Benefits of ITR filing: Faster loan processing, visa applications, buying life insurance: 5 benefits of filing an ITR before the deadline

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The deadline for filing income tax returns (ITRs) is July 31, 2022. To avoid a fine or penalty, taxpayers should submit their ITRs online before the deadline.

A tax return must be filed if the net income exceeds the basic exemption limits before subtracting these qualifying assets and exempting any qualifying capital gains. All investment allowances and the long-term capital gains tax exemption must be claimed on a tax return. In addition, there are certain advantages to filing your income tax returns (ITRs) on time each year.

Benefits of filing tax returns

According to Kotak Securities, filing an RTI quickly has several advantages. Here are some examples:

1. High life insurance coverage

Your ITR can provide you with a substantial life insurance policy. If insurers think you are a tax evader, they may decide not to grant you this benefit.

2. Faster loan processing

ITR filing documents for the past three years may be required if you are seeking a loan. This would make it easier for the bank to assess your financial situation and repayment capacity. Your loan processing period could be expedited by submitting these documents. The same goes for credit card processing.

3. Incidental Third Party Claims

Let’s say you want to file an insurance claim in the event of an accident. Your ITR evidence is normally required by insurance companies before legal action can be taken. Your claim amount may be reduced if you do not include the ITR facts. Your request could possibly be refused, depending on the circumstances.

4. Faster visa applications

Going on a trip abroad? You must first obtain a visa. You will also need to produce ITR evidence for this. This is to ensure you have a stable financial situation. Your most recent tax returns must be submitted when applying for a visa if you wish to travel abroad.

5. Obtaining capital for startups

You might need funding from outside sources like venture capitalists or seed investors. These investors might inquire about the specifics of your RTI in order to assess the financial stability and profitability of the business. They could also cross-check data from the audited report using your ITR forms.

6. Benefit for freelancers and independent professionals

Self-employed or self-employed freelancers do not receive Form 16. Their ITR is often the only record that demonstrates that they have submitted income taxes. Without this proof, they may face financial constraints and transactional problems.

7. Helps to carry over losses

The losses of a person or a company from one financial year can, if necessary, be carried forward to the next. These losses can be reported under “business and professional gains and gains” or “capital gains income”. But only if you have submitted your ITR before the deadline, you will be able to benefit from this advantage. Losses cannot be carried forward if you file later than this point.

Penalty for not filing on or before due date

A late filing tax is collected from the taxpayer when he submits his return after the deadline. Section 234F of the Income Tax Act 1961 imposes this levy of Rs. 5,000. However, the cost of late filing for small taxpayers whose total income does not exceed Rs. 5 lakh will not be more than Rs. 1,000. Before filing the late RTI, this fee must be paid.

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