Who should file Income Tax Return & what are the benefits of filing an ITR?
Any person as described under to section 2(31) of Income tax act are required to file Income tax return if their total net income falls under the taxable category. Person includes :
(ii) Partnership Firms
(v) Association of person or body of individuals whether incorporated or not
(vi) Local authorities
(vii) Any other artificial judicial person not falling under any of the above sub sections
TAXABLE CRITERIA FOR DIFFERENT SETS OF PERSONS AND FORM APPLICABLE TO THEM
1. Individuals: The basic exemption limit for resident individuals who are below the age of 60 years is Rs. 2,50,000, exceeding 60 years of age or more but less than 80 years of age Rs. 300,000 and who are 80 years of age or more, it is INR 500,000 during any time during the assessment financial year. ITR 1-4 depending upon the sources of income is required to be furnished by an individual.
2. Partnership firms including LLP: It is mandatory for every partnership firm to file the return of income irrespective of amount of income or loss at the rate of 18.5 of total income with 4% of Health and education cess. Besides, a partnership firm is liable to pay an income tax surcharge of 12% if the total income exceeds Rs.1 crores. ITR 4 & 5 is applicable to partnership firms.
3. HUF: Every HUF who earns more than Rs. 250000 during any financial year needs to file ITR. HUF needs to furnish their income tax returns under ITR 1 to 4 is applicable on HUF.
4. Company: Every company irrespective of the amount of income or loss during the financial year must file their IT return in form 6 and 7 according to their sources of Income. If the company is earning less than 250 crores the taxable rate is 25% and 30% if their net total income is more than Rs. 250 crores with an health and education cess at 4%. Besides, a company is also liable to pay an income tax surcharge of 5% if the total income exceeds Rs.1 crores
5. Association of persons or Body of Individuals: If the net taxable income of any one of the members of AOP/ BOI exceeds Rs. 250000 it will be held liable to pay taxes as the same taxable rates as applicable on individuals. The AOP needs to show their ITR returns under ITR 5.
BENEFITS/ NEED OF FILING ITR
An assessee needs to file ITR for various purposes some of them are as follows
1. For Loan Approval:
Filing the ITR will help individuals, when they have to apply for a loan as its serves as a proof of income statement. You need to submit your 3 years ITR returns for getting loans from the bank.
2. To claim tax refund:
You need to file your ITR mandatorily to claim TDS refunds during the financial year
3. Acts as Income & Address Proof:
Self-employed individuals who do not have salary slips can use their Income Tax Return as proof of your Income and Address.
4. Quick Visa Processing:
Most embassies & consultants require your tax returns for the past couple of years at the time of the visa application. These are considered to be the most important documents while filing Visa applications.
5. To Carry Forward previous year 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 which will help you reduce your tax liability of the future income.
6. To Avoid tax Penalty:
If you fail to file your tax returns on time , then a penalty of up to Rs.5,000 can be imposed on the taxpayer till 31st Dec and post which 10K till 31st of March. Again it depends upon the current situation.