12 Major Benefits of Filling ITR in India

12 Major Benefits of Filling ITR in India

Every Indian citizen has to pay tax to the government on their income as per income tax rules and regulations. Income tax is the source of revenue for the government.

Individuals who earn income are required to pay an income tax on such income.

Many people don't know these amazing benefits so we prepared a list of all the benefits of filling ITR not only helping in nation building but also many financial benefits you get.

What is Income Tax Return?

"As per the Income Tax Act, 1961, income tax return contains the provisions of filing an income tax return. It is a form in which the assessee furnishes information about his total income and tax payable.

In return for income generally, the assessee is required to furnish its income from the different heads, gross total income, and deductions available on gross total income. 

It is a form where the assessee declares its total income and income tax payable.

The income tax return is a form in which the taxpayers file information about their income earned and tax applicable to the income tax department.

To pay the taxes, ITR is filed on www.incometaxindia.gov.in.

When the income exceeds the basic exemption limit, tax is deducted on such income and paid to the government. 

Benefits of Filing ITR

1. Acts as a legal document: Aadhar no. PAN no. of an assessee is required at the time of filing an income tax return and the details are recorded by the government. Therefore, the government accepts the ITR as address proof.

2. Claim Deductions: Deductions u/s 80C to 80U are available for the assessee. These deductions are given to the assessee only when ITR is filed. Therefore, it helps in reducing the tax amount by providing deductions and encourages more people to file an income tax return.

3. Get TDS Refund: An assessee can claim a refund only when they file income tax returns. It is very much beneficial for salaried people and self-employed people. TDS refund is refunded only by filing ITR.

4. Seamless processing of loans: To have seamless processing of loans ITR is required. When you apply for the loan, the financial institution asks for the ITR (which can be more than a year) to know about the income statement of the borrower. Therefore, income tax returns act as a supporting document during the process of the loan.

5. Makes Visa Process Easy: If you travel to go abroad, a visa is required. In many countries, visa issuing authorities demand ITR, as it states your income statement.

6. Helps the losses to be carried forward: Any business or a company may incur losses during the financial year. The losses can be carried forward for the next financial year only if an income tax return has been filed, return is to be filed before the due date to claim losses in the future.

7. Deduction on home loans interest: For an assessee applying for home loans, the interest deduction is given, if the income tax return is filed.

8. Helps in avoiding penalties: It is mandatory for individuals to file an income tax return before the due date of filing. If the assessee fails to file ITR, the penalty is levied, the fine is 1000/-

9. Act as proof of income: Self-employed assessees do not have any proof of income, therefore filing an income tax return is the proof of income for the self-employed taxpayers.

10. Medical insurance: Medical insurance deduction is available under section 80D of the Income Tax Act. It offers deductions up to 50,000 on medical insurance premiums.

11. Helps in obtaining capital for the startups: For startups, you may require funds from outside. An investor, to evaluate the financial stability of the business may ask for ITR.

12. Helps in availing Presumptive tax scheme: Professionals like architects, doctors, and lawyers can consider 50% of their income as profit if the income is below 50 lacs and businesses with annual turnover below 2 crores can opt for presumptive tax scheme.

Filling ITR is Mandatory for these

Section 139 states that it is compulsory for all companies and firms and individuals to file a return of income for every previous year before the due date. Even if there’s a loss of income, filing of return is compulsory for the assessee.

Section 139 of the income tax Act prescribes the guidelines for filing a return of income if any assessee fails or delays filing an income tax return within the due date.

Who should file ITR

Before knowing the benefits of filling ITR you must know the income tax slab rate to better understand how much tax you need to pay.

  • Any individual whose age, 

Less than 59 years with an annual income of more than 2.5 lacs

60 to 79 years(senior citizen) with an annual income of more than 3 lacs

80 years(super senior citizen) and above with an annual income of more than 5 lac

  • A registered company with profit or loss has to file ITR before the due date of return.
  • Foreign companies taking treaty exemptions on transactions within the country.
  • Any NRI who earns more than 2.5 lacs in the previous year.
  • Any individual who wants to claim a refund has to file ITR.

Documents Required for filing an income tax Return

Apart from PAN and Aadhar following documents are required for filing income tax returns.

Form 16: This form is for a salaried person, which is provided by your employer, whereas it contains the details of the salary and tax deducted source (TDS) deducted by the employer.

Form 16A: For any assessee who receives interest from fixed deposits or recurring deposits, TDS is deducted, as the details of TDS are furnished in this form.

Form 16B: Contains details of TDS deducted on the sale of the property.

Form 16C: TDS is deducted on rent by the tenant, form 16C contains the details of TDS.

Form 26AS: The form is the summary statement of tax deposited against your PAN. It includes TDS deducted by banks, employers or any organisation. 

It shows details of advance taxes deposited and self-assessment tax paid by the individual.

An individual has to make sure that all the taxes deducted in the financial year should reflect against the PAN in Form-26AS

Which ITR should you file?

ITR 1: This form is for individual Indian residents whose income is up to 50 lacs. Income from salary, income from one house property, and income from other sources are required to file ITR 1.

ITR 2: Any individual or HUF whose income is more than 50 lacs. ITR 2 is for the persons who have income from salary, house property and other sources except for business and profession.

ITR 3: This is filed by the individuals or HUF having income under business or profession.

ITR 4: Individuals who have opted for a presumptive scheme, and earn less than 50 lacs from the profession and less than 2 crores from business are required to file this form.

ITR 5: This form is applicable for all partnership firms, LLP, society, AOP, and BOI, other than an individual, HUF, and company.

ITR 6: ITR 6 is applicable for those companies which do not claim exemption u/s 11 under the income tax act, 1961.

ITR 7: Persons or companies u/s 139(4A), 139(4B), 139(4C), 139(4D) are required to file ITR 7, including religious & charitable trust, political parties, scientific research and associations, universities & colleges.

Frequently Asked Questions (FAQs)

Q1. What do you mean by revised return?

Once you have already filed the return with the income tax department and later on you discover any mistake made by you, then you can correct and file a revised return.

Q2. What if the electricity consumption is 1 lac?

An individual is required to file a return if the electricity consumption is more than 1 lac during the previous year.

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