Income Tax Return (ITR) is a form which a person is supposed to submit to the Income Tax Department. It contains information about the person’s income and the taxes to be paid on it during a particular financial year, i.e. starting on 1st April and ending on 31st March of the next year.
ITR returns helps in filing loan application or to raise funds from different sources.
There are many criteria defined under the Act, in which you may be served legal notice if you have not filed your ITR. Filing your ITR correctly and in time can ensure that you don’t have to receive such notices.
Income tax return serves as a proof of your current income and source of such income. There is no other document available which serves the purpose.
A Taxpayer receives the income after deduction of applicable TDS especially in case of Salary. It may happen that after the eligible deductions, the tax liability is lower than the amount of TDS actually deducted. In such cases, the excessive payment can be claimed in the form of refund only if ITR is filed by the person.
Some countries ask you to produce your Income tax Returns in order to grant you VISA. Also it is helpful for higher education of your children when some universities demand Income tax returns to check your elgibility.
Most businesses in their initial years face losses from the business. The business loss or capital losses can be carried forward up to 8 years if the ITR is filed. This loss can also be adjusted against the future income that lowers taxable income in the future. If ITR is not filed, the taxpayer is deprived of this benefit.