An income tax (IT) return is an income tax form which you need to fill and submit it electroncially to the Income tax Department. In this form you need to give details of your income and taxes (taxes – that you may have paid or other people who may have deducted your tax). The income tax return forms are in various formats viz ITR-1, ITR-2 etc. Each form depicts a separate category of Income tax payers. You need not worry of your category as myITreturn handles it for you automatically.

Remember, Income tax is a Direct tax and you need to only report Direct Income (salary, pension, interest etc) and taxes paid on that Income. The tax return formats are predefined formats by the Central Board of Direct Taxes (CBDT- which is also called the Income tax Department).

The tax returns must be filed every year and must be filed by a specific date. If the return shows excess tax has been paid during a given year, you are eligible for a ‘income tax refund’, subject to the department’s interpretations and calculations.

Why should you File?

Many think that filing tax returns is optional and therefore dismiss it as unnecessary and burdensome. Filing tax returns is an annual event and is a moral and social duty of every responsible citizen.

Filing returns is a sign that you are responsible

The government mandates that individuals who earn a specified amount of annual income must file a tax return. Failure to pay income tax and file the income tax return will invite penalties from the Income Tax Department.

Those who earn less than the prescribed level of income can file their income tax return voluntarily.

Your loan or credit card company may want to see your income tax return

If you plan to apply for a home loan in future it is a good idea to maintain a steady record of filing income tax returns as the home loan company will most likely insist on it as a proof of steady income. In fact, you may even consider filing your spouse’s returns if you want to apply for a loan as a co-borrower. (myITreturn allows yu to handle your family income tax returns from a single login.) Even a credit card company may insist on proof of income tax return before issuing a credit 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 it’s voluntary.

If you want to claim adjustment against past losses, a return is necessary

Various losses incurred by an individual or a business cannot be shown for exemption in subsequent years for the purpose of tax calculation if your return is not filed. These losses could be 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 income tax return in a financial year. So it’s best to file returns regularly, because you never know when you may want to claim an adjustment against past losses.

Filing income tax returns may prove useful in case of revised returns

In case the assessee has not filed the original return, he cannot later file a revised return. Under the Income Tax Act, non-filing of returns can attract a penalty of Rs 5,000.