Why is ITR filing important for businesses?

  • 17-09-2022

Life is all about money which can be estimated through your income, and bank account. Life is all about numbers in your bank account and income. The filing of ITR is not only for declaring your income to the income tax department but also to avail several benefits. These benefits can be beneficial for you in the short and long-term period.

Benefits of filing ITR for businesses :

  • It helps as a legal document: it holds high legal value for the business. It is a government document. It acts as legal proof in 2 ways :
  1. IDENTITY PROOF: The return you fill can be used as identity proof in various scenarios such as while applying for an adhar card, or any other document. The government also accepts adhar as the address proof.
  2. INCOME PROOF: An ITR form consists of a detailed list of your income and accounts. The tax you have to file is calculated. ITR can also be used as income proof as some of the transactions like the purchase of property require you to show some proof of income.
  • Can help you claim deductions: To reduce the burden of tax on taxpayers and to encourage more people to pay tax, the government provides you some deduction in tax. TDS and rebates can also be claimed back. For this deduction, you need to file ITR and if you have not filed any ITR can you will be left from these benefits.
  •  Important document while applying for a loan: when you decide to apply for a loan this ITR file is important. One important document they ask for before you apply for a loan is income proof. Banks generally ask for ITRs for the last 3 years. This is to access your past and current financial situation which shows if you can pay the loan or not.
  • Helps if planning to go abroad: If you do not file your ITR then it can cancel your plans for going abroad. ITR document is the one item that is required by the countries you need to visit.
  • Avoid penalty and punishment: If you are eligible to pay taxes on your income and yet still fail to file an ITR then you may be charged. The income tax officer can charge you a penalty of Rs.5000 and other punishments can also be incurred on you if you do not file an ITR.

ITR filing is beneficial for businesses even if it’s small businesses or large ones. ITR can be useful in many fields and work as it contains multiple information or details about you and can be used in multiple sectors in multiple ways.

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