We are in middle of Tax Filing season and so it would be a good idea to discuss Many benefits of filing Income Tax Return India 2021.
Income Tax Filing in India is compulsory for individuals only when their taxable income is more than Rs 2,50,000. Besides, individuals paying towards consumption of electricity more than Rs 1,00,000 or those who have undertaken foreign travel for over Rs 2,00,000 are also required to file a tax return.
However, there are many other benefits pursuant to filing the tax return even if you earn below the taxable limit. Here are 5 such Benefits.
1. Getting Income Tax Refund
Passive income sources such as term deposit interest or dividend income is liable to income tax deduction (TDS). For many individuals these could be exempt if it is below the threshold. Most of the individual taxpayers having only the above-mentioned income would need to file the tax returns for claiming refund of taxes. Even in the cases of salaried taxpayers where excess taxes are withheld, filing of returns would be mandatory to claim the refund of excess taxes. By filing an ITR online, the refund of taxes can be claimed in the individuals bank account that is KYC-compliant.
2. Processing of Loans, Insurance Policies & Credit cards
Income-tax return is a very important document for the purpose of processing various types of applications. For example, at the time of lodging an application for processing of a house or auto loan, bankers need the copies of tax returns filed to verify the individual’s sources of income. The tax returns filed on prudent basis help in smooth processing than having to explain why returns for certain years were not filed. Besides securing a loan, the income tax return helps in the processing of obtaining credit cards, insurance policies, etc.
3. VISA Application for Foreign Countries
Where individuals are planning to take up a job or conduct business visits outside India, the immigration authorities request for copies of tax returns filed in the past. The tax return filing ensures in smooth processing of VISA applications as immigration authorities then deem the individual as tax-compliant. It is seen that certain embassies that of the US, Canada, the UK, etc. are particular about the tax return records of the individual.
4. Carry Forward Losses
Filing of tax return within the due date is mandatory to claim specified losses for an individual taxpayer, such as losses from capital gains, business, or profession, etc. By opting to file tax returns, not only does it benefit the individual to claim the losses carried forward in future years, but it also serves as a document to track losses that can be claimed in the future. For example, an individual taxpayer who makes a profit from the sale of mutual funds or equity shares can adjust these profits with losses incurred in the past by filing tax returns on time.
5. Acts as a Valid Proof of Income
Self-employed taxpayers do not have any proof of income unlike salaried individuals who receive a salary certificate in Form 16. Therefore, the income tax return serves as a proof of income for these self-employed taxpayers with detailed break-down of income and expenses incurred by these individuals during any financial year. Besides, self-employed taxpayers can also furnish these documents before various forums as proof of income.