Filing your taxes may not be fun, but the benefits? They’re worth every penny.
Filing your income tax returns (ITR) is an essential responsibility for individuals and businesses alike. Beyond fulfilling a statutory obligation, the act of filing your ITR brings with it a host of benefits that can positively impact your financial well-being. In this blog, we will explore in detail why filing your income tax returns should be a priority, explained in a simple way for anyone to understand.
“Taxes are what we pay for a civilized society — Oliver Wendell Holmes Jr.”
Compliance with Legal Requirements
One of the most important reasons to file your income tax return is that it is required by law. If your income exceeds the basic exemption limit set by the government, filing your ITR is mandatory. Failure to do so can result in penalties, interest charges, and even legal action. Keeping up with this legal obligation helps you maintain a clean record and avoid trouble with tax authorities.
Claiming Refunds
You may have paid more tax than you owe due to advance tax, self-assessment tax, or TDS (Tax Deducted at Source). Filing your ITR is the only way to claim a refund for the excess tax paid. By filing, you can get back the money that rightfully belongs to you. For many, this could be a significant sum, which could be used for savings or other expenses.
Proof of Income
Your ITR is a valuable document that serves as proof of your income and financial stability. It is commonly requested when applying for various financial services, such as home or personal loans, credit cards, or even renting an apartment. Having filed ITRs over the years can show that you are financially responsible, making it easier for banks and financial institutions to trust you.
“The hardest thing in the world to understand is the income tax – Albert Einstein”
Applying for Loans and Credit Cards
If you plan to take a loan for buying a home, car, or for personal reasons, most banks and financial institutions require copies of your income tax returns for the past 2-3 years. It gives them an understanding of your financial situation and repayment capacity. Not having ITR records can limit your ability to secure a loan, even if your income is sufficient.
Visa Applications
If you are planning to travel abroad, especially for employment or long-term stays, consulates and embassies often ask for ITR copies as part of the visa process. This is to verify that you have a reliable source of income and sufficient financial backing. Filing your ITR regularly strengthens your copyright, making it easier to travel abroad.
Read More