Top 7 Benefits of filing Income Tax Return on Time

Top 7 Benefits of filing Income Tax Return on Time 

In India, the income tax return (ITR) is only required to be filed if an individual's taxable income exceeds the exemption limit of Rs 2.5 Lakhs during a fiscal year. An individual doesn’t need to file a NIL tax return if the gross income is below this exemption limit.  

However, it is recommended to file a tax return even if your tax return is below the permissible threshold for a variety of reasons. If you have earned any income from any source in the financial year, it is always wise to file a tax return. But, why? Let’s have a look at some of the top benefits! 

Benefits of Filing Income Tax Return 

1. Claim Excess TDS  

Even if your income is not taxable, tax may be deducted from salary, FD or at any other source. For instance, if your overall income is less than 2.5 lakhs but you received Rs. 1 lakh from an FD in the bank, the bank should withhold 10% tax on this. In such a case, the tax deducted by submitting an ITR can be reimbursed. In layman language, an individual needs to file a tax return to claim any TDS deducted at the source. 

2. Application for VISA 

The inclusion of proof of ITR in a visa application lessens the likelihood of the application being rejected or marked problematic. The tax return demonstrates that the individual is a responsible citizen. These days, due to increased security concerns, several nations require ITR for visas. For example, when applying for a Schengen Visa, you must submit the returns filed in the previous three years, even if you have had no income for the three years. 

3. Setting Off Losses 

Filing a return, even if it is NIL, is required if you have a stock market loss that you want to carry on to the next year. Regardless of whether you receive any profit or not, you should file an ITR if you want to set off those capital losses. In addition, according to income tax regulations, if a person has invested in foreign stocks, they must file an ITR. 

4. As a Valid Address Proof 

The Income Tax Return is acceptable as proof of address. It can even be utilised to get an Aadhaar card. Address proofs are necessary for a variety of documents, including passports, visa applications, Aadhar cards, licences, and so on. Standard forms of identification, such as ID cards, are often ineligible for such documents. In such circumstances, your income tax return can be utilised. 

Additional Read: Overview of Income Tax Return 

5. Processing of Documents 

The income-tax return is an important document for processing applications for numerous purposes. For example, when submitting an application for a home or vehicle loan, lenders want copies of tax returns filed in order to verify the individual's sources of income. Aside from acquiring a loan, the income tax return aids in the application procedure for credit cards, insurance policies, and so on. A NIL ITR is a legal document that contains all of the relevant information about your financial situation. It is regarded as a reliable source of income and is accepted by all financial institutions.  

6. Genuine Proof of Your Earnings 

Employers typically provide Form 16 to their employees, which serves as verification of income. For self-employed or freelancers, the ITR filing form acts as genuine income verification. During the fiscal year, it contains a thorough breakdown of an individual's income and spending. 

7. For Buying Insurance with High Cover 

People are increasingly buying life insurance plans for more than Rs. 50 lakh. However, insurance providers will only approve it if you present them with your ITR records to prove your yearly income. The amount of coverage is determined by your working income, and ITR demonstrates to the insurance provider that you have a high income. 

Additional Read: 7 best tax saving options available for you 

How to File a Nil Tax Return? 

Filing zero tax returns is the same as filing normal income tax returns. Keep all required papers, such as Aadhar, PAN card, bank account data, Form 16, and investment details ready before filing your ITR. You may e-file your tax returns online in a few simple steps. 

Step 1: Sign in to an e-filing service. 

Step 2: Choose the correct ITR form that is applicable to you. 

Step 3: Enter your earnings and deductions. 

Step 4: File your tax return with the Income Tax Department. 

Step 5: Verify your ITR with any of the methods. 

As you can see, there are various advantages to filing an income tax return and paying income tax. By knowing your tax duties and paying them on time, you may play a role in nation development while also reaping all of the other benefits described above. 

Additional Read: How to Check Income Tax Refund Status Online