• Invest
    Investment Suite
    Stocks
    Mutual Funds
    Future and Options
    IPO
    Exchange Traded Funds
    Commodity
    Stockcase (Stock Baskets)
    Currency
    Non Convertible Debentures
    Sovereign Gold Bond
    Exclusive
    NRI Account
    Private Client Group
    Features
    SipIt
    MTF
    Investment Suite
    Exclusive
    Features
  • Platform
    Product Suite
    Kotak Neo App & Web
    Nest Trading Terminal
    NEO Trade APIs
    Features and Tools
    MTF
    Securities Accepted as Collateral
    Margin Requirements
    Equity Screeners
    Payoff Analyzer
    Calculators
    SIP Calculator
    Lumpsum Calculator
    Brokerage Calculator
    Margin Calculator
    MTF Calculator
    SWP Calculator
    CAGR Calculator
    Simple Interest Calculator
    ELSS Calculator
    Step up SIP Calculator
    All Calculators
    Product Suite
    Features and Tools
    Calculators
  • Pricing
  • Research
    Research Calls
    Long Term calls
    Short Term calls
    Intraday calls
    Derivatives calls
    Pick of the week
    Top Monthly Picks
    Research Reports
    Fundamental Research Report
    Technical Research Report
    Derivative Research Report
    Research Calls
    Research Reports
  • Market
    Stocks
    Market Movers
    Large Cap
    Mid Cap
    Small Cap
    Indices
    Nifty 50
    Bank Nifty
    FinNifty
    Nifty Midcap India
    VIX
    All Indian Indices
    Mutual Funds
    SBI Mutual Funds
    HDFC Mutual Funds
    Axis Mutual Funds
    ICICI Prudential Mutual Funds
    Nippon India Mutual Funds
    All AMC's
    IPO
    Upcoming IPO
    Current IPO
    Closed IPO
    Recently Listed IPO
    Stocks
    Indices
    Mutual Funds
    IPO
  • Learn
    Resource
    Market Ready
    Kotak Insights
    Infographic
    Podcast
    Webinars
    Youtube Channel
    Quarterly Results
    Investing Guide
    Demat Account
    Trading Account
    Share Market
    Intraday Trading
    IPO
    Mutual Funds
    Commodities
    Currency
    Futures & Options
    Derivatives
    Margin Trading
    Events
    Budget 2024
    Muhurat Trading
    Share Market Holiday
    Market Outlook 2024
    Resource
    Investing Guide
    Events
  • Partner
    Business Associates
    Fund Expert
    Kotak Connect Plus
    Startup connect
  • Support
    FAQs
    Circulars
    Bulletins
    Contact Us
    Forms Download
    Get your Statement
​

Benefits Of Filing Income Tax Returns

  •  5m
  • 0•
  • 06 Feb 2023

Putting off income tax payments can have difficult implications for you. Besides, filing your income tax returns (ITR) on time every year can have some benefits

ITR is a form that you use to file information about your income and income tax liability. The form is submitted to the Income Tax Department.

Indians are expected to file their ITR every year. Herein, they have to state the income they have earned during the year, whether as an individual or a business entity. The income could take the form of salary, dividends, interest, and capital gains, among other things.

If an individual fails to file their returns within the stipulated time, a penalty may be imposed. In some cases, it may attract scrutiny from the Income Tax Department.

If excess tax has been paid during a given year, the assesse may be eligible for a tax refund. This would be subject to the Income Tax Department’s interpretations and calculations. To make tax compliance easier, taxpayers have been categorised into many groups based on income earned and its source.

Read more: Claim refund if excess TDS is deducted

Timely ITR filing brings certain key benefits. Here are a few of them:

  • Quicker Loan Processing

If you are applying for a loan, you may need to submit proofs of filing your ITR for the last three years. This would help the bank to assess your financial situation and capability to repay the loan. Submitting these documents could also reduce the time taken to process your loan. This holds for the processing of credit cards as well.

