Benefits of Filing ITR: Claim Refunds & More

Income Tax Return (ITR) filing is a form in which you declare your income details, taxes payable on other income, deductions & exemptions for a particular financial year. As per the tax laws, individuals with taxable income or income above the basic exemption limit have to mandatorily file an ITR every year before the due date. Under Section 234F of the IT Act, not filing ITR before the due date can attract a penalty of up to INR 5,000 and result in other severe consequences.

Filing an ITR helps you to claim for tax deductions, thus reducing your tax outgo & growing your savings. But apart from this, there are additional income tax return filing benefits. Take a look-

The income stability of the borrowers is critical for the lenders. This is why borrowers must submit an ITR of at least three consecutive years when applying for loan products such as Home Loans, Car Loans, and Personal Loans.

Another top advantage of filing ITR is its ability to work as income proof. As detailed information about your annual income and the taxes you've paid is available on the ITR, it is one of the most-widely accepted income proofs. So, if you're required to submit an income proof somewhere, file the ITR and submit the receipt as your proof. 

The income and tax status of the applicant are vital for international embassies. So, if you're planning to visit a foreign country and are about to apply for a Visa, you'll mostly be asked to submit your ITR so that the embassy can easily analyse your income and tax status.

Another biggest benefit of income tax return filing is claiming tax refunds. You can file tax returns to claim your refund if you've paid a higher income tax than your actual tax liability. After verification, the tax department will deposit the refund amount directly into your bank account.

Any business can incur a loss in a specific financial year. As a business owner, you can compensate for the loss by filing an ITR. By following the ITR process, one can carry forward the losses to the next year. However, this compensation for losses is only possible if ITR is filed before the due date.

A Presumptive Taxation Scheme is one of the benefits of filing ITR. As per the Income Tax Act, self-employed individuals and professionals are required to maintain regular books of account and get the accounts audited. Small taxpayers can get relief from this tedious work by opting for the Presumptive Taxation Scheme, under which self-employed individuals can declare income at a prescribed rate at the time of ITR filing.

As mentioned in the beginning, late ITR filing could result in penalties. When you file the tax returns every year before the due date, you can protect yourself against such penalties and other severe consequences.

Under Section 80D of the IT Act, taxpayers can claim a tax deduction of up to INR 25,000 in a financial year on premiums paid towards a Health Insurance plan. Higher deduction limits are available for senior citizens. One of the leading benefits of ITR is allowing taxpayers to claim medical insurance deductions.

• Now that you know what is the benefit of income tax return file, don't forget to file your tax returns on time
• Even if your annual income is below the basic exemption limit, you can still file ITR to experience a host of benefits
• Apart from knowing ITR benefits and filing tax returns, it is also crucial for taxpayers to make tax-saving investments
• AU Small Finance Bank offers access to various tax-saving investments such as AU 5-Year Tax Saving Fixed Deposit, Life Insurance & others, thus allowing customers to reduce their tax burdens and grow their savings