Ways to File Returns
Let's begin by examining the different ways that returns can be submitted:
Manual submission:
This is the conventional approach to submitting returns, whereby individuals visit the income tax office and manually file their taxes. [1]
E-filing Intermediaries:
As a taxpayer if you need help organising your taxes and figuring out how you can avail deductions an agent, chartered accountant, or firm may be able to prepare and submit the returns on taxpayer’s behalf . [1]
Let’s have a look at benefits of filing your rax returns:
Simple Approval of Loans
Many documents are needed by banks in order to process loan applications . The loan application could be for home loans, personal loans etc.
The ability to repay the loan is determined before it is approved, and this is done using your income earnings. Your income tax return serves as evidence of your steady income over the previous periods. This paperwork is required in order to approve a loan. [2]
Make a Tax Refund Claim
Your interest on fixed deposits, rental income, salary income etc may all be subject to tax deduction. There may be situations in which you have no tax liability for a particular year or where the tax that has been deducted (TDS) exceeds the tax owed on your entire income. To get a refund of the tax deducted at source (TDS) in these situations, you have to file an income tax return. [2]
Proof of Address & Income
You can use your income tax return as evidence of your address and income. Address proofs are needed for Aadhar cards, licenses, passports, and other similar papers. [2]
Fast Processing of Visas
Most embassies and consultants request copies of your tax returns from the previous couple of years when you apply for a visa. Since they demonstrate the individual's civic duty, these documents are among the necessary ones. As a result, it is best to file your income tax return as soon as possible. [2]
Carry forward Losses
One may lose money in the stock market, when conducting business, or when renting out a home etc. You can lower your tax obligation by deducting these losses from your future income. You can only carry forward losses to later years if you file your return before the original due date. This benefit would not be available if an income tax return was not filed [2]
Getting Tenders from the Government
Contractors are required to file these returns on schedule, with great accuracy, and to have them audited (if needed). This is particularly important when attempting to win a government contract. This work may occasionally be inspected by the tender scrutiny committee, and it is standard procedure to review the ITR for the previous three to five years. [2]
For Term Insurance Purchases
Insurance companies frequently ask applicants to give their Income Tax Return (ITR) records as evidence of their yearly income in order to accept term insurance plans. The individual's wages determine the coverage amount, and submitting the ITR aids insurance companies in determining the higher income level of the policyholder. [2]
Start-up Venture Funding
Funding from outside sources, such as venture capitalists or seed investors, may be necessary when preparing to start a new business or expand an existing one. In order to assess the company's
profitability and financial health, these investors may ask to see the details of your ITR. They could also use your ITR forms to cross-check the data in the audited report. [2]
What are the benefits of E-filing your tax returns?
Convenience
Since one may now file taxes from the comfort of their home or place of business at their own convenience, e-filing has expanded tax filing flexibility and made the process much more convenient. [3]
Saves money and time
The time and money saved by e-filing is enormous. When assesses submit their taxes electronically, the information is sent straight from the e-filer's servers to the tax agency's servers. By using this method, the agency avoids transmission problems and saves a significant amount of time and money when converting data from paper to online input.
Processing e-filed tax returns is quick and it saves time and efforts of both the taxpayer and the tax office. [3]
Enhanced accuracy
E-filing improves the correctness of data records and the tax filing procedure as a whole by preventing transmission errors and similar problems. [3]
Enhanced authenticity
Additionally, e-filing has made the tax filing process more legitimate and held the taxpayer and the tax office more accountable.
As e-filing allows for 24-hour communication during the tax filing process and/or confirmation of receipt or rejections are given within 24 hours, it increases the certainty of the process . [3]
Accessing Documents
When returns are filed electronically, the user is prompted to upload the required paperwork, generating a database that may be viewed at any time. [3]
Processing of Refunds
Taxpayers must file returns in order to receive their refunds. Today, you have digital mediums that allows for faster processing for tax filing services. You can benefit from e-filing by saving time and receiving your money sooner. [1]
Conclusion
E-filing income tax returns offers numerous advantages, including convenience, cost and time savings, enhanced accuracy, and better authenticity. It simplifies access to documents, speeds up refunds, and provides essential proof for loans, visas, insurance, and business funding. By ensuring timely filing, taxpayers can also carry forward losses and qualify for government tenders. Overall, e-filing makes tax compliance easier, faster, and more efficient, benefiting both individuals and businesses.
FAQs
What is e-filing of income tax returns?
E-filing is the process of electronically submitting income tax returns through the Income Tax Department's online system, making the assessment procedure simple and convenient. [1]
What are the ways to file income tax returns?
Income tax returns can be filed in three ways:
Manual filing:
Visiting the income tax office and submitting a physical copy.
E-filing intermediaries:
Agents, chartered accountants, or firms file returns on behalf of taxpayers.
Self e-filing:
Taxpayers file their returns online. [1]
How does e-filing help in getting loan approvals?
Banks and financial institutions require proof of income to process loans. Income tax returns serve as official proof of steady earnings, helping in the approval of home, personal, and vehicle loans. [2]
Can I get a tax refund by filing an income tax return?
Yes, if the tax deducted at source (TDS) exceeds your actual tax liability, you must file an income tax return to claim a refund. [2]
Why is an income tax return needed for visa applications?
Many embassies and consulates require copies of tax returns for the past couple of years as proof of financial stability when processing visa applications. [2]
How does e-filing improve accuracy?
E-filing reduces transmission errors and ensures that tax records are more accurate by eliminating manual data entry issues. [3]
Can business losses be carried forward if returns are not filed?
No, taxpayers can only carry forward business losses, rental losses etc to offset future income if they file their returns before the original due date. [2]
How does e-filing save time and money?
E-filing eliminates the need for paper submissions and manual processing, reducing costs and expediting the filing and refund process. [3]
Why is an income tax return important for term insurance purchases?
Insurance companies require income tax returns as proof of annual income to determine the coverage amount for term insurance plans. [2]
How does e-filing speed up tax refunds?
With digital filing, the processing of tax returns and refunds is faster ensuring that taxpayers receive their refunds sooner. [1]
References:
[1]https://www.indiafilings.com/learn/benefits-of-e-filing-income-tax-returns/
[2]https://cleartax.in/s/income-tax-return-filing-benefits
[3]https://corporatefinanceinstitute.com/resources/accounting/electronic-filing/
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