Filing an income tax return is as important as paying your income tax. E-filing your income tax return is one of the best ways to have authentic proof of your income. Moreover, regularly filing ITR also helps you create a good record with the Income Tax Department.
It is a must-do task for every individual to pay their income tax and file income tax return within the provided time every financial year. By doing this you can avoid the stress and embarrassment of receiving notices from the ITD.
Besides this, being tax-compliant has other benefits, like if you want to take a loan -for a vehicle, a house, higher education, etc.- then you will have to provide the receipts of your income tax return to process the loan. In case, you haven’t filed your ITR for 3 continuous years then the bank will not provide a loan.
Apart from this, a delay while e-filing income tax return can create many other problems too. According to the Income Tax Act of India, the basic limit of exemptions provided is Rs 2,50,000, for senior citizens the exemption limit is Rs 3,00,000, and for very senior citizens Rs 5,00,000 is the maximum limit of exemption. Thus, if one’s income is higher than these limits then they must file an income tax return. With the help of the online income tax filing process, one can file ITR in a very simple and hassle-free way.
E-filing your income tax return is very important and is beneficial in many different ways. Here is some insight into some of the benefits of filing an income tax return.
Many organizations deduct tax at source (TDS) on the salary earned by the employees. The tax deducted at the source often exceeds one’s tax liability and the employee can avail tax refund on it. But, without filing their income tax returns, the employees won’t be able to receive the tax refund. And, without proof of your income tax return, the income tax department will not be able to process the tax refund. So, it is very important to e-file ITR to avail your refund.
To Get Loans
As mentioned above, filing an income tax return helps an individual to take loans as all major banks ask for a copy of income tax return while giving a loan to any individual. The State Bank of India asks loan applicants for either a recent salary slip that has all the deductions, TDS / IT form 16, or a copy of the last two financial years’ ITR. Moreover, showing an ITR receipt copy is also helpful if the application of the loan is rejected or if an individual is not getting the required amount of loan.
To Carry Capital Losses Forward
Capital losses in a fiscal year are adjusted against capital gains made in the subsequent years. If you don’t file your income tax return, you will be unable to carry over any short-term and long-term losses. A long-term loss can be carried over for the next consecutive eight years. In a financial year, the long-term capital losses can only be adjusted against long-term capital gains. Contrary to this, a short-term capital loss can be adjusted alongside both short as well as long-term capital gain.
Processing One’s Visa
If a person wants to apply for a visa to travel overseas, then they are required to showcase the ITR receipts of the last few years to the foreign consulates during the visa interview. The income tax return receipt legitimizes the individual’s source of income in India and strengthens the case for visa approval. While traveling abroad either for business or leisure trips it is always suggested by experts to keep the income-related proof at hand, along with one’s salary slip, ITR receipt, and Form 16. In most cases, the requirement of income tax proof is specified by the consulates.
Purchasing a High Life Cover
In today’s day and age, buying high life coverage, be it of Rs. 50 lakh or Rs. 1 crore has become very common. However, to avail life coverage so high, one needs to verify the annual ITR documents. Almost all the major life insurance providers, especially LIC, ask for a receipt of one’s ITR if an individual wants to buy a term insurance policy with Rs 50 lakh or more as the sum assured.
All self-employed individuals like consultants, businessmen, and partners of a firm do not use form 16. Thus, the receipt of the Income Tax Return becomes much more important and a valuable document for them, under the condition that their yearly income exceeds the basic deduction limit of Rs 2.50 lakh.
For all types of financial transactions, income tax return receipt is the only income proof and tax payment for the self-employed.
Wrapping it up!!
Don’t wait until the last minute to file your online income tax return. Even if you think that you will not face any difficulty filing income tax returns at the last moment, you can make silly mistakes and can miss important information. So, as you pay your income tax regularly, you should file your income tax return before the completion of the financial year.