Filing of Income Tax Return (ITR) is a yearly activity done by every responsible Indian citizen. Filing of ITR not only makes you responsible, but keeps a tab of your income and taxes that you are required to declare.
An ITR is nothing, but a proof of your income and the tax that every earning individual of India is liable to pay. If your gross income is more than the exempted limit an individual is liable to pay the mandatory tax.
What is an ITR?
It is a form that a person is supposed to submit to the Income Tax Department of India. It contains information about the person's income and the taxes to be paid on it during the year.
It is for earning individuals whose income falls under these: salary, income from house property and income from other sources. If the income doesn't exceed Rs. 50 lakh he/she is eligible for ITR.
The due date for filing Income Tax Return is the 31st of July (after the end of each financial year for which it has to be filed). This date may be extended by the Income Tax Department if people do not file their returns within the given time frame.
There are multiple benefits of filing an ITR, below is a list of a few:
Easy loan approvals
Yes, you heard that right. One of the primary benefits is that loans get approved easily. As the ITR document is one of the primary documents a lender asks for when one applies for a loan which helps the lender to identify your income stability for the last few years.
Additionally, showing a copy of ITR receipts also comes in handy if your loan application is rejected or if you are not getting as much loan as you want.
Even while applying for a housing loan, many Financial Institutions ask for Form 16 or even ITR receipts.
Claim tax benefits
Of course this the major reason why people apply for ITR to get tax benefits/tax refunds. If you have investments in tax saving schemes you are liable for a tax refund.
Quick visa approval
Countries like the USA, Canada and Australia among a few others ask for the ITR receipt of the last three years from the applicant. The purpose of seeking this information is to get assured that you have a stable income and you shall be able to manage your expenses in these countries.
Higher life insurance cover
As we all are aware of the importance of life insurance for our families. On presenting ITRs of the last few years you can increases chances of a higher insurance cover of Rs. 50 lakh or more.
Income and address proof
Filling of the income tax return can be used as a proof to assess your income and address.
If you are not filing your ITR or you are delaying this process, a tax officer can impose a penalty of up to Rs. 10,000 in case of delay or you are required to pay interest.
Ideally, an ITR should be filed by July 31st of any year to reap the benefits.