Every individual with an earning capacity in India has to pay their taxes and file their income tax returns every financial year. A financial year starts in April and ends in March, but the government extends the ITR filing dates to July and December. This year (2021–2022), the due date for filing income tax* was December 31st 2021, and the extended date is July 31st 2022.
 

Those who are salaried, self-employed, business persons, freelancers, Hindu Undivided Families (HUFs), and even companies have to file their income tax per the income tax* rules. The government stresses the importance of income tax returns by stating that any individual with an annual income above ₹2,50,000 should file their income tax returns, even though those with an income below ₹5,00,000 can get back their income tax* through tax* rebates.
 

Moreover, they even direct those having an annual income below ₹2,50,000 to file their income tax because of the added ITR benefits. Read on to learn more about the importance of tax returns and the benefits of filing ITRs on time.
 

Benefits of Filing ITR
 

Here are the benefits of filing ITR:
 

• Claiming tax* deductions/ rebates
  
  One of the most popular benefits of filing ITR is the tax* deductions/ tax* rebates you can claim every year. If your total taxable income is less than ₹5,00,000 in a year, then according to the annual tax slab, you can claim the tax* deducted at source (TDS) during income filing.
  
  Even though you have zero tax* liability, you still have to file your income tax returns before the due date per the rules. Even those who file taxes under form 4, like architects, doctors, and lawyers, claim 50% of their income as profit and claim benefits of income tax return if the income is below ₹50 Lakh.
  
  
• Quicker loan application approval
  
  Banks and non-banking financial institutions often ask for ITR receipts as of the previous year or three years as income proof during a loan application. The proof of income works as a powerful support document and establishes the borrower’s capacity to repay the loan on time and whether their current financial situation is stable.
  
  This is of core importance during loans like home loans, vehicle loans, student loans, credit card applications, and the like. Both salaried and self-employed individuals benefit from this because income tax documents are singlehandedly enough to issue loans sometimes. One essential document asked is your income proof.
  
  
• Faster visa approval to go abroad
  
  It is almost impossible to get a visa without furnishing income tax* receipts as proof of financial capacity. One of the main benefits of income tax returns is that they increase your chances of visa approval.
  
  Many foreign countries like the USA, Australia, Canada, France, and others require income tax* filing to assess whether you have the financial capacity to bear the expenses of the trip and fund the stay. Most embassies often see ITR filings as a way of establishing that you are well employed in India and are coming back to continue your life after a brief tour.
  
  
• Offsetting losses to subsequent years
  
  If any company or business incurs a monetary loss at any time during the financial year, they can carry forward their losses through income tax return filing in the coming years. Under Sections 70 and 71 of The Income Tax Act, 1961, there are clear provisions for forwarding losses to a subsequent assessment/ fiscal year.
  
  Losses can include losses from businesses or losses from house properties. In fact, you can carry forward losses from house property for 8 assessment years. However, to claim this benefit, you have to file the income tax return before the due date. You cannot be late for the ITR filing.
  
  
• Avoidance of penalties and punishments
  
  When you delay or don’t file your income tax, some penalties might come your way. For instance, for delaying ITR filing and filing the tax returns after the due date of the specific fiscal, you might have to pay a penalty of up to ₹10,000 as interest for delaying the ITR filing.
  
  Under section 234B of the Act, if a taxpayer has not paid tax* on time or paid less than 90% of their tax* liability, then they would become liable to pay interest at the rate of 1% per month till the date they finish the tax* filing.
  
  
• Income and address proof
  
  Many financial experts advise paying taxes even if your income is below ₹2,50,000 in a year. This is because you can unlock many benefits of filing ITR. This is because it acts as a valuable legal document and works as identity and address proof, apart from income proof. This can help you while applying for government documents like the Aadhar card or the purchase of a property.
  
  
• Life insurance tax* benefits
  
  
  One of the life insurance tax benefits is that you can claim tax* deductions through life insurance plans like term insurance, savings insurance plans, etc. You can claim up to ₹1,50,000 in a year from the premiums paid towards any form of life insurance under section 80C.
  
  The maturity proceeds or death benefits you receive are even tax-exempt under section 10(10D). Moreover, you get the protection of an insurance cover and, sometimes, the dual elements of savings and wealth creation. You can choose a Tata AIA life insurance policy tailor-made for your needs.

Conclusion

Paying income tax is mandatory for those who fall under the income tax slab. It is also a citizen's duty to the country to pay taxes as it contributes to its development. Many experts advise that even with no tax* liability, you should file ITR on time to enjoy the many benefits.

L&C/Advt/2022/Oct/2491