ITR filing for FY 2023–24: Top 10 benefits of filing Income Tax Returns on time

So with the process becoming more streamlined and digitised today, filing an ITR, in addition to being a legal obligation, is also a practice that brings several benefits. Timely filing of the ITR ensures one is in good standing with the tax authorities, helps with financial documentation, and opens up various opportunities for financial growth and stability.

Here are the top 10 benefits of filing one’s ITR on time, emphasising the importance of adhering to tax deadlines.

1. Comply with the law:

One of the primary benefits of filing an ITR is legal compliance. As a responsible citizen, it is one’s duty to file one’s income tax return on time and pay the tax due. Non-compliance with the law can lead to legal consequences, including prosecution and imprisonment. By filing it on time, one can avoid such situations and keep a clean financial record.

2. Ease of loan and visa approvals:

Filing the income tax return on time can also help one to apply for a loan or a visa if needed. Banks and other financial institutions require income tax returns as proof of income for loan processing. Providing income tax returns as part of a visa application can increase the chances of approval, as it provides evidence of the applicant’s financial stability and responsibility.

3. Identity and income proof:

ITRs offer a credible and detailed report of one’s earnings and financial status. So, filing an Income Tax Return (ITR) is a fiscal responsibility and an important legal document. One can use ITR as a form of identity proof in various situations, such as applying for an Aadhaar card or any other official document.

4. Ensure timely processing of tax refunds:

Many taxpayers are eligible for refunds on taxes paid due to excess deductions at source or advance tax payments. Filing an ITR is essential to claiming these refunds. It ensures that any excess tax paid is returned, contributing to better financial management.

5. Carry forward losses:

Filing ITR allows taxpayers to carry forward losses incurred in a financial year to subsequent years. These losses can be offset against future income, reducing the overall tax liability. This provision can be highly beneficial for businesses and individuals with investments in the stock market or other ventures.

6. Avoiding late penalties:

The Income Tax Department imposes penalties on individuals and entities who fail to file their ITR on time. By adhering to the filing deadlines, taxpayers can avoid these penalties, ensuring they do not have to pay extra money unnecessarily.

7. Enhancing the credit profile:

A consistent history of filing ITRs can enhance an individual’s credit profile. Credit bureaus consider ITRs while evaluating creditworthiness. A good credit profile can lead to better credit terms and easier access to credit facilities.

8. Eligibility for government tenders:

For businesses, filing an ITR is crucial when bidding for government tenders. Authorities require proof of financial stability and compliance with tax laws. Regularly filed ITRs demonstrate that the business is financially sound and adheres to legal requirements, increasing the chances of winning tenders.

9. Claim deductions and rebates:

The government offers various tax deductions and incentives to encourage certain investments and financial behaviours. By strategically investing in eligible instruments, one can take advantage of these deductions and effectively lower the amount of income tax they owe by claiming back any excess tax deducted at source (TDS) or tax rebates through the filing of an ITR.

10. Simplifying financial planning:

Filing an ITR provides a comprehensive view of one’s financial status, helping with better financial planning and management. It allows one to analyse their income, expenses, and investments, aiding in making informed financial decisions and planning for future financial goals.