Easy Loan Approvable
The income stability of the borrower is critical for the lender. For which borrowers must submit an ITR of at least three consecutive years when applying for loan products such as Home Loans, Car Loans and Personal Loans.
Proof of Income
Top advantage of filling ITR is it acts as income proof. As it detailed information about your annual income and the taxes you have paid is available on the ITR.
Quick Visa Processing
The income and tax status of the applicant are vital for international embassies. Many countries require ITR for visa applications.
Claim Tax Refund
You can file tax returns to claim your refund (TDS/TCS/Advance Tax) if you have paid a higher income tax than actual tax liability.
After verification, the IT Department will deposit the refund amount directly into your bank account.
Carry Forward Losses
Business or capital losses can be carried forward for set-off in future years.
The compensation for losses is only possible if ITR is filed before the due date.
Presumptive Taxation Scheme
A Presumptive Taxation Scheme is one of the important benefit as per the IT Act, where small taxpayers can get a relief from maintaining regular book of accounts and get the accounts audited. Under Presumptive Taxation Scheme self employed individuals can declare income at a prescribed rate at the time of ITR filling.
If turnover is less than 2 crore and opt 44AD section where minimum 6% gain on digital transaction and 8% profit on cash transaction then no tax audit required
If opt 44ADA and minimum 50% profit then audit is not required.
Avoid Penalties
Filing ITR on time helps to avoid late fees u/s 234F.
If you file your return every year on or before the due date, you can protect yourself against such penalties.
- Rs.5,000 if income is above Rs.5 lakh.
- Rs.1,000 if income is below Rs.5 lakh.
For Updated Return
12 months from the end of the relevant assessment year
- Additional tax of 25% on the tax amount, along with interest and a late filing fee.
24 months from the end of the relevant AY
Additional tax increases to 50%, along with interest and the late filing fee.
Claim Deductions
Many investment and expenses can be claimed in ITR under Old Tax Regime:
- Children Fees
- Home Loan
- LIC/PPF/HRA
- Rent Paid/Donation paid
Evidence of Earning
- On record income
- Capital Creation
- Sources and Proofs of Investment
Funding For Startup Ventures
When planning to launch a new company or grow an existing one, you might require funding from outside source like venture capitalists or seed investors.
These investors might inquire about the specifics of ITR in order to evaluate the business’s financial stability and profitability. They could cross-check the data in the audited report using your ITR Forms.
Save from Notices
If you are engage in High Value Transactions such as cash or FD or property, this transaction will reflect in AIS TIS and Form 26AS as PAN is required while doing this transactions.
In this case if ITR not filed then Non filing Notice will be issued by the Department up to four financial year or 6 year.
Mitigation of Tax Scrutiny
Regular and accurate ITR filling reduces the chances of being subjected to tax scrutiny. Properly filed returns with supporting documentation minimize the risk of tax audits or investigations by tax authorities.
ITR Required For Selling Product to Government
If you want to produce a commodity which is readily purchased by the government, then you will require to provide your filed ITR copy for past 2 to 3 years.
TDS on Cash
If you are regular taxpayer and withdrawn high amount of cash from Bank account then no TDS u/s 194N is applicable up to 1 Crore.
One who not filed their ITR for the past 3 years, 2% TDS will be deducted for withdrawals exceeding Rs.20 lakhs and 5% exceeding Rs.1 crore.
Divorce Settlement
ITR can be used to decide alimony and balance sheet as assets division.