Why is IT Filing Mandatory in India
Why is IT Filing Mandatory in India
The Income Tax Act of India has framed laws to levy tax on taxable income earned by individuals, Hindu Undivided Families, Firms, Companies, LLP, Association of Persons, Body of Individuals and Local Authority. The law mandates filing of returns for any income earned above a specified threshold and those who fail to file their return face penalties under the law.
A taxpayer can file their return digitally or manually. However, it is mandatory for every assessee to quote their Aadhar number and link it with their PAN card while filing a Income Tax Return, irrespective of whether they are submitting the return electronically or manually.
Filing returns is not just a legal obligation, but it also offers many benefits to the individual. Filing returns gives you the chance to claim tax benefits under the law such as deductions, exemptions and rebates. It also helps in getting tax refunds, which can make up for a significant portion of the taxable income.
Besides this, banks and financial institutions insist on providing a copy of the tax return before processing loan applications, especially for home loans and vehicle loans. Credit card companies are another instance of institutions that demand a valid copy of the tax return to grant approval for a credit card.
Manual filing of returns involves visiting a tax office that is often crowded with people, thus making the whole process cumbersome and time-consuming for taxpayers. e-Filing, on the other hand, eliminates this burden by allowing taxpayers to file returns from the comfort of their homes. In addition, it is much quicker than the manual filing method as the returns are verified online through the e-verification system.
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