‘Income tax return’ is a form in which taxpayers declare details of income, deductions, exemptions, and taxes payable on their taxable income. Filing income tax returns is mandatory to claim tax deductions under Section 80C, 80D, etc. and other eligible exemptions like long-term capital gains exemptions, which may eventually bring your taxable income to zero.

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Bene ts Of Filing Income Tax Returns
India Tax
Jul 24 · 4 min read
Individuals whose annual income is in excess of the basic exemption limit of Rs 2.5
lakh must mandatorily file their income tax returns. Even when there is no tax liability,
an income tax return (ITR) must be filed if the total income exceeds the above-
mentioned threshold.
‘Income tax return’ is a form in which taxpayers declare details of income, deductions,
exemptions, and taxes payable on their taxable income. Filing income tax returns is
mandatory to claim tax deductions under Section 80C, 80D, etc. and other eligible
exemptions like long-term capital gains exemptions, which may eventually bring your
taxable income to zero.

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Filing ITR not only keeps you tax-compliant, but also offers the following
benefits:
1. Filing ITR avoids penalties
Effective from FY 2017–18, the Income Tax Department levies a penalty of Rs 10,000
under section 234F on individuals who do not file their income tax return. Filing ITR
on time avoids unnecessary penalties. Even though the penalty has been kept at Rs
1,000 if your annual income is not more than Rs 5 lakh, as a law-abiding citizen, it is
your duty to file your tax returns.
2.ITR receipt is a very important document
You need to preserve ITR receipts carefully as they are very important proof of your
income and of payment of your taxes. It is much more detailed than Form 16. It
contains your total income details and has details of your income from other sources.
3.ITR receipt is a useful document for hassle-free processing of bank loans
Most banks and NBFCs ask for ITR receipts of the latest three years when you apply for
high-value loans like home and car loans. Lenders consider ITR as the most authentic
document supporting an individual’s income. Hence, you should regularly file income
tax returns if you are planning to avail home or car loans in the future.

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4.Visa processing
Embassies of developed countries like the United States, United Kingdom, Canada, and
Australia ask for ITR receipts of the past years to process your visa application. They
are very particular about your tax compliance and hence, you are asked to furnish past
ITR receipts. This helps them assess your income and ensure that you are able to take
care of the expenses on your trip.
5.Compensate losses in the next financial year
Individuals cannot carry forward losses of the current financial year to the next
financial year until an ITR is filed. As per the income tax law, individuals are not
allowed to carry forward losses and set them off against future years’ income if the ITR
is not filed within the due date. Hence, it is important to file your income tax return on
time in order to claim the losses in future years.
Filing ITR on time is beneficial in many ways while keeping you tax-compliant. The e-
filing season has begun for the Financial Year 2018–19 and the due date is 31 July,
2019. Be a responsible citizen and file your taxes early to avoid the last-minute issues.
6. Claiming refund: There could be a possibility that there has been tax deducted at
source (TDS) on some investment made in the name of the individual. “If TDS has
been cut, one will have to file the ITR to claim refund of the same.

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7. Being a law abiding law abiding citizen: More than any other benefit, being on the
right side of law helps. “It is also recommended to keep the income tax department
informed about your income and taxability. This communication is only possible when
you file your ITR.
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