Do I need to file my Income tax returns regularly?

Do I need to file my Income tax returns regularly?

There is a lot of confusion amongst the general public about filing of income tax returns. While many of them assume that they need not file returns, and quite of few of them thought it is necessary to file returns, we thought of putting a write up on the importance / requirement of filing of income tax returns.

• Individuals whose income exceeds the maximum amount not chargeable to tax, should file their returns. Maximum amount not Chargeable to tax means the basic annual income that is exempted. For the Financial Year 2015-16 and 2016-17, this amount was Rs. 2.5 lakh. This means that if an individuals income does not exceed Rs. 2.5 lakh in the that financial year, he need not file his return.
• Individuals who are residents and have foreign income or foreign assets, should file his return declaring the same. Since for a resident, his global income is taxable in India. There are other tax planning options that the resident ahs like utilizing the benefits of DTAA, however, we will not dicuss these provisions in this article.
• Individuals who have made a loss in their startup business, or existing business in a particular financial year should file their income tax if they need to carry forward their loss and set it off against future profits. Infact, the provisions of the income tax act says that the carry forward of losses will only be allowed if the return is filed within the due date.
• Individuals whose income is below the threshold limit, but have TDS deductions and would like to claim refunds also need to file their income tax returns. Refund of excess tax paid or TDS deducted is not automatic. The assessee needs to file a return to claim a refund.
• It is mandatory to file income tax returns for a partnership firm, LLP and Companies.

Benefits of filing your income tax returns regularly.

You can get your losses adjusted – If you are trading in shares, or have sold a house property at a price lower than the indexed cost of purchase, or have incurred losses in business, you can set off your losses against future profits. Thos the set off and carry forward are subject to conditions, you have a fairly good opportunity to save on taxes if you are filing your returns.

You have your return acknowledgements ready for loan applications – In case you are applying for a loan, either to buy a car or purchase your own house, or even for working capital requirement of your business, one of the most important set of documents are your return acknowledgements. These help establish your regular income to be able to pay off your EMIs.