why do we need to file income tax returns

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Expert Review [and TurboTax Live] not available on the TurboTax mobile app or when using a web browser on your mobile phone. On-screen help is available on a PC, laptop or the TurboTax mobile app. Service, area of expertise, experience levels, wait times, hours of operation and availability vary, and are subject to restriction and change without notice. Tax Return Access and My Docs features: Included with TurboTax Deluxe, Premier, Self-Employed, TurboTax Live or with PLUS benefits. Access to all tax-related documents we have on file for you is available through 10/31/2019. Terms and conditions may vary and are subject to change without notice. #1 best-selling tax software: Based on aggregated sales data for all tax year 2016 TurboTax products. Most Popular: TurboTax Deluxe is our most popular product among TurboTax Online users with more complex tax situations. CompleteCheck: Covered under the TurboTax accurate calculations and maximum refund. 1 rated online tax prep provider: Based on independent comparison of the by March 13, 2017. Get tips based on your tax and credit data to help get you to where you want to be: Tax and credit data accessed upon your consent. A lot of individuals seem to think that filing tax returns is voluntary and therefore dismiss it as unnecessary and burdensome. As we will see, this is not a very healthy perspective on tax-filing. Filing tax returns is an annual activity seen as a moral and social duty of every responsible citizen of the country.

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It is the basis for the government to determine the amount and means of expenditure of the citizens and provides a platform for the assesse to claim refund, among other forms of relief from time to time. 1. Filing returns is a sign you are responsible The government mandates that individuals who earn a specified amount of annual income must file a tax return within a pre-determined due date. The tax as calculated must be paid by the individual. Failure to pay tax will invite penalties from the Income Tax Department. Those who earn less than the prescribed level of income can file returns voluntarily. Filing returns is a sign that you are responsible. Not just that, it also makes it easier for individuals and businesses to enter into subsequent transactions since their income is recorded by the tax department with applicable tax, if any, having been paid. 2. Filing returns is mandatory in some cases Even if your income level does not qualify for mandatory filing of returns, it may still be a good idea to voluntarily file returns. In most states, registration of immovable properties requires advancing as proof the tax returns of last three years. Filing returns makes it easier to register the transaction. 3. Your loan or card company may want to see your return If you plan to apply for a home loan in future it is a good idea to maintain a steady record of filing returns as the home loan company will most likely insist on it. In fact, you may even consider filing your spouses returns if you want to apply for a loan as a co-borrower.

Likewise, even credit card companies may insist on proof of return before issuing a card. Financial institutions may insist on seeing your returns over the past few years before transacting with you. In fact, the government may make it mandatory for them to do so, thereby indirectly nudging individuals to file returns regularly even when its voluntary. 4. If you want to claim adjustment against past losses, a return is necessary Filing returns on time has many advantages regardless of whether you draw the prescribed level of income necessary to file returns. Various losses incurred by an individual or a business, both speculative as well as non-speculative, short term as well as long term capital losses and various other types of losses not recorded in the tax return in a financial year, cannot be shown for exemption in subsequent years for the purpose of. So its best to file returns regularly, because you never know when you may want to claim an adjustment against past losses. 5. Filing returns may prove useful in case of revised returns In case the assesse hasnt filed the original return, he cannot subsequently file a revised return, even when he really needs to. Under the Income Tax Act, non-filing of returns can attract a penalty of Rs 5,000. So while filing returns is a voluntary activity, there are times when it could hold legal implications for those who do not do so, especially if they must file a revised return in future.

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