You don’t have to be a rocket scientist to file income taxes. We want to remind you that filing taxes today isn’t about carrying hundreds of papers and arranging everything like a student does before an exam. Taking advantage of India’s embrace of the digital world and its many conveniences, electronic filing (e-filing) allows you to file income tax returns (ITRs) in a matter of a few clicks. By e-filing your taxes, you are not forced to queue up and waste time or make human interactions complicate the process. You can do it at home or even at your office workstation.
How does E-filing work?
Income tax e-filing refers to the act of electronically filing income tax returns for a particular year. Using this technology, you no longer need to visit the Income Tax Department’s office physically to file your returns. Instead, you simply log onto the internet and submit your forms.
E-filing in three ways
- E-filing of income tax returns can be done in three basic ways.
- Digital Signature Certificates (DSCs) are a useful way of electronically signing documents since they are digital versions of physical certificates.
- The second option – You can e-file without a DSC. In this case, an ITR-V form is generated, which is a one-page document containing the ‘Income Tax Return–Verification. It is imperative to print, sign, and submit the form to Central Processing Centre (CPC), Bangalore within 120 days from the date the e-filing is completed if Aadhar details have not been updated on the Income Tax site.
- If you choose this option, you are not required to submit ITR-V to CPC and can instead e-file the income tax return directly without the DSC.
Income Tax Returns: Why Should You File Them?
In addition to the benefits of filing income tax returns on time, file itr return is also pocket-friendly. File your ITR before the year’s deadline to avoid the penalties imposed for late filings. If you file your tax return after the year’s deadline, you will be liable to pay a maximum penalty of $1,000.
Filing a Tax Return Has Many Benefits
- Whether it is applying for a loan, traveling abroad, or dealing with financial losses, filing income tax returns is very helpful. Here is how it works.
- The Tax Deducted at Source (TDS) deductions of a taxpayer’s income, whether he or she is a salaried worker or a businessperson, are a refund. If, however, you have made investments that are deductible from taxable income, your actual tax dues will be much lower than what you have already paid if your investments are deductible. If you file your taxes, you can claim and receive a refund of excess tax.
- Overseas travel requires visas. In order to apply for a visa, you must have filed your tax returns for the past few years. These returns must be presented before the official of the destination country’s embassy or consulate.
- As part of the loan application process, banks will ask to see tax returns from the past few years. The returns will be used to determine your financial condition. If you do not have the returns, your application may be rejected.
- Applicants for credit cards need to prove that they are capable of repaying the borrowed funds. A credit card issuer may ask for an income tax return to determine the applicant’s ability to repay the loan.
- Currently, an individual can carry forward losses to offset future taxable income. It is possible to carry forward losses for up to eight years consecutively. You can build a case using your income tax returns and adjust your losses against your future taxable income.