As a responsible citizen, it is your duty to file your Income tax Return on time. However, before you do so, you must also keep an eye on the yearly changes in taxation norms and also tax slabs that will enable you to understand under which slab you fall, how much tax you owe to the government and how much refund you are eligible to receive. If you are a business owner, your responsibility doubles up and you must ensure that you file your tax returns on time.
Here, we give you a few important reasons that will help you understand why you should file your taxes on time.
1. Apply for a loan
There is no doubt that you need to have sufficient capital for the smooth running of your business. Whether you are a big business or a small business, some sort of financial assistance will help you in great way. Business loan is the best way to avail additional financial help for your business. You can utilize the loan to develop activities and expand your business. However, to apply for a business loan, you will have to submit the most recent income tax return as well as the calculation of income documents to the bank. Therefore, it is imperative that you file your taxes on time if you want to apply for a loan from the bank.
2. Avoids Penalty and Prosecution
As a business owner you must understand that filing tax is of utmost importance as you can attract severe penalties if you fail to do so. Additionally, there are also late filing penalties that can be levied in case you fail to file your returns on time. Therefore, make sure that you file your taxes on time if you do not want be penalised. Also, try and avoid evading filing your taxes as it will not help you in any way.
3. Carry forward losses
If you want to carry forward your business losses to the next year then it is essential that you file your tax returns on time. If you have a loss under the ‘Profit and Gains of Business and Profession’, you can carry forward it to the next year and set off the amount in the future income only if you file your tax on time. This will also help you in reducing your taxable income and reduce payable tax in the future years.
4. Government tenders
If you are a contractor, you stand a very good chance of procuring government projects only if you file your income tax returns on time. Unfortunately, not many contractors know about this benefit. To avail this benefit, you must ensure that you not only file your taxes on time but it also accurate and audited.
In most cases, the scrutiny committee checks up to seven years of your tax returns to determine if you are eligible to apply for government tenders. Therefore, it is imperative that you file your taxes well within time and avail the benefits of procuring government projects.
5. Claim depreciation
You can claim depreciation if you have assets in your name or your business’s name. However, the asset been claimed should be strictly used for business. Additionally, if you have not opted for the Presumptive Taxation Scheme, your taxable amount is calculated after taking in to account all the expenditures and allow for depreciation claim under section 32. So, if you can avail maximum profits if you file your returns on time.
6. Avail presumptive taxation scheme
The Presumptive Taxation Scheme helps reduce burden of paying taxes on small businesses by allowing them to pay tax only on a portion of their earning under section 44AD. Businesses earning less than Rs.2 crores can avail this scheme and pay taxes only on about 8% of their earnings. Business owners can avail the benefits under this scheme by filing their tax returns using ITR 4.
Filing of Income Tax returns can help you get several benefits that can help your business grow. Therefore, as a business owner, you must ensure to file your taxes on or before the due date.