Investments

7 Benefits of Filing Income Tax Returns

06 Dec 2019 4 min read
Investments: 7 Benefits of Filing Income Tax Returns

If you are earning a specific amount which exceeds the exemption limit, (as mentioned in the below table) filing ITR is mandatory as per the guidelines of Income Tax Law. You are required to file the ITR within the prescribed time. Millennials, may find it daunting to file the ITR, but they forget the benefits which they are going to receive after filing the returns.

Tax rates for individuals below 60 years of age:

Taxable income

Tax Rate

INR 0 to INR 2,50,000

Nil

INR 2,50,000 to INR 5,00,000

5%

INR 5,00,000 to INR 10,00,000

20%

Above INR 10,00,000

30%

Internet is the modern age tool to gather information, with just a click. Reading, sharing, commenting are the trends that we all are practicing. Don’t we? Internet has it all. However, other than mentioned activities, we can use the internet for some productive tasks and filing an ITR (Income Tax Return) is one of them. You may find it difficult and time-consuming to file an ITR offline as it needs rigorous documentation and frequent visits to the ITR office. Hence, filing an ITR online is one of the most productive usage of the internet.

As per the Interim Budget presented by the finance minister, Honorable Mr. Piyush Goyal on Feb1, 2019, there were some major changes to the tax rates.

Under section 87A, if the net income is up to Rs 5lakh, it gives you the advantage of rebate on paying tax.

For the convenience of the user, the department has initiated the mechanism of e-filing, assisting in creating the system of tax paying.

Below listed are the advantages one will receive on filing the ITR

1. Income and address proof- 

 The first and foremost benefit of filing an ITR is the advantage of getting official income and address proof. Whenever we apply for any kind of loan or even at many places, we can get the leverage of presenting it as Income and address proof, which will have much weightage.

2. In claiming a refund –

An individual is required to file the return of the relevant assessment year by July 31, to claim the refund. One becomes eligible to file the refund of the excess tax during a financial year and claims if one has filed the return on time. Usually the scenario arises, if the advance tax, self-assessment tax paid is higher than the total tax liability of a taxpayer.

3. Hassle free loan approval-

To purchase one’s own home is every person’s dream. But getting home with your saving is not that easy due to rising cost of the property. So, we need a home loan as a financial assistance from a bank or financial institution. Major banks ask for ITR filing for granting any kind of loan. A person applying for personal loan or any kind of loan will get the advantage of negotiating the interest rates and will get the approval easily if he or she files an ITR. E-filing of return has made the life easier for getting the tax filed. It allows you to keep a record of filing ITR’s by investing only few minutes, eventually making your life easier. Additionally, it acts as a proof of your income.

4. Avoid Paying Penalties –

If, for any reason, you could not file the income tax return by the due date, you should definitely file before the end of the relevant assessment year that is 31st March. In order to avoid being penalized by the Income Tax department. It is necessary to pay the income tax before the due date mentioned. If you do not pay it on time, you will be penalized for it and charged Rs10,000, besides interest.  An interest rate of 1% will be levied on you every month after the due date, till the next date of filing the return.

If one has declared the sources of income in the tax return, one is exempted from paying the interest. The interest is charged on the amount of tax payable after adjusting pre-paid taxes like advance tax, TDS etc.

5. Carrying forward of losses-

If your income falls below the bracket of tax slab and if you are investing in buying or selling shares or in equity market, paying income tax gives you the advantage of it. Filing ITR helps you to carry forward the losses for eight consecutive years, and offset it against future gains and incomes. Therefore, it is necessary to file income tax return every year, without a break.

How To Save Income Tax

6. In owning foreign assets, ITR is mandatory-

Owning properties and assets, whether in India or in foreign, will always require financial documents. If you are residing in India and owning an asset in a foreign land, then it becomes necessary to file an ITR, irrespective of your income. It is compulsory to declare all foreign assets, whether it is movable or immovable. Failing which will invite fines and penalties. Furthermore, it is considered an economic offence.

7. Getting a VISA –

If you are planning to visit abroad for admitting your kid to pursue higher education or you are looking for job opportunities abroad, you will be required to furnish ITR documents. For a couple of years of VISA application, some embassies and consulates ask for Income Tax Returns. It is therefore necessary to keep filing the returns without break to avail the many benefits in different aspects of life.

It is necessary, we should make it a habit of filing the ITR, from the moment we begin earning. If our income falls under the tax bracket, filing ITR becomes mandatory.

File ITR and contribute in the nation’s growth.