ITR (Income Tax Return) filing is an important process for startups, businesses, and professionals as it helps them to comply with the tax laws and avoid penalties. Some of the point-wise advantages of ITR filing are:
- Compliance with tax laws: Filing ITR is mandatory for businesses, professionals, and startups with taxable income. By filing ITR, they can comply with the tax laws and avoid penalties and legal actions.
- Claim tax refunds: If a business, professional or startup has paid more tax than their actual liability, they can claim a refund by filing ITR. This helps them to get back the excess amount paid as tax.
- Carry forward losses: If a business, professional, or startup incurs losses in a financial year, they can carry forward those losses and set them off against future profits. However, to carry forward losses, it is necessary to file ITR.
- Access to credit: Most financial institutions require ITRs as proof of income to sanction loans and credit facilities. By filing ITR, businesses, professionals, and startups can easily access credit and financial services.
- Proof of income: ITR serves as proof of income for businesses, professionals, and startups. It helps them to establish their income for various purposes, including obtaining visas, getting loans, and participating in tenders.
- Avoid penalties: If a business, professional, or startup fails to file ITR within the due date, they may be liable to pay a penalty. By filing ITR on time, they can avoid such penalties.
- Maintain financial records: Filing ITR helps businesses, professionals, and startups to maintain their financial records. It helps them to track their income, expenses, and profits, which can be useful for making business decisions and improving profitability.
- Increase credibility: By filing ITR on time, businesses, professionals, and startups can increase their credibility with their stakeholders, including customers, suppliers, and investors. It shows that they are transparent and compliant with the tax laws.