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Who Is A Responsible Citizen?
The answer includes hundreds and thousands of points which define a responsible citizen. People contribute to their nations in many ways; some help their nation by making sure its environment is safe, while some contribute by working to eradicate social evils. Another most highlighted trait of a responsible citizen is their direct economic contribution to the nation. Yes, we are talking about Income Tax Filing.
Some may consider paying Income Taxes as their duty or an obligation. Still, today in this article, we will all agree that Filing Income Tax Returns is not just a duty or an obligation to fulfill, but it is a Right of every citizen. By securing this right, one can open doors to various benefits provided to them for being a responsible citizen.
So, the question arises: is filing income tax only essential for being a responsible citizen? Or does it hold some other points too? What are the benefits a person can avail of by filing their income tax returns? Before knowing all these things, we should first get a quick gist of what is Income Tax Filing?
What Is Income Tax Return Filing?
In India, When a person/entity earns a certain amount of income in a year, the Income Tax Act of 1961 obligates them to pay a certain amount as a tax and inform the government about it.
For example, Shivi has earned ‘X’ amount in the previous year, so this year she will compute her Net total income, on which she would pay the tax. Suppose the ‘Y’ amount came out as a net tax liability, which she would pay to the income tax department. Things don’t end here; after paying Net tax liability, she is obligated to inform the income tax department about the same, known as Income Tax Filing or Return filing.
In India, there are broadly Seven unique formats made by the income tax department for different categories of payers. These are, ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6, and ITR 7. There is a specific due date for different categories of payers in the year. For example, Those individuals whose Gross total Income maximizes from the specific basic exemption limit must fill their required ITR before 31st July of every year.
Although there are various provisions for different kinds of payers, one thing is clear; everyone benefits from filing the returns, whether it’s compulsory for them or not.
Importance And Benefits Of Filing ITR
One should always file their Income Tax Returns, whether it’s compulsory for them. Let’s see why!
For getting credit/ loans from banks or any other financial institution: This upcoming generation is the generation of Entrepreneurs; Government throughout the world also encourages youths to become entrepreneurs and run businesses they can excel at. This surely helps individuals and Nations to grow. But starting up a business initially needs a huge amount of capital, which a large portion of the population cannot afford collectively; for this, they require loans.
Today if you go to any bank or other financial institutions to get any kind of loan, be it a personal loan, home loan, loan for business, etc. You need to present proof of at least the last three years’ income tax returns before them. Without this, no institution will trust you to give loans. Income tax returns are solid proof of your certain amount of income flow throughout the years. This ensures banks that you will be able to pay their loans on time and won’t become a defaulter to them.
For Getting Income Tax Refunds: Often, we get our incomes shrunk through many deductions from our employers’ side. Have you ever noticed TDS deductions there? TDS is tax deducted at the source. Also, when we deposit our money in banks as a fixed deposit, the bank deducts an amount as TDS and then pays us the balance amount.
Suppose your income falls under the exemption limit, but your TDS is still deducted; you will surely want a Refund, right? To get Refunds on such deductions, an individual needs to file income tax returns regularly. No filing of ITR, NO refunds for you.
Carrying Forward The Capital Losses To Next Year:
It’s very important for people who deal with the share market or often get capital gains and losses. Suppose you incur a loss of 50,000 this year in your share market trading. But next year, you get a profit of 80,000.
If you file ITRs, you have this fantastic option to adjust your losses with your profits. In this way, you won’t be paying tax on the full profit you gained, but you can get the tax liability amount shrunk by deducting the previous year’s losses. In our case, we will be paying tax on only 30,000, i.e., 80,000 minus 50,000.
For The Creation Of Your Wealth: when you file your returns every year, you accumulate your true wealth. No one can question you on your purchases. Whenever you are asked about any big purchase of yours, the income tax department wants to know how you managed to buy a particular property? You can immediately show your returns and prove that it is the product of your true wealth and not black money.
Other Benefits: other benefits include scholarships for your children and visa support. By filing ITRs regularly, you can benefit from government support schemes. People who don’t file returns cant ask for these. Also, while getting VISAs, one has to show proof of their income.
After knowing all these points, one thing is clear. If you pay your Income-tax Returns, you get to enjoy all these Rights provided to you for being a Responsible Citizen. Today, aware youths are paying their ITRs from a young age only. They know the importance of wealth creation and capital accumulation in their life. Income Tax Return Filing paves the way for your safe and economically stable future.Add to favorites