Income tax return (ITR) filing is a mandatory task in India, and every individual with an earning capacity must file it every year. Such government tasks seem very time-consuming and monotonous, but they also bear certain benefits. Though the financial year begins in April and ends in March for income tax filing, the government extends the date. This year in 2023, 31 July is the last date to file an income tax return. Filing ITR is something that goes with the law; not only this, but it also helps one to acquire financial stability and sidestep any financial complications. It also serves as proof of income which is needed while applying for loans, credit cards, or any other financial services.
Here is a list of the top 10 benefits of Income Tax Return (ITR) filing in India
- Avoid penalty – Not filing income tax returns on time poses financial penalties. As we know, filing an ITR is mandatory, but if you pay after the due date, you may charge a monetary penalty of up to ₹ 5000/-. Additionally, the taxpayer has to pay the interest amount on the fine.
- Claim refund – There is a possibility that the tax has been deducted from salary or earnings even if the income of the tax payee falls under the basic exemption limit, or you might have no tax liability for that year. In such cases, filing an IT return can help you claim the return of TDS.
- Works as authentic evidence of income – Your income tax return document is genuine evidence of your income proof. Employers provide Form 16 to their employees as income proof. For professionals, self-employed or freelancers, income tax return filing works as a genuine income verification. It contains the entire breakdown of an individual income and spending for the whole of the fiscal year.
- Easy loan approval – Regular income tax return filing depicts a consistent income and shows that the individual is regularly paying the tax on time. Such consistency provides eligibility for loan approval. Any financial institutions you approach for a loan, credit card, cash credit, and bill discounting options demand your previous year’s IT return.
- Faster visa approval – A visa application can only get approved if you have filed your previous year’s income tax returns. Thus, your IT return document could help fasten your visa approval process. Many foreign countries check your income tax filing to ensure that you are financially capable of bearing the trip’s expenses and can afford to stay there.
- Buying high coverage insurance – Nowadays, people opt to purchase life or medical insurance policies of ₹ 50 lahks or above. The insurance company will not provide it until you show your ITR records that depict your annual income. The amount insured by the insurance policy is determined by specific criteria, and the insurer’s income is one among that.
- Startup venture funding – While seeking funds from outside sources like seed investors or venture capitalists for a new startup or expanding the existing company then, the investor first demands your ITR to enquire about the financial stability and profitability of your business.
- Establishing losses – According to sections 70 and 71 of the income tax act 1961, one can carry forward the failures of a particular year to the subsequent year. This means you can take your loss forward to the next assessment year. It allows you to pay off your losses from the future income of the upcoming fiscal year.
- Purchasing assets legally – By filing an income tax return, an individual has compliance with the law and thus avoids any legal complication. It further allows a person to legally purchase any asset, including a home, car, land, etc., and register them under his name without facing any legal issues.
- Presumptive taxation scheme – Under this scheme, self-employed people like doctors, lawyers, and architects can pay their tax on presumptive income by considering only 50% of their income as profit. They can get taxed accordingly if such income is between ₹ 50 lakhs to ₹ 75 lakhs. Businesses can also use this scheme, but the annual turnover must fall between ₹ 2 crore to ₹ 3 crore.
Conclusion
I hope you have understood the ITR filing benefits, and there is no reason for you to avoid filing it. Alongside extending the ITR filing date, the government has made the process of ITR filing very easy so that any newbie can even do it online. So, pay the taxes on time and acquire numerous ITR filing benefits.