  • Essential For Visa Applications

Planning to travel abroad? You will have to get a visa first. For this too, you would be required to submit ITR proofs. This is to ensure that you are financially stable. Should you wish to travel abroad, especially to the USA, Europe, or Canada, you would need to submit your tax returns for the past few years when applying for a visa.

Read more: Reason to file ITR

  • Helps In Carrying Forward Losses

The losses incurred by an individual or a firm in a financial year can be carried forward to the next year if required. Such losses may be filed under ‘profits and gains of business and profession’ or ‘income from capital gains’. But this benefit is available only if you have filed your ITR before the due date. If you file later than that, there may be a chance of losses not being carried forward.

  • No Hassles Of Late Filing

Filing your ITR on time helps you avoid the penalties. There is also the benefit of being able to revise your ITR if required.

  • Third-Party Accidental Claims

Say, you wish to claim insurance in case of an accident. Insurance companies typically require your ITR proofs to start legal proceedings. Should you fail to furnish the ITR details, your claim amount could be reduced. Depending on the case, your claim may even be rejected.

Read more: Tax fundamentals

  • Fund Procurement For Start-Ups

Planning to start a business or to expand an existing one? You may need capital from external sources like seed investors or venture capitalists. Such investors may ask for your ITR details to assess the financial soundness and profitability of the business. Your ITR forms would also help them to cross-check the figures presented in the audited report.

  • Benefit For Freelancers And Independent Professionals

People who work as freelancers or are self-employed do not receive Form 16. Often, the only document that proves they have filed income tax is their ITR. Without this proof in place, they could face funding issues and transactional problems.

  • Buying A High Life Insurance Cover

Your ITR can help you get a high life insurance cover. Insurance companies may not extend this benefit to you if they feel you are a tax evader.

Read more: Investments to declare to get tax exemption

Filing an ITR does not mean that you will need to pay huge amounts of tax. In fact, you can make it work in your favour by making wiser investments. The following investment options can help you to reduce your tax outgo.

  • Tax-Saving Mutual Fund

Equity-linked savings schemes (ELSSs) are tax-saving mutual funds. These plans bring you equity exposure and an opportunity to earn higher returns. The funds come with a lock-in period of three years. You can invest in these through a lump sum investment or via a systematic investment plan (SIP). In either case, you would be eligible for a tax deduction of up to Rs 1.5 lakh under Section 80C. The dividends and the amount received on maturity are also tax-free.

Read more: Taxes on mutual funds and inherited mutual funds

  • Life Insurance

Under Section 80C, premiums paid on life insurance policies bring tax benefits of up to Rs 1.5 lakh. This holds true for term insurance, unit-linked insurance plans (ULIPs), and other types of life insurance. Besides, any income you receive from the policy (including bonuses and surrender value) are tax-exempt under Section 10 (10D).

  • Health Insurance

Premiums paid for health insurance plans are also eligible for tax deduction under Section 80D. You get a Rs 25,000 deduction for yourself, your spouse, and your kids. An additional Rs 25,000 deduction applies if you get health insurance for your parents. This goes up to Rs 50,000 if your parents are senior citizens.

  • Public Provident Fund

Public Provident Fund (PPF) has a lock-in period of 15 years. The maximum amount one can contribute to PPF in a year is Rs 1.5 lakh. This entire sum can be claimed as a tax deduction under Section 80C. The amount you receive on maturity and any interest earned are also tax-free.

  • National Pension Scheme

Investment in the National Pension Scheme (NPS) brings a tax benefit on Rs 50,000 of investment per year. This is in addition to the Section 80C deduction and you can claim it under Section 80CCD (1B).

Conclusion

As you can see, there is good reason for you not to fear the ITR filing exercise every year. Pay your taxes and file your returns on time. The benefits make all the difference.

Read more: Right time to start tax planning

Did you enjoy this article?

0 people liked this article.

What could we have done to make this article better?

Read Full Article >
Enjoy Free Demat Account Opening
+91 -

personImage
Enjoy Free Demat Account Opening
+91 -