Filing an Income Tax Return (ITR) is a necessary step that offers several benefits beyond meeting a legal requirement.
Reporters note that filing an income tax return can help claim tax refunds, carry forward certain losses, and improve chances of availing loans, among other benefits.
Benefits of Filing an ITR
Chartered accountant Abhishek Soni, CEO & co-founder of Tax2win, discusses eight reasons why filing an ITR can benefit taxpayers in different ways.
One key benefit is the ability to claim tax refunds. If excess tax has been deducted from salary, bank interest, or other income during FY 2025-26, filing an ITR is the only way to claim it back.
This usually happens when actual tax liability is lower than the TDS deducted. Without filing a return, the Income Tax Department will not process the refund.
Carrying Forward Losses
If losses were incurred from shares, mutual funds, property, or business, filing an ITR on time lets taxpayers carry these losses forward and adjust them against future profits, reducing future tax liability.
Most losses can be carried forward only if the return is filed by the due date.
Banks and financial institutions usually ask for the last 2-3 years’ ITRs while processing home, personal, education, or business loans. A regular ITR filing history acts as proof of income and improves financial credibility.
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Supporting Visa Applications
Many countries require ITR acknowledgments as proof of income while processing tourist, business, or student visas. Having ITRs for the last 2-3 years can strengthen chances of visa application approval by demonstrating financial stability.
In some cases, filing an ITR may be mandatory even if income is below the taxable limit. For example, if over Rs 1 crore was deposited in current accounts, or more than Rs 2 lakh was spent on foreign travel, filing becomes mandatory under the Income-tax Act.
They attract a late filing fee of up to Rs 5,000. If total income does not exceed Rs 5 lakh, the maximum fee is Rs 1,000.
Filing an ITR can also help build a strong financial record, which can be useful when applying for insurance, government tenders, scholarships, business funding, or other financial opportunities where an income proof is required.
Ultimately, if gross total income exceeds the applicable basic exemption limit for FY 2025-26, taxpayers are generally required to file an ITR, even if deductions or rebates reduce final tax liability to zero.
The deadline for filing ITR is July 31.
They should be aware of the key forms they need to submit, including those related to TDS due dates, to avoid any penalties.
