9 advantages of filing ITR in time

Mumbai

Even as the last date (or July 31) to file one's Income-Tax Return (ITR) approaches fast, one must file an income-tax (I-T) return in time to avoid any penalty due to expiry of the due date. ITRs are filed annually by taxpayers who make a taxable income within a pre-determined due date. Another important thing, that in case you file your ITR in time, you can avail yourself of a host of benefits. Let's go by the nine such benefits one by one.

1) Proceed with losses: In order to lower tax liabilities of future income, the income tax rule allows the taxpayers to forward the losses to the next financial year. So, business can carry forward the losses to be paid on the future income. Hence, filing ITRs on time help set off losses.

Talking to Bizz Buzz, Ajay Mohan, a Navi Mumbai-based tax consultant and registered valuer (SFA), says: "You can carry forward your short term and/or long term losses which can be set-off from your next financial year short term and/or long term income respectively. To carry forward unabsorbed losses, it is mandatory to file IT return on or before due date."

2) Higher TDS for non-filer of IT return: The Central Board of Direct Taxes (CBDT) has issued a circular to determine the non-filers, who are subject to higher tax withholding or collection for FY23. If you fail to file ITR, and aggregate TDS and TCS exceeds Rs 50,000, it would attract higher TDS than prescribed rate of TDS.

3) TDS refund: We can claim TDS refund if we have income below threshold limit or TDS is in excess of income tax payable. For example, in case TDS deducted on interest by bank or TDS on commission of insurance companies, and if your total income is below taxable limit, you can claim refund by filing IT return.

In case of TDS is more than tax payable like TDS is deducted by employer for non-submission of investment proof or housing loan interest, you can show this exemption at the time of filing of IT return. Similarly for business, if TDS is deducted on your receipt by customer and you have tax payable less than TDS. You will get TDS refund only upon filing of IT return.

4) Avoid income tax notice: Income tax department tracks various financial transaction which appear in Annual Information Statement (AIS). Income tax will send you the notice, if you are not reporting or incorrectly reporting transaction in your IT return. Remember, it is mandatory to file IT return, if you have TDS deduction on your income as shown in form 26AS.

5) For bidding or tendering: Government agencies or private enterprise has qualification criteria that bidder must submit IT return along with balance for last three financial years. This is technical document for them to award contract for goods and services. This also provides your income and business credentials to your prospective customer.

6) Identity proof: The income tax return can serve as identity proof in various forms such as while applying for any bank account, an Aadhaar card, or any other document. It is also accepted as address proof for multiple purposes like getting admission to colleges and getting benefits from various governmental schemes.

7) Income proof: As we know that we file ITR based on our annual income. It includes every detail of our source of income, so it can serve as proof for doing transactions while purchasing a property.

8) Makes loan approval easy: While applying for a loan, banks generally ask for income proof and ITR documents of a few years so that they can assess your past and present financial status to make sure whether you would be capable of repaying it or not.

9) For getting a visa: ITR filing makes getting your visa easy as the Embassy takes note of the individual's financial status, while assessing the application. If you file your ITR on time and have a good past history of doing it on time, it would be useful to get your visa easily.