Five key benefits of filing your income tax return by the due date
Filing ITR is mandatory in order to claim deductions under Chapter VI and exemptions on long-term capital gains; but there are other benefits you need to know about
Many believe filing the Income-tax return (ITR) is not important if the earnings are below the taxable threshold. However, ITR works as proof of earnings and cumulative taxes, like TDS, charged to the person throughout the year. In India, ITR is mandatory to claim all deductions (Under Chapter VI) and exemptions on long-term capital gains arising from the sale of house, shares and other capital assets. If the total earnings exceed the exemption limits, the ITR must be filed.
However, there are many other benefits of filing ITRs on time. Here are five of them.
Getting bank loans
All the major banks in the country ask for a copy of tax returns. ITR gives the banks a fair idea about the source of an individual’s income. It enables taxpayers to get home and vehicle loans more easily.
Processing visa quickly
Most embassies and consulates ask for a passenger’s ITR of the past two years at the time of visa application. If the documentation is complete, it can help them process the application faster.
Carrying forward losses
According to provisions under the Income Tax Act, the losses incurred in the previous financial year can be set off against the gains made in the current year if the ITR is filed on time. The outstanding expenses can also be carried forward to the next year.
If the ITR is not filed on time, the tax officer reserves the right to impose a penalty of up to Rs 5,000 on the individual. The tax that banks deduct at source on the interest payable on fixed deposits (FDs) in case it exceeds a certain amount can only be refunded if the individual files his ITR on time.
Eligible to be used as address proof
The ITR can also be used as both address and income proof. It comes in handy while applying for memberships etc