Even when your earnings are below the tax threshold, filing an Income Tax Return (ITR) can be greatly rewarding. Most individuals believe ITR filing is only for those subject to paying tax, but experts recommend that everyone file their returns because of its various benefits. Here’s how filing your ITR can be helpful even when you’re not supposed to pay taxes:
1. Claiming Tax Refunds
If Tax Deducted at Source (TDS) has already been deducted from your income – from salary, commissions, interest, or any other source—you can reclaim this amount by filing an ITR. Often, excess TDS is deducted, and the only way to get a refund is by submitting your return. If you fail to do so, the deducted amount remains with the government.
2. Offsetting Financial Losses
If you have suffered money losses in a particular year – like business, investments in shares, or property—you can carry forward these losses to future years and set them off against future gains. This can only be done if you have filed your ITR. Without the filing of the ITR, money losses cannot be set off against future revenues, which might create financial setbacks.
3. Easy Loan Approvals
At the time of taking a loan, be it a home loan, car loan, or personal loan, banks and financial institutions like to see the proof of income. Your ITR becomes a very vital document that justifies your financial position. Loans can still be sanctioned without an ITR, but at a higher interest rate. Your return filing makes your credit position good and increases your chances of getting the loans on more favorable terms.
4. Smoother Visa Application Process
Traveling abroad? Most countries, particularly the United States, Canada, Australia, and the European nations, require proof of financial security in the visa application process. Providing ITRs of the previous years makes your application more formidable by showcasing that you have a stable source of income and are financially prudent.
5. Enhancing Financial Credibility
If you plan to make big money transactions, buy property, or venture into business, an ITR can serve as a guarantee of your financial well-being. It strengthens your credit history and facilitates transactions with banks, real estate purchases, and business investments.
A crucial Financial Document
Filing your Income Tax Return is more than just a regulatory obligation—it serves as a crucial financial document that offers multiple benefits. Whether it’s securing loans, claiming refunds, or ensuring smooth financial transactions, maintaining a consistent ITR filing habit can safeguard your financial future.
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