The past week has been rather busy for me. I prefer filing my taxes as soon as my accountant frees up. Ergo, I rushed to my accountant to file my Income Tax Returns (ITR) for the income earned in FY 2017-2018. My statements alone amounted to a ton of paperwork and I spent a good few days organising everything and printing it out for audit purposes.
The picture is what I was left with at the end of the print job. Filing returns is very important, especially if you operate in the world of cryptocurrencies from India. There's a lot of uncertainties in this space if you are an Indian citizen residing in India but with clean paperwork and regular tax filing you can breathe easy.
I'm not a fan of taxes on personal income but I'm very particular about filing my paperwork. I've filed my first IT Returns about 9-10 years ago at the age of 20-21. I wasn't aware that I could have filed it sooner even as I worked small gigs to fund my expenses and travel during my college years. But it has been an interesting journey since then.
As a self-employed individual I've found it extremely beneficial to have my paperwork in order. I'm very meticulous about this. However, I don't prefer to do the audit and filing returns part by myself (even thought its possible) as my work involves some complexity that requires a very good accountant to look into the details.
Fortunately for me I also happen to have a good understanding of these things from doing it from an early age. Most people I've known don't generally bother doing it and it's not something which is taught to us in school. Fortunately for me, I have an excellent accountant who also happens to have some understanding of cryptos after last few years of discussions and auditing.
Filing your returns on a regular basis and declaring your income and expenditures allows you to get a good grip on your personal finances. This can have a positive impact on your life if you and help you plan your investments and work on your savings.
Benefits Of Filing Your IT Return
There are some benefits of filing your returns even if you are below taxable bracket. I certainly was! When I first began filing my IT returns, my income barely reached the first taxable slab of it's time. But it helped to have an IT returns because it was proof that I had some earning and that opened up some doors for me along the way.
I'm a self-employed individual and I write these out of my personal experiences.
Travel & Visas - As someone who loves traveling frequently this is one of the biggest upsides. Most places such as USA, Europe, UK, Canada etc require 2-3 years of IT Returns. It's almost mandatory in some cases. Having your paperwork in places makes a big difference on your visa application. The chances of getting a longer term visas are likely with good ITR.
Credit Cards - You can easily get a credit card if you have your ITR. If your income is good then you can get higher credit limits and better credit card features. It's difficult to get a card without ITR and you may be required to keep a collateral to get one incase you don't have an ITR.
Bank Loans - Loan processing is a lot faster and easier regardless of the type of loan you are looking for with your ITR in place. Filing returns allows the banks to understand your financial situations which makes it easier for both parties. In India it's a common to get married at a younger age. In these cases, many are burdened with the responsibility of buying a car or taking a home loan. ITR makes it easier to procure a loan for many purposes.
Business or Loss of Capital - If you have any capital loss or business loss you can carry it forward for upto 8 years. By filing your returns you can adjust your losses against your income. You can also carry these losses forward and adjust a certain amount each year.
Tax Deductibles - You can reduce your taxable income if you have made investments that allow for these deductions. There are certain sections in the tax law that allows you to adjust your taxable income. Filing your returns is mandatory to claim these benefits.
Avoid Penalties - Since our PAN and Adhaar Cards are linked to nearly every account we use for transacting, it is wise to remember that all legal transactions are tracked by the government. You might not get a notice today but eventually the IT department will catch up with you if you didn't file your returns and pay your taxes to the government. It's best to file it on time and avoid paying any interest on penalties under Section 234A.
Tax Refunds - If you are employed in a salaried job you are likely to have your tax deducted at source (TDS). You can claim this amount by filing your returns. Going back to Point 5. If you have made any investments that are approved by the government, your taxable income lowers and you may pay little to no taxes depending on your level of income.
Disclaimer: This is not a tax or accounting advice. I'm writing this purely from my personal experience. I would recommend you to speak to a certified accountant and figure out how you can plan your own investments and savings as well as filing returns. Please do your due diligence as tax and accounting laws keep changing frequently. Your auditor can guide you better.
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