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There's more to filing income-tax returns than just getting refunds.
Reason: your returns can also come in handy if you need a loan, mishap compensation, visas (for some countries), enhancement of credit limit on credit cards not to mention alimony.
Indeed, when a wife produces the I-T returns of her husband to get maintenance in a separation or divorce case, the court fixes the alimony accordingly.
So, as the annual ritual of filing returns for salaried individuals reaches its peak, with July 31 as the last date, here are some of its uses.
ASESSMENT FOR PERSONAL LOAN
A small-time contractor Suresh's (name changed) application for a car loan was rejected by a nationalised bank. It seems he could not furnish proof of income, either in the form of I-T returns (ITR), Form 16A or salary slip.
“As I get paid through raw receipts most often, I do not have any concrete proof of what I earn,” says Suresh.
A senior bank official says, “There is no rule or norms that reject an application for want of ITR, but if you do not have an unaudited/audited balance sheet, salary slip or Form 16A, ITR is the most authentic, legally certified paper to assess the financial strength of an individual.”
Tax experts agree. “Some taxpayers may feel that filing I-T returns is unnecessary, particularly when their taxable income is below the exemption limit. Well, legally there is no obligation, but surely this activity will help them in the years to come, especially if they apply for loans,” said tax expert, Mr Subhash Lakhotia.
ACCIDENT COMPENSATION
Courts also decide on the compensation for family members of accident victims. Either they consider the present earnings of the victim, based on the information provided by the family, or his/her age, or the number of dependents etc.
The figure arrived at on the basis of these are, quite often, contested by insurance companies, resulting in legal cases dragging on for years.
“If a court finalises compensation on the basis of ITR, it is not easy to contest it,” says a lawyer. ITRs are always considered to authentic documents, he added.
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