An Income Tax Return (ITR) is more than just a statement of income submitted to the tax department. From claiming tax refunds and carrying forward losses to securing loans and visas, timely ITR filing can play an important role in an individual’s financial life.
While some senior citizens are exempt from filing returns subject to conditions, most taxpayers need to file an ITR if they meet the prescribed criteria.
Who should file ITR?
Filing an ITR is mandatory for most taxpayers, except in certain cases.
Individuals aged 75 years or above are exempt from filing ITR if they meet all the following conditions:
- Pension and interest income are their only sources of income.
- The interest income is earned from the same bank where the pension is credited.
- A declaration has been submitted to the bank.
- The bank deducts TDS under Section 194P.
Benefits of Filing Income Tax Return (ITR) on time
- Easier loan approval: Banks and financial institutions often ask for ITRs while processing applications for home loans, vehicle loans or personal loans. Since ITRs reflect a person’s income history and repayment capacity, they serve as an important financial document during loan approval.
- Claiming tax refunds: Tax may be deducted at source (TDS) on salary, fixed deposits, rent or professional income. If the tax deducted exceeds the actual tax liability, filing an ITR becomes necessary to claim the refund.
- Valid income and address proof: An ITR acts as an official proof of income and can also support address verification for various financial and legal purposes, including passport and visa applications.
- Carry forward of losses: Losses arising from stock market investments, business activities can be carried forward and adjusted against future income only if the ITR is filed within the prescribed due date.
- Mandatory for certain financial and Visa Requirements: ITR filings are often required for visa processing, tender participation, and other regulatory requirements.
- Buying Term Insurance: Insurance companies may request ITR documents while approving high-value term insurance plans. The returns help insurers assess the applicant’s income level and eligibility for coverage. “Accurate and timely ITR filing helps minimise the likelihood of receiving notices or scrutiny from the tax authorities. Regular filing also helps maintain a structured record of income and taxes, supporting better financial planning and transparency,” an tax expert said.
