Generally, filing of Income Tax Returns by assessees is necessary, if their income exceeds the threshold limit of Rs. 2.5 lacs. However, it is still advisable to file ITR even if the income does not exceed the specified threshold limits to claim the benefits attached with it.
Also Read: Do I Need to File Income Tax Returns?
Benefits of Filing Income Tax Return
The benefits wrt to the filing of Income Tax Return are:
– Firstly, seamless processing of loans
–Â Secondly, valid document for income proof
– Thirdly, easy visa approval
– Fourthly, helps in claiming the tax refund
– Fifthly, loss compensation
– Sixthly, avoid penalties
– Lastly, responsibility towards the nation
Seamless processing of loans
When applying for a bank loan, the record of the previous three financial years’ Income Tax Return is considered. This is so because the assessee’s earnings and taxes paid provide a guarantee to the bank that the loan will be repaid.
Also Read: Tax Benefits On Home Loan: Know More At TaxHelpdesk
Identity Proof Of Income
In the case of salaried individuals, Form 16 is sufficient for proof of income. However, in the case of businessmen, professionals, consultants, partners of the firm, and other related individuals, ITR becomes proof of income and taxes paid.
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Quick Visa Approval
Most embassies and consultants require you to furnish copies of Income Tax Return filed for at least 3 previous years, at the time of visa application. This acts as a proof of your income and helps in quick visa approval.
Also Read: What Happens If ITR Is Not Verified Within 120 Days?
Claim TDS refunds
While the filing of Income Tax Return, an assessee has to report all the allowances received, investments made, details of deductions and other income that he has earned. Once he has stated all the amounts, his tax liability is calculated and refunds, if any are processed.
For instance, Ram aged 35 years is a salaried individual with having an income of Rs. 1,00,000/ month. He gets House Rent Allowance of Rs. 5,000/month. Further, he has made investments in LIC worth Rs. 1.5 lacs and has savings interest of Rs. 5,000/-.
Now, in order to claim TDS Refunds, he will have to file his Income Tax Return and he must mention all the details to claim the following benefits:
– HRA (under Section 10(13A))
– LIC deduction under Section 80C
– Savings interest under Section 80TTA
Also Read: Can you claim HRA even if you own a house?
If assessee has suffered losses during the current financial year, then he can carry forward those losses for the next eight subsequent years by the filing of Income Tax Return. Consequently, the loss can be set off against the future income to be earned. Therefore, filing of ITR in a way helps in reducing the tax burden on all the assessees.
If an assessee is liable to file Income Tax Return and does not file it, then he may get a notice from Income Tax Department. Additionally, it can also lead to paying interests and penalties of up to Rs. 10,000/-. Further, this amount is exclusive of the amount of the assessment findings.
Also Read: Pay Double TDS On Non-Filing Of ITR
For getting yourself insured
In order to buy a term policy worth Rs. 50 lacs or more, the Insurance companies ask for the income tax returns filed for ITR receipts. Hence, filing of ITR becomes important when it comes to buying of high end insurance cover.
Responsibility towards the nation
Time and again during every financial year, the Government of India through the budget mandates the filing of Income Tax Return. Even if the income does not exceed the exemption limit, the filing of ITR shows that you’re a responsible citizen of India. It also make it easier for the individuals to enter into subsequent transactions since their income is recorded by the Income Tax Department with applicable taxes, if any, having been paid.
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