For many people, filing income tax returns is a matter of confusion. Some tend to wait right until the final moment before filing their returns in a hurry. However, if you can get past the confusion, filing income tax returns has a lot of benefits.
Income tax returns have to be filed at the end of each financial year. However, the tax-filing date for the last financial year has been extended to September 30, 2021, owing to the pandemic situation (as of July 2021).
Income Tax classification
If you are eligible to pay income tax, you should know exactly how much you need to pay. This means knowing which income tax slab you come under.
In the Union Budget of 2020, the government announced a new tax structure. As a result of this additional structure, the tax slabs that people would usually refer to have seen a major change. This means that there would be two tax charts that people can refer to. As an individual taxpayer, you can decide under which chart you want to file your income tax returns.
|Total income in INR(₹)||Tax rates (New structure)||Tax rates (Old structure)|
|Up to Rs. 2,50,000||Nil||Nil|
|₹2,50,001 to ₹5,00,000||5%||5%|
|₹5,00,001 to ₹7,50,000||₹12,500 + 10% of total income exceeding ₹5,00,000||₹12,500 + 20% of total income exceeding ₹5,00,000|
|₹7,50,001 to ₹10,00,000||₹37,500 + 15% of total income exceeding ₹7,50,000||₹62,500 + 20% of total income exceeding ₹7,50,000|
|₹10,00,001 to ₹12,50,000||₹75,000 + 20% of the total income exceeding ₹10,00,000||₹1,12,500 + 30% of the total income exceeding ₹10,00,000|
|₹12,50,001 to ₹15,00,000||₹1,25,000 + 25% of the total income exceeding ₹12,50,000||₹1,87,500 + 30% of the total income exceeding ₹12,50,000|
|₹15,00,001 and above||₹1,87,500 + 30% of the total income exceeding ₹15,00,000||₹2,62,500 + 30% of the total income exceeding ₹15,00,000|
Use an online income tax calculator to know how much taxes you’ll have to pay in the old vs new tax regime.
Benefits of filing income tax returns
When planning an international trip, you will need to apply for visa. This is where your tax returns are of importance. When you apply for a visa, your tax returns are reviewed to decide whether you should be given a visa. Hence, you need to submit proof of these returns when travelling abroad.
There might be times when you would need to apply for a loan to fulfill your dreams – be it buying your dream house, owning a vehicle, or meeting some personal objectives. Depending on the financial institution that you approach for a loan, there are certain terms and eligibility criteria that you need to fulfill. One thing that is common across all institutions is the submission of ITR or Income Tax Return, which is considered as an authentic proof of income. Having a robust record of tax returns can speed up the processing of your loan and elevate your chances of approval.
Starting a business
Many individuals look for their chance to get out of the 9 am – 5 pm way of living that jobs offer. They look for the freedom that having a business offers. As a result, there are newer business ventures launched every day.
If you are one of those who want to start a business, your tax returns can help you. Registering a business requires you to fill out government compliance documents. You are required to submit tax return receipts for the last five years. The receipts prove that you are financially stable and that you can make timely payments.
Apart from the above-mentioned benefits, filing Income Tax returns on time could also help you to avoid penalties for not filing returns within the specified period. Being responsible with your tax filings can also help keep you tax compliant.