Is it mandatory to file IT return?

The government has made it a mandatory step for people with annual earnings more than 10 lakhs to electronically file their income tax returns.

A statement issued by the Finance Ministry, Government of India, said that as per the Central Board of Direct Taxes (CBDT) notification, e-filing was made compulsory for the assessment year 2012-13 onwards, for an individual or a Hindu Undivided Family if the total income exceeded Rs. 10 lakh with July 31 being the deadline for filing returns for the fiscal ended March 31, 2012, 

Separately, the notification also states that  an individual or a Hindu Undivided Family (HUF), being a resident, having assets (including financial interest in any entity) located outside India or signing authority in any account located outside India and required to furnish the return in Form ITR-2 or ITR-3 or ITR-4.

However, digital signature will not be mandatory and these taxpayers; they can transmit the data in the return electronically, and thereafter submit verification of the return in Form ITR-V.

Source: http://finmin.nic.in/press_room/2012/CBDT_eFiling_IncomeTax.pdf

As of now, business houses with receipts of Rs. 60 lakh and professionals with an income of Rs. 15 lakh are mandatorily required to e-file their returns with digital signature.

According to the statement released by the Finance Ministry dated July 02, 2012, The Income Tax Department has received a record number of 1.64 crore income tax returns electronically in the year 2011-12. E-filing is an easy, fast and secure method of filing of income tax return. The electronically filed returns are processed at the Centralized Processing Centre, Bengaluru (Karnataka). The processing for e-filed return is faster and taxpayers get their refunds, if due, quickly. The Department also provides some value added services like tracking of refunds, viewing tax credit status (Form 26AS), e-mail and SMS alerts regarding status of processing and refunds to taxpayers who e-file their returns.

IT returns:

Most of us think that Tax filling is a traumatic experience but it is not so. Although the government has not made it mandatory to file the IT return but one should definitely try file IT return as it helps a person with many benefits.

The first reason why one should definitely file income tax returns because it ensures that the person is compliant with Indian tax laws. Secondly, the IT return will help as a standard income proof for the individual. If someone is seeking education or employment abroad, then this income tax return will act as a standard income proof.

Moreover, IT returns will help the person to speed up the loan application process from different financial institutions, because the IT return will act as a proof of the person’s repayment capability.

Lastly, Income tax return helps to reduce tax liability too. Extra tax paid by the way of TDS can be refunded only by filing tax returns.