1. You can claim your Refund of Taxes
As per the Income Tax laws, many Businesses/Bank/Post Offices/Authorities deduct a amount of TDS out of your payment receipts and submit to the government. Now if your income is less and your tax liability is nil, then in that case you can claim that taxes back to your bank account. For claiming back those taxes, you need to file your ITR first. Hence, for claiming the TDS refunds, you need to file ITR mandatorily.
2. It is a must for applications of Loans, Credit card, Insurance Policies, etc.
Whether it is a home loan, vehicle loan, personal loan, or business loan, ITR is a must-have requirement for applying for a loan. The same happens in the case of credit card and insurance policies. ITR is the document that speaks your financial condition to those Banks and Insurance Companies. Hence ITR is compulsory to file for applying for financial services.
3. You cannot apply for VISA without your ITR Receipt
Yes, the same happens when you go for applying for your VISA. Embassies of foreign countries ask for past year ITRs before issuing a VISA. Your ITR speaks about the financial capabilities that whether you can take care of your expenses in that country or not. Therefore they are very careful about your Income Tax Returns i.e., ITR.
4. You can compensate your losses also
This is interesting, you might be unaware that filing of ITR in case of loss is more beneficial as you can carry forward and set off your current year’s losses with the next years incomes. This is called carry forward and set off of losses. Hence it is always advisable to all that you must file your ITR in case of loss. Remember that in order to take the benefits of carrying forward and set off, you must file your ITR on time only, otherwise, these benefits will lapse.
5. ITR is your Income Proof or you can say it is your Income Base
ITR is the only document that certifies your income details to the Income Tax Department. In simple words, these are the proofs that yes your income is this and because you have submitted these details in the ITR form, now you are safe. Otherwise, it will be difficult to confirm your Income to the government or anyone.
6. You can avoid future Income Tax penalties
Sometimes it is noticed that people do not file their ITR even they need to. In that case, they receive Notices from Income Tax Department asking for taxes, interest & penalties. I several cases it is observed that to avoid a tax of INR 100, people pay 2.5 times, i.e., INR 250. Therefore it is always advised that if you are earning anything then you should file your ITR.
7. ITR is your Address Proof also
ITR is normally accepted as a valid address proof.
8. Very important for Personal Records
Just like PAN Card, Aadhaar Card, Driving License, Identity Card, ITR is also a personal record, which records your various incomes under one place.
9. Stay safe from IT (Income Tax) Department Notices
It is very easy for Income Tax Department to check your incomes base. Income Tax Department has all access to one’s bank interest, hotel bills, credit card bills, airline bills, etc. IT department can easily judge whether or not a person is liable to pay Income Tax or not. Therefore it is not a good choice to play hide n seek with the IT department and is advisable that every earning person should file their ITR on timely basis.