Wondering what are the benefits of filing an income tax return? Below are a few things you must know:

Retrieving Excess TDS

One of the benefits of filing an Income Tax Return (ITR) is that it helps you reclaim the excess Tax Deducted at Source (TDS) you may have paid to the government. Even if your total income falls below the taxable threshold, certain income sources, like Fixed Deposits (FDs), may still have TDS deductions. Filing your return enables you to avail yourself of tax deductions and potentially receive a refund for these deductions. It ensures you are not overpaying taxes and can maximise your savings by reclaiming any excess TDS deducted throughout the financial year.

Visa Approval Made Easier

A speedy visa approval is an unknown benefit of filing an income tax return in India. Indians need to apply for visas to travel to many countries around the world. Depending on the country you wish to visit, you would need to submit some documents, one of which is an ITR. When applying for a visa, submitting the ITR alongside your application adds credibility to your visa application and can significantly improve your chances of approval. It serves as proof of your financial stability and income source and reassures authorities of your ability to support yourself financially during your stay abroad.

Gateway to High Coverage Insurance

If you are looking to purchase a life insurance policy with a sum assured exceeding ₹ 50 lakh, it is crucial to provide your past ITR records. Many insurance companies ask for your tax documents to evaluate your financial situation. Your ITR serves as proof of your income and tax records and helps them decide on the coverage you qualify for. The ITR also establishes your financial stability and reassures the insurer of your premium-paying capacity. It is advised to regularly file your return every year and submit these records to enhance the likelihood of securing higher coverage. This can be instrumental in guaranteeing sufficient financial protection for your family in case of an unfortunate event.

The Loan Application Essential

You may need loans to fulfil several of your needs, such as purchasing a house or a car. When you apply for a loan, the loan providers, such as banks and financial institutions, typically require ITR documents for the past three years. Your ITR offers a detailed view of your financial health, income, assets and liabilities over the years and helps the loan provider process your application. Lenders use this information to evaluate your repayment capacity and assess the risk associated with lending money. A consistent history of filing returns can strengthen your loan application and increase your chances of approval. It can also potentially help you secure a more favourable term and interest rate.

Address Verification Simplified

Your ITR contains your latest residential address. Since it is a valid government document, it can serve as a convenient proof of address when needed. You can use it for various purposes, such as opening a bank account, leasing or renting property, applying for a loan and more.

Fuelling Startup Dreams

India is booming with startups today. With so many budding entrepreneurs and revolutionary ideas, startups can help put India on the map in terms of technology, innovation and ideation. However, a startup requires funding. When seeking funding, investors and sponsors often look at ITR details to assess the financial stability and profitability of the business. The ITR highlights your business's performance. It includes several details, such as revenue, expenses and profits. Investors can use this information to gauge the viability of your startup and determine the potential returns on their investment.

Tangible Proof of Earnings

The benefits of filing your income tax return on time can be particularly significant for self-employed individuals. Freelancers, independent contractors and other similar professionals can use their ITR as proof of their earnings and income verification. Unlike salaried employees who receive regular pay slips, self-employed individuals do not have employment proof to demonstrate their income sources and earnings. Hence, they can rely on their ITRs to establish credibility in their financial position. An ITR enhances an individual's transparency and can be used for personal and professional needs, from applying for a personal loan to securing business contracts.

Scholarship Opportunities Unlocked

ITRs play a crucial role in the life of students. Many government and private educational institutions offer scholarships to students who may not be able to afford the full tuition. However, they require some form of income documentation to assess your financial situation and gauge whether you truly qualify for the scholarship. Submitting your ITRs can provide proof of your financial status and eligibility for the scholarship. Moreover, ITRs can be used for national and international educational funding and can help you pursue your academic aspirations without financial constraints, no matter where you study.

Conclusion

Filing ITR is crucial for you as it offers many benefits across different facets of your financial and personal life. It helps you claim a refund on TDS, apply for visas and expedite the approval process for life insurance plans and loans. It also simplifies the process of address verification and serves as tangible proof of your earnings as a self-employed individual. Lastly, it can also unlock scholarship opportunities for you. Evidently, the benefits of filing an income tax return not only ensure tax compliance but also simplify your life to a great extent by enhancing your credibility and opening various opportunities.

COMP/DOC/May/2024/305/6220

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