ITR is a form that taxpayers use to report the details of their income, the tax liability on that income, exemptions, and deductions for a particular financial year. ITR must be filed by anyone having taxable income for many reasons, especially for claiming tax deductions.
There are many other benefits to filing the ITR on time. Here is what you can get by filing ITR within the due date.
No fines and penalties
If you file your Income Tax Return (ITR) on time, you can avoid the high penalties and fines that come with filing your ITR late or missed ITR filing. If you fail to file ITR by the deadline for filing your income tax return (ITR) as specified by the Govt., you could be subject to a tax penalty of up to Rs. 10,000 in addition to the income tax.
No interest charges
If you delay submitting your ITR, you may also be required to pay the outstanding tax amounts that have not been paid. Under Section 234A of the Income Tax Act, these unpaid amounts are subject to a monthly interest payment of 1%.
Protection against legal action
If you do not file your ITR as required to avoid paying taxes, legal action may be taken against you. You can defend against any potential legal action taken against you by timely filing your ITR.
Additional TDS claim
Even if you do not have taxable income, taxes might still be collected from sources such as your salary, fixed deposits, or any other source. If you have a total income of less than 2.5 Lakhs but earned 1 Lakh from a fixed deposit in the bank, the bank is required to retain 10% tax from the amount that you received from the fixed deposit. In this scenario, the tax credit that was obtained by submitting an ITR is eligible for reimbursement.
Easy approval of a loan
If you have a clean history of filing your income tax returns, you should be fine getting approved for loans from financial institutions and avoid unnecessary complications. When you ask for a loan from the bank, they will require you to provide documentation of your income in the form of a copy of your income tax return (ITR).
Proof that you filed your income tax return for the assessment year is typically required to get approved for any loan. Individuals not filing income tax returns may face greater difficulty borrowing loans from financial institutions.
Easy Visa approval
Suppose you have proof of your income tax returns when you apply for a VISA, and the authority reviews your case. In that case, there is a minimal probability that the authority will deny your application for a VISA. As a result, the income tax return, often known as the ITR, is an essential document. In addition, due to an increase in the number of countries' security concerns, obtaining a visa in many countries now requires verification in the form of an ITR.
Acts as an Address proof
The Income Tax Return can be used as proper documentation to verify your address. Even an Aadhaar card can be obtained with the information acquired utilizing it. Proof of address is necessary for a variety of official documents, including Aadhar cards, licenses, passports, and other similar documents. The majority of the time, these documents do not acknowledge conventional forms of identification, such as ID cards. In situations like this, you might make use of your Income Tax Return.
Refund of taxes
Filing your ITR on time can get you a tax refund or take advantage of any applicable tax credit. However, failing to file the ITR will not allow you to claim a tax refund, even if you are qualified to do so.
Carry forward losses
There is a provision that allows taxpayers to carry forward losses from one year to the next year according to Section 139(1) of the Income Tax Act 1961. You will not be allowed to carry forward or set off any losses and deduct them against other income if you do not file an income tax return within the deadline.
Scholarship benefits
An Income Tax Return is seen as a source of income documentation by a variety of authorities, including both government and private. For instance, you can use an ITR to prove your eligibility for a certain institute or university's scholarship program. The ITR assists in determining whether or not a prospective student is able to provide evidence of their income, plus insurance companies recognize them as valid documents.
Purchase of high-coverage insurance
There has been an increase in the number of persons acquiring life insurance plans with a face value of more than 50,000. On the other hand, insurance providers won't take it seriously unless you provide them with records from your ITR that demonstrate your annual income. The amount of coverage you receive will be based on your working income, and providing your ITR clarifies to the insurance company that you make a significant amount of money.
Start-up venture funding
When starting a new business or expanding an existing one, you may find that you need finance from outside sources such as venture capitalists or seed investors. These investors may request the particulars of your ITR in order to assess the financial stability and profitability of the company. They could also use your ITR forms to verify the authenticity of the information that is present in the audited report.
Filing an income tax return is not only our obligation as responsible citizens for our own personal advantages, such as obtaining tax exemptions, but also the filing of an ITR should be our top priority for the development and advancement of both our country and our economy.
