People are considering filing of Income Tax Returns as their obligation or mandate but we should know that there are many Benefits of filing of Return of Income.
In following other circumstances where it is Favorable/Beneficial to file income tax return:
(1) To claim refund
This is the most common purpose of filing of ITR. After calculating of total income as per the provisions of the Income Tax Act, 1961; if the TDS deducted is more than the actual tax paid/tax liability or TDS deducted but total income is not taxable i.e. below the taxable slab limit then REFUND arises.
You can’t receive that refund unless you file your ITR. By filing ITR to Income Tax Department, Income Tax Department will get to know you are eligible for receiving REFUND from them. So, to get refund, you need to claim refund by filing ITR.
(2) For taking loan or credit card
This is the second most famous purpose of filing of ITR. For taking Housing Loan or Vehicle Loan or for applying for credit cards from Bank, there is general requirement of ITR of, say last 3 years or more (depends on individual bank’s policy). For Housing Loan Banks asks for Salary Slips and Form No. 16 or ITR copies. Reason being asking for such is to check your capacity to honor the payment of loan/credit facility taken by them from banks.
(3) Carry forward Losses
To able to carry forward short term/ long term capital losses of any financial year to subsequent financial year by applying the provisions of the Income Tax Act, 1961, you need to file ITR.
(4) Registration of purchase of Immovable Property
In many states, various State Government authority may ask for last few years ITR before registration of purchase of immovable property.
(4) Visa Processing
If you are traveling to USA, Canada, UK, Europe; the foreign consulates may ask for your ITS of past few years. While there’s no such strict rules in travelling in Middle East and South Asia.
(5) Taking High Value Life Insurance
Many insurance Companies may ask for ITR for past few years if anyone is buying a Insurance cover of big value, say Rs.50 lakhs. By such they check your capability to pay premiums.
(6) Filing of Government Tender
In Government Tendering procedures, many tenders prescribe to submit ITRs of last few years while applying for tenders. After inspection they grant tender on their policy. Such policies are different to different departments in different states.
(7) Know your Annual Income
Because of your filing of ITR, you get a chance or time to calculate your earning in a year and can make personal financial planning. By ITR you can plan your investments as well to earn better returns in future. So, it gives opportunity and time every year to analyse your earnings and savings.
Dwarkesh K. Diwan 