Benefits of Filing Income Tax Return

Blog Single

Top 10 Benefits of Filing Income Tax Return in India

1) Excess TDS Claim

Tax can be taken from your salary, Fixed Deposit, or any other source, even if your income is not taxable. For instance, if your total income is under ₹2.5 Lakhs but you received ₹1 Lakh from an FD in the bank, the bank is required to deduct 10% tax from this amount.

In this situation, the tax that was subtracted by filing an ITR can be repaid. In plain English, a person must submit a tax return in order to claim any TDS that was taken at the source.

2) VISA Application

The likelihood that a visa application will be rejected or flagged as problematic decreases if ITR documentation is submitted with the application. The tax return illustrates the person's civic responsibility.

Several countries now demand ITR for visas due to rising security concerns. For instance, even if you had no income during those three years, you must submit the returns from the previous three years when applying for a Schengen Visa.

3) Establishing Losses

If you want to carry over a loss from the previous year's stock market, you must file a return, even if it is NIL.

If you want to offset those capital losses, you should file an ITR whether you obtain any profit or not. Additionally, if a person owns foreign stocks, they must file an ITR in accordance with income tax regulations.

4) A Reliable Proof of Address

The Income Tax Return is valid as address verification. Even an Aadhaar Card can be obtained using it. Aadhar Cards, licenses, passports, and other documents like those are all required to have address proofs.

Frequently, these documents do not accept common forms of identification like ID cards. Your Income Tax Return can be applied in such cases.

5) Authentic Evidence of Your Earnings

Form 16 is typically given by employers to their employees as proof of income. The ITR Filing form serves as actual income verification for self-employed or independent contractors.

It includes a thorough breakdown of a person's income and expenses for the entire fiscal year.

6) For Purchasing High Coverage Insurance

More people are purchasing life insurance policies for over ₹50 Lakhs. However, insurance companies will not accept it unless you show them your ITR records that show your yearly income.

Your working income will determine how much coverage you receive, and ITR shows the insurance company that you make a lot of money.

7) A Crucial Document for Loan Application

The bank requests certain documents from you when you apply for a loan to buy something, like a car or a new home for your family or business. Aadhar Cards, PAN Cards, Licenses, Photo Identification, etc., are some of the documents that might be required.

Additionally, your income proof is one important document that is requested. ITR for the previous three years was frequently requested by banks. This is done to determine whether you will be able to repay the loan given your past and present financial circumstances.

ITR is helpful not only when requesting bank loans but it can also help you apply for a credit card. Before issuing you a credit card, credit card companies will also request your prior earnings and tax returns.

8) Scholarship Advantages

Various authorities view an ITR as a source of income documentation (both government and private).

For instance, you can submit an ITR to claim specific institute and/or university scholarships. The ITR aids in establishing the prospective student's ability to prove their income, and insurance companies also accept them as acceptable documentation.

9) Funding for Startup Ventures

When planning to launch a new company or grow an existing one, you might require funding from outside sources like venture capitalists or seed investors.

These investors might inquire about the specifics of your ITR in order to evaluate the business's financial stability and profitability. They could cross-check the data in the audited report using your ITR forms as well.

10) Benefits for Independent Contractors & Professionals

Self-employed or independent contractors do not receive Form 16. Their ITR is frequently the only record that demonstrates they have filed income taxes. Without this evidence, they might run into funding problems and transactional issues.