Filing ITR for the first time? Know what are its benefits and what should be taken care of
Income Tax Return for those who start a job after completing their studies, the terminology related to income tax seems quite difficult
Income Tax Return for those who start a job after completing their studies, the terminology related to income tax seems quite difficult. Terms like Taxable Income 26AS Form 16 TDS and Tax Saving Investments seem to create confusion for the new job recruits.
As per the Income Tax Act, the last date for filing Income Tax Return for the financial year 2020-21 is July 31, 2021. But given the Corona epidemic, the government has extended this deadline to 30 September 2021. For the youth who have started earning in 2020, it is very important to know some things related to income tax. Along with the joy of earning the first income, comes the responsibility of filing income tax returns.
For those who start a job after completing their studies, the terminology related to income tax seems quite difficult. Words like Taxable Income, 26AS, Form 16, TDS and Tax Saving Investments seem to create confusion for new job recruits. But there is no need to panic. We tell you some basic things, from which you will start to understand these things easily.
First of all, it is important to understand that any individual has to file an income tax return by 30 September 2021 on the income earned from 1st April 2020 to 31st March 2021.
What is meant by Income Tax Return Filing?
Generally, after the end of the financial year, you are given three-four months to calculate your income earned in the previous year. You are given this time to calculate your taxable income and pay tax accordingly. If the net taxable income of an individual is more than Rs 2.5 lakh, then him/her must file an income tax return.
What is net taxable income, you may ask? So it simply means that it is the total income after deducting the deduction. There are many deductions in the Income Tax Act. The more deductions you use, the less your tax liability gets. There are many deductions available under section 80 of Income Tax like 80C, 80D, 80E etc. These are used to save tax and reduce tax liability.
Since you have just joined the world of taxpayers, you might not be aware of the benefits of filing Income Tax Returns. Let's get to know them.
Loan gets approved easily
ITR filing receipt proves to be an important document for you to take any loan in the future, be it for a vehicle, home loan or personal loan. The bank asks for the ITR receipt for the last three years before giving you the loan. If you give this, your loan gets approved quickly.
Visa processing made easy
If you are going to apply for a visa, then ITR receipts of previous years are asked. Many embassies ask for a receipt of ITR as they strictly follow the tax rules.
Makes it easy to carry forward losses
If you invest in shares or mutual funds and you have a loss, then it is necessary to file an income tax return within the stipulated time frame to carry forward the loss to the next year, because if you have a capital gain in the next year, then this loss will be adjusted and you can get the benefit of tax exemption on the profit.
If your income in a financial year is less than Rs 2.5 lakh, you can still file ITR for the above-mentioned benefits. Along with this, also remember that filing an income tax return is a must. If you do not do so, you can be fined up to ten thousand rupees. So don't take it lightly and file an income tax return on time.