ITR Filing is a crucial task for every taxpayer in India. Doing ITR Filing means you are complying with tax laws in India. And, as a result, you get lots of benefits. However, you have to face certain challenges also. In this article, will understand both advantages and disadvantages of Income Tax Return Filing, specifically when you file income tax return online or choose to e-file income tax return.
Advantages of Income Tax Return Filing in India
Legal Compliance
Filing ITR will ensure that you stay compliant with tax laws in India. So, if you don’t do ITR Filing on time, it will lead to penalties and legal consequences.
Tax Refund Claims
You are eligible for tax refunds if you have paid more taxes then your liability. For example, if your employer had deducted more tax at source, you can reclaim it through ITR Filing. The tax refunds are then released directly to your account.
Income Proof
In India, ITR Return acts as a solid proof of income. Thus, if you need to apply for loans, credit cards, or visa, you will need to have submitted ITRs.
Carrying Forward Losses
Filing ITR enables you to carry forward losses including capital or business loans to the next financial year. Thus, reducing the tax burden in the future through offsetting losses against the future income.
Penalty Avoidance
ITR Filing before the deadline will save you from hefty fines. These hefty fines can be in thousands of rupees or even more.
Faster Loan Approvals
Banks and other financial institutions require your ITR Documents when you apply for loans. ITR Filings boost your credibility and thus boost the speed of loan approval process.
Disadvantages of Income Tax Return Filing in India
Complex Filing Process
ITR Filing is complicated, especially if you don’t know tax laws. Income Tax Return Filing involves different kinds of forms and it depends on income sources and deductions. Thus, a lot of confusion for many.
Time- Consuming
Even though you can now file income tax returns online, the complete ITR Filing process still requires a lot of documentation including Form 16, bank statements and TDS Certificates. This documentation can take a lot of time especially for individuals with lots of income streams.
Technical Glitches
Though e-filing simplifies the procedure, it is not without challenges. Taxpayers may encounter technological issues or server errors, particularly prior to the deadline, resulting in submission delays.
Heavy Penalties
Missing the filing date might result in fines up to ₹10,000. This amount of money can be stressful, particularly for people with lower earnings
Risk of Audit
Filling out incorrect or incomplete returns raises the likelihood of a tax audit. Any disparities revealed might result in penalties or legal action, which is difficult for taxpayers. Thus, considering all the disadvantages, it is best to have experts do ITR Filing for you.
Moreover, If you want any other guidance concerning ITR Filing in India, please feel free to talk to our business advisors at 8881-069-069.
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