Most of us pay taxes in one way or another but are often confused about the benefits derived from it. In this article, we will try to understand the advantages of paying income tax on time and try to look at it from a positive perspective and not as a lawful binding imposed on the citizens of a country by the government.
Generally, taxes that we pay are used to equip military budget, the welfare of unprivileged, infrastructure growth and betterment of the country.
Advantages and Merits of Filing Income Tax Return timely
Easy Loan Approval and Faster Processing
Filing the Income Tax Returns (ITR), timely help individuals to get easy approval on different kinds of loans, depending on the returns filed by them and their current income.
When you apply for an Auto (vehicle) loan, Personal Loan, House Loan or Business loan, all major banks can ask for a copy of tax returns to evaluate your credentials.
Claim Tax Refund of Initial Year
If you have a refund due from the Income Tax Department based on the excess tax paid by you earlier, you will have to file an Income Tax Return to claim the refund.
Acts as an Income & Address Proof
Income Tax Return can be used both as proof of your Income and Address and is honored by most of the government and banking institutions.
Faster Visa Processing
If you are planning to go or settle in abroad, remember, most embassies & consulates require you to furnish copies of your tax returns for the past couple of years at the time of evaluation basis your application.
In short, Visa procurement for foreign travel needs proof of income tax returns.
Income tax returns along with educational qualifications and professions can serve as proof for Non-ECR (Non-Emigration Check Required) while applying for a passport.
Avoiding Risk of Penalty
If you pay your taxes within the due date, you will be able to save yourself from ant sort of penalty imposed due to late or non-payment of taxes.
Supporting Your Country’s Economic Growth
Paying direct or indirect taxes, especially income tax is an important source of income for the Government. The government then uses this money to ensure the smooth functioning of the country and the welfare of its people.
Maintaining security by equipping the Defence Forces with optimum arms and ammunition, developing quality infrastructure, Restoring and improving the transport system, welfare schemes for farmers and the general public, provision for disaster management, etc. are all areas where the government spends the money which it collects in the form of taxes.
Enhances your Financial Credibility
Filing income tax returns timely on year on year basis helps to build a strong financial background of the taxpayer and hence boosts his financial credibility.
Carry forward of losses
Losses such as Business or Capital Loss etc. can be carried forward only on filing the income tax returns on time i.e. on or before the due date.
Important Insurance Factor
In case of accidental death, in a court trial, an insurance company needs proof of income to finalize the accidental claim as it calculates the claim by multiplying the yearly income by the expected life of the deceased.
Also, while buying a high-value life cover, your income tax returns are scanned to verify your annual income. So, filing taxes is equally important as being insured.
An Important Tool for Business Owners
For accruing government tenders and for business expansion via the issue of IPOs, etc. income tax returns play a major role and a strong positive record of filing taxes on time by the business institution is very crucial before any deal is made or investment is done in the business or company.
In short, filing taxes on time is a must for any business house or company to improve its credibility and credit rating.
The most important advantage of filing your taxes on time is that it gives you ‘Peace of Mind’ and a sense of satisfaction that you have made a positive contribution to the welfare of your motherland.
If you do not file ITR on time, then somewhere in your mind you have fear of getting an Income Tax notice from the Income Tax Department for non-compliance and penalizing you for the same. On the other hand, if you file your Income Tax Return on time then there is no fear of facing any legal complications.