Income tax is levied on the income earned by all the individuals, HUF, partnership firms, LLPs, and Corporates as per the Income-tax Act of India. In the case of individuals, tax is levied as per the slab system if their income is above the minimum threshold limit (known as the basic exemption limit).
Indian Income-tax levies tax on individual taxpayers on the basis of a slab system. A slab system means different tax rates are prescribed for different ranges of income. It means the tax rates keep increasing with an increase in the income of the taxpayer.
This type of taxation enables progressive and fair tax systems in the country. Such income tax slabs tend to undergo a change during every budget. These slab rates are different for different categories of taxpayers. Income tax has classified three categories of “individual “taxpayers such as:
- Individuals (aged less than of 60 years) including residents and non-residents
- Resident Senior citizens (60 to 80 years of age)
- Resident Super senior citizens (aged more than 80 years)
But, when this entire world is changing towards being mobile and trying to automate things in the internet era, there has come a facility to file your income tax just from sitting at home using your mobile phone or personal computer.
After this online methods of filing income tax, it has helped and benefitted many individuals to file their income tax in time, and in the easiest way possible
Benefits of filing IT online
1. Easy loan Approval
Filing the ITR will help individuals when they have to apply for a vehicle loan (2-wheeler or 4-wheeler), House Loan etc. All major banks can ask for a copy of tax returns as proof of income statement. This is a mandatory document for loan approval.
2. Claim Tax Refund
There can be instances when tax has been deducted (TDS) from your income even when your total taxable income is less than the basic exemption limit and you have nil tax liability for that year. In such a case, you will have to claim TDS refund for which you will have to file an Income Tax Return mandatorily.
3. Quick Visa Processing
Most embassies & consultants require you to furnish copies of your tax returns for the past couple of years at the time of the visa application. These are amongst mandatorily required documents and hence it is always advisable to timely file your ITR.
4. Carry forward your losses
If you file the return within the original due date, you will be able to carry forward losses to subsequent years, which can be used to set off against the income of subsequent years. This means you can deduct certain losses from the relevant income which will help you reduce your tax liability of the future income. This is not possible without filing the income tax return.
5. Avoid Penalty
If you are required to file your tax returns according to the income tax act, but didn’t, then the tax officer deserves the right to impose a penalty of up to Rs.5,000.
6. Prompt processing
The acknowledgment of Income Tax Return (ITR) is quick. More importantly, refunds, if any, are processed faster than paper-filed returns.
7. Better accuracy
E-filing software with built-in validations and electronic connectivity is seamless and minimizes errors considerably. Paper-filings can be prone to errors. Also, when any paper-based form is migrated to the electronic system, there is a possibility of human error in data entry.
8. Convenience
No time and place constraint in filing returns online. E-filing facility is available 24/7 and you can file anytime, anywhere at your convenience.
9. Confidentiality
Better security than paper filings since your data is not accessible to anyone either by design or by chance. With paper filings details of your income can fall in the wrong hands at your chartered accountant’s office or in the Income Tax Department’s office.
10. Accessibility to past data
You can easily access past data while filing returns. Most e-filing applications store data in a secure manner and allow for easy access at the time of filing subsequent returns.
11. Proof of receipt
You get prompt confirmation of filing, both at time of filing and subsequently, via email on your registered email id
12. Ease of use
E-filing is friendly and the detailed instructions make it easy even for individuals not very conversant with the internet
13. Electronic banking
The convenience of direct deposit for refund and direct debit for tax payments. You have the option to file now, pay later – decide what day to debit your bank account for tax payment, among other convenience features.
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Consequences of not filing ITR
Now that you know about the advantages of income tax return filing, here are some consequences they may face if they fail to file it:
- An individual will receive an income tax notice if he/she falls in the taxable slab.
- If a person cannot file IT returns due to a genuine reason, the authorisation body will accept a detailed letter and supporting documents. In such a case, he may apply for a condonation relief.
- In case of late filing of ITR, the IT Department will levy fines on an individual. Generally, one has to bear a penalty of ₹10,000 if his income is above ₹5 lakhs. If income is below this amount, the fine is ₹1000.
- During severe scenarios like tax evasion, assessees may be subjected to tough imprisonment.
However, there are some individuals who are not required to file an income tax return. Senior citizens above 75 years can get full exemption from ITR filing as per the Finance Minister’s announcement in the Union Budget 2021.
By going through this comprehensive guide on the benefits of filing ITR, one can acknowledge the advantages of e-filing tax returns and applying for the same without any delay.
How to File your INCOME TAX online?
Enter the relevant data directly online at e-filing portal and submit it. Taxpayers can file ITR 1 and ITR 4 online.
Step1– Go to the Income Tax e-Filing portal, https://www.incometax.gov.in/iec/foportal/
Step 2– Login to e-Filing portal by entering user ID (PAN), Password, Captcha code and click ‘Login’.
Step 3– Click on the ‘e-File’ menu and click the ‘Income Tax Return’ link.
Step 4– On Income Tax Return Page:
- PAN will be auto-populated
- Select ‘Assessment Year’
- Select ‘ITR Form Number’
- Select ‘Filing Type’ as ‘Original/Revised Return’
- Select ‘Submission Mode’ as ‘Prepare and Submit Online
Step 5 -Click on ‘Continue’
Step 6-Read the Instructions carefully and Fill all the applicable and mandatory fields of the Online ITR Form.
Step 7-Choose the appropriate Verification option in the ‘Taxes Paid and Verification’ tab.
Step 8-Choose any one of the following option to verify the Income Tax Return:
Step 9-I would like to e-Verify
Step 10– I would like to e-Verify later within 120 days from date of filing.
Step 11-I don’t want to e-Verify and would like to send signed ITR-V through normal or speed post to “Centralized Processing Center, Income Tax Department, Bengaluru – 560 500” within 120 days from date of filing.
Step 12 -Click on ‘Preview and Submit’ button, Verify all the data entered in the ITR.
Step13– ‘Submit’ the ITR.
Step14– On Choosing ‘I would like to e-Verify’ option, e-Verification can be done through any of the following methods by entering the EVC/OTP when asked for.
Step15– The EVC/OTP should be entered within 60 seconds else, the Income Tax Return (ITR) will be auto-submitted. The submitted ITR should be verified later by using ‘My Account > e-Verify Return’ option or by sending signed ITR-V to CPC.
Step16– To view the uploaded ITRs
