It is the duty of each and every citizen to file their income tax returns as mandated by the Income Tax Department. This should happen if your gross total income exceeds a certain amount each year (that is before allowing all statutory deductions to be made). Most people do not see the need to file their returns and end up ignoring. Filing income tax returns has lots of advantages like; ensuring smooth governance of the country as well as making one a responsible citizen. So, why should one file his or her income tax returns (TAX)?
1. It Is A Sign Of Corporate Responsibility
Corporate social responsibility means that the citizen has a business approach in filing tax and must be faithful. One may say that filing returns are voluntary. This might be true to some extent but it is more of a sign of responsibility. It is the duty of all citizens to file their taxes within a defined period of time. If not, one is penalized by the Income Tax Department. To avoid the penalty, you are supposed to file the returns before the deadline; this is a sign that you are responsible.
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2. Carry Forward Of Losses
The tax loss carryforward rules only apply to a citizen who has been filling his or her returns. Carryforward means that any un adjustable loss under the head speculation business may be carried forward up to 6 years immediately succeeding the tax year in which the loss was incurred. So when your business incurs some losses then they should be recorded in tax returns of the financial year. In order to claim an adjustment against past losses then you must have been filing your income tax yearly without fail. If not then you cannot be compensated.
3.Income Tax Refunds
Most citizens file in their annual tax returns but do not know how to process the income tax refund. One is eligible for an income tax refund if he or she has paid more tax to the government than the actual liability. To get the refund, one can claim it during a financial year while he or she is filling for his income tax returns for that year. So the only way to get back an income tax refund is by filling your annual tax returns. This is why you need to file your tax returns without fail.
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4. Benefits When Processing A Loan
Banks and other financial institution require for one to provide their income tax return statements to process any kind of loan. Maintaining a great record of filing returns will help you ease the process of getting a loan. In some countries, the government has made it mandatory for everyone to provide their income tax return statements when seeking any banking services like loans and mortgages. For those who love using plastic money, before getting the credit card, the company in charge must ask for proof of filing a tax return to give you the card.
5. Avoidance Of Penalty
It is the law that any citizen who fails to file his tax returns and fails to pay his taxes should be penalized. Most individuals wait until when the deadline is passed to file their taxes. When the deadline closes, every person who has not filed his or her income tax returns gets penalized. To avoid this, ensure that you file your income tax returns on time. Each time you don’t file your taxes, a penalty is made and this means they accumulate each year. File your taxes on time and avoid the hefty penalty from the Income Tax Department.
Filing of income tax returns is an annual event where individuals who earn a specified income file their returns before a certain set date. Even if your income level does not qualify for mandatory filing of returns, one should always file nil returns. Ensure that you file the nil returns way before the deadline to avoid penalty. Filing of returns has great advantages which include improved infrastructure and enjoying other great government services. Therefore, it is important for one to make sure that they file their annual tax returns on time to enjoy the great benefits of a citizen.
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