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ITR Filing: Filing Income Tax Return (ITR) is not only a legal obligation but also the responsibility of a citizen. This shows his contribution in the development of the country.
ITR Filing: Tax is the main source of income for the government and a large part of it comes from Income Tax. Most people think that filing Income Tax Return is just a legal obligation. But do you know that it also has many benefits.
Know the benefits of filing Income Tax Return (ITR) –
- Protects from penalty: Filing income tax return is mandatory for those individuals whose income exceeds the limit prescribed by the Income Tax Department. Those whose income comes under the ambit of tax can avoid penalties and legal proceedings by filing their returns on time.
- ITR required for tax refund claim: If you have paid more tax than required through TDS (Tax Deducted at Source) or advance tax payment, then you can claim refund by filing the return. This can prove especially beneficial if you have investments or expenses that fall within the scope of exemption. Even if someone’s income does not come under the tax net, still for some reason his TDS is deducted. In such a situation, if he wants his refund then it is necessary to fill ITR for it. That means, to claim tax refund, you are required to file ITR.
- Access to financial products: Many financial institutions, such as banks and NBFCs (Non-Banking Financial Companies) ask for ITR as income proof for approving loans. The habit of filing returns increases your credibility, which increases your chances of getting loans, credit cards and other financial products.
- Benefit of deductions and exemptions: By filing returns you can avail the benefits of deductions and exemptions available under the Income Tax Act. Such as, you can avail exemptions on investments in tax-saving instruments (Provident Fund, ELSS), on payment of insurance premiums, on donations to charitable organizations, and on home loans and education-related expenses.
- You can avoid investigation: By filing returns regularly, you can avoid investigation conducted by the Income Tax Department. It also helps in maintaining transparency in matters related to your finances.
- Financial Planning: Filing income tax returns provides a complete record of your financial transactions, sources of income and tax liabilities. This information is very useful in financial planning, budgeting and taking investment decisions.
- Government benefits: Some government welfare schemes and subsidies require proof of income, which can be shown through income tax returns. By filing returns, you become eligible for various social security benefits and subsidies provided by the government.
ITR is also necessary for insurance cover: If you want more insurance cover or for a term plan up to Rs 1 crore, insurance companies demand ITR from you. Insurance companies demand ITR to check the source of a person’s income and his repayment status. - ITR required for Visa: If you are planning to visit another country, then for this you will have to first obtain a Visa. While applying for visa, many countries ask for income tax return from you. Visa authorities may ask you for ITR of 3 to 5 years to grant visa to your country. Through ITR, visa authorities check what is the financial status of the person who is coming or wants to come to their country and whether he can afford to stay there.
