Planning to Miss Your ITR Filing? Check These Top 7 Benefits First

The Income Tax Act requires individuals and businesses who are earning above basic exemption limits to file an Income Tax Return (ITR). For individuals under 60 years, this threshold is Rs. 2.5 lakh per year. For senior citizens aged 60 to 79, it’s Rs. 3 lakh, and for those above 80, it’s Rs. 5 lakh. These limits are calculated before applying deductions like those from Sections 80C to 80U and Section 10 exemptions.

Moreover, it is worth mentioning that businesses (whether profitable or not) and individuals who want a refund on excess tax payments must file their ITRs. Now, if we talk about some major benefits of ITR filing, it can help you claim refunds for excess taxes paid and even make you eligible for loan applications.

In this article, we have covered 7 major benefits of ITR filing that you must know before skipping this year’s ITR:

• ITR filing allows you to claim refunds for excess TDS deducted.
• ITR strengthens your visa applications as it shows your financial stability.
• If you wish to carry forward and set off losses, you must file your income tax return.

Even if your total income is below the taxable limit, TDS may be deducted from sources like Fixed Deposits (FDs). For example,

• Say you earn Rs. 1 lakh interest income from an FD.
• Now, the bank will deduct a 10% tax on that amount.
• You can claim this TDS only through ITR filing.

Please note that your TDS can get reduced or remain unchanged in case you have a payable income tax liability,

Submitting ITR documents when applying for a visa can increase your chances of approval. Many countries, especially those with stricter immigration policies like Schengen countries, view ITR as proof of financial responsibility. In some cases, it is even mandatory to submit an ITR for the past three years.

ITR filing showcases your tax compliance, and it positively impacts visa applications by proving your financial credibility.

As per the Income Tax Act, ITR filing is mandatory if you wish to carry forward losses and offset them against future gains. Be aware that even if you earned no profit, you need to file the return to claim those losses in future years. This is particularly important for those with foreign stock holdings.

An Income Tax Return (ITR) serves as a “valid document” for address verification. It can be used to obtain important documents like:

• Aadhaar Card
• Passport
• Driving license

Often, an application for these documents requires reliable proof of address. In such cases, your ITR acts as an official and government-recognised source that confirms your residential address.

For salaried employees, Form 16 serves as proof of income, but for self-employed individuals and freelancers, ITR acts as evidence for verifying earnings. For the unaware, the ITR includes a detailed breakdown of a person’s:

• Income
• Expenses
• Financial activities

This document is specifically important for those without an employer-issued income certificate. That’s because ITR provides an accurate record of earnings.

When buying life insurance policies worth more than Rs. 50 lakh, insurance companies often request ITR records to assess your annual income. Here again, ITR serves as proof of financial capability and helps insurers check how much coverage you can afford. Without it, they may not approve high-value insurance.

When applying for a loan (say, car loan or home loan), banks request various documents, including “proof of income”. To satisfy this requirement, most banks ask for ITR records from the past three years. This helps them in:

• Assessing your financial history
  and
• Determining if you can repay the loan

To banks, the ITR provides an accurate picture of your income and financial status. Additionally, credit card companies also check ITRs before issuing credit as they always ensure you have sufficient income to handle credit repayments.

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