Taxation is the government’s primary source of revenue, with income tax accounting for a significant portion of it. Most individuals believe that submitting an income tax return is only a legal responsibility. But did you realise that it also has several advantages too?
1. Easy Loan Approval
Filing your ITR can help you qualify for loans such as car loans (2-wheelers or 4-wheelers) and house loans. Major banks frequently want a copy of your tax returns as confirmation of your income statement. This is a required document for loan approval.
2. Claim a Tax Refund
Tax may have been deducted (TDS) from your income even if your total taxable income is less than the basic exemption level or you have no tax due for the year. In such circumstances, you must file an Income Tax Return to request a refund of TDS.
3. Income and Address Proof
Your Income Tax Return can be used as verification of your income and address.
4. Quick Visa Processing
When applying for a visa, most embassies and consultancies need copies of your tax returns from the previous several years. These documents are part of the requirements. As a result, it is important to file your ITR on time.
5. Carry Forward Your Losses
Losses can be carried over to future years if you file your return by the original due date. These losses can be adjusted against future years’ income, lowering your tax obligation. This benefit is not available until you file an income tax return.
6. Avoid Penalties
If you fail to file your tax returns as required by the Income Tax Act, the tax officer may levy a penalty of up to Rs. 5,000.
7. For Buying Term Insurance
To approve term insurance policies, insurance companies frequently demand applicants to provide their Income Tax Return (ITR) records as proof of yearly income. The coverage amount is defined by the individual’s wages, and providing the ITR allows insurance companies to analyze a person’s higher income level.
8. Request A Refund Of Excess Tax Payments
Even if your income falls below the taxable level, taxes may be withheld from your wage, fixed deposit (FD), or other sources. For example, if your total income is less than Rs. 2.5 lakhs but you get Rs. 1 lakh from an FD, the bank must withhold 10% tax from this amount. Individuals can request a refund for the tax deducted by completing an Income Tax Return (ITR). Simply put, submitting a tax return helps taxpayers to reclaim any taxes deducted at the source.
