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benefits of filing income tax return

Benefits of Filing Income Tax Return (Complete Guide)

You should pay tax to the government once your income exceeds a limit. To pay the taxes, you should file Income Tax Returns. The benefit of filing an ITR is incredible.

ITR is a form wherein you enter your income details in the past financial year (1st April-31st march). Filing an ITR is mandatory even if you are a salaried individual, Partnership, or even a HUF.

There are many benefits to filing ITR. Let us dive deep into them one by one.  

You may feel filing income tax returns is a complex process. That is the reason why you decide to skip filing returns. But as a responsible Indian Citizen, you should file your returns. Filing your tax is a moral duty of every working Indian. The benefits of filing an Income tax return are tremendous.

Here are the various benefits of filing an Income Tax Return.

What are the benefits of filing income tax?

  1. Your ITR is your Legal Document

The government records your Income Tax Return. It acts as legal proof in two ways,

a. Identity Proof

While you apply for an Aadhar Card or another document, you can use your return as identity proof. You can use your ITR as address proof as well.

b. Income Proof

Your ITR has all the details of your income and expenses. Based on the details of your ITR, you calculate your tax.

Thus, you can use your ITR as income proof for property purchases.

Your ITR also comes in handy if you are self-employed and don’t receive Form 16.

2. Your ITR helps you to claim deductions

 The government allows certain deductions to reduce your burden and encourage you to pay your taxes.

a) These deductions and exemptions help in some investments and thus help reduce the tax you ultimately pay.

b) You can also claim TDS and rebates back.

You must file your ITR to have access to these tax benefits. If you have not filed ITR, you cannot claim deductions.

3. Your ITR is a mandatory document for availing of Loans

When you decide to avail of a personal loan, Car loan, or Home loan, you should submit documents as

a) Aadhar card

b) PAN card

c) Driver’s license

d) Photo ID etc

Another mandatory document asked for is your income proof. Banks ask for your previous three years’ ITR. Your ITR gives a complete picture of your past and current financial situation and your ability to repay the loan.

You can use your ITR to get a credit card as well. Credit card companies also ask for your past financial status, which means your ITR, before issuing the card.

4. Your ITR helps your plan to go Abroad

You need to follow a lot of procedures before going abroad. If you fail to file your ITR, it can deter your plans to go foreign. Many countries need your ITR form in the list of documents they require.

They require your ITR may be because of the following:

a. If you have a history of filing income tax returns, it helps your case and improves your chances of getting visa approval.

b. Your ITR gives your financial situation details to the embassy.

5. Your ITR can avoid your Penalty and Punishment

You must pay taxes if you fall above the exemption criteria. Your taxes are governed by the Income Tax Act 1961.

If you fail to file your returns, you attract a fine. You may pay a penalty of up to Rs 5000 and other punishments too.

Thus, you should file ITR to be secure from such penalties and punishments.

6. You can carry forward your losses

Section 70 and 71 of The Income-tax Act 1961 contains provisions to carry forward losses of the current year to the coming year. You can move your current losses to the next assessment year.

Here are a few examples:

a. Losses from your house property can be carry-forward till the next eight assessment years and can be set off from income from house property.

b. You can carry forward the loss from your business this year and pay with the future income from the business.

If you fail to file an Income tax return, you cannot carry forward your losses. 

Your ITR not only helps you but also helps the nation. The government uses your tax money to build infrastructure and other facilities such as medical, defense, etc.

The more people file, the more the government can spend and provide a good country.

What are the benefits of e-filing of income tax returns?

If you file your returns online or e-file as known, you get more perks than paper filing. Let us know about the benefits of e-filing your returns.

1. Your reply will be Prompt.

The acknowledgment for your Income Tax Return (ITR) is quick. Your refunds will process faster than paper-filed returns.

2. You will have accurate returns

If you file ITR online, the E-filing software with built-in confirmations and programs is seamless and minimizes errors considerably. However, your Paper filings can be prone to errors. Also, during the migration of your paper-based form to the electronic system, there is a possibility of human error in data entry.

3. Your convenience

You can e-file from anywhere and at any time. It is available 24/7.No time and places constraints in filing returns online. 

4. Your details will be most confidential

As you file your returns electronically, they cannot be accessible to anyone. E-filing has better security than paper filing.

 With the paper filing, your details can leak anywhere at your chartered accountant’s office or the Income Tax Department’s office.

5. You can access past data

All your e-filing applications will get stored in the database and hence you can easily access your past data. Most e-filing applications store data in a protected manner and permit easy access at the time of filing the following returns.

6. You will receive your receipt

You will get a confirmation message and mail at the time of filing your returns at once.

7. User friendly

Even if you are not very conversant with the internet, you can e-file as it is very friendly and has detailed instructions.

8. You can avail of Electronic banking facilities

If you e-file your returns, you can opt for direct deposit for refund and direct debit for tax payments. You can file the returns and pay the tax later at your convenient day.

 These are some of the benefits of e-filing your returns.

What are the advantages and disadvantages of filing an ITR?

You should file ITR if your annual income exceeds the exemption limit. However, you may feel irrelevant to file ITR. Here are a few advantages and disadvantages of filing an ITR.


  •  Your loan gets approved easily.
  •  You will get a refund of excess taxes.
  •  You can avoid paying interest and penalties, and embarrassment.
  •  You can get your Foreign VISA Stamping hurdle free with your IT returns filing
  •  You can improve your creditworthiness for future loans
  •  You can be in Peace. No need to worry about your family either. 


  • You should pay a fine of Rs. 10,000 if you fail to file your income tax returns (ITR).
  • If you submit your returns after the due date, you should pay a fine of Rs. 5,000.
  • You should pay interest on the due amount of Tax under Sections 234A
  •  You may get a tax refund without any interest from IT Department
  •  You cannot carry forward your losses to the future years.

FAQ- Benefits of Filing Income Tax Return

1. What is the purpose of a tax return?

You may think that filing tax returns is voluntary and therefore dismiss it as an unnecessary and complex process. But that is not a healthy perspective of filing returns. It is a moral and social duty of every responsible citizen of the country.

  • Filing your ITR is a sign that you are a responsible citizen
  • Filing your returns may be mandatory in certain cases where you need to register your properties.
  • Filing returns adds a boost to the process of your loan application and credit card acquisition.
  • Filing returns is mandatory if you need to carry forward your previous losses and gain benefits from those in the current year.
  • Filing returns may be useful for your revised returns.

These are some of the main purposes of a tax return.

2. What is the benefit of filing nil ITR?

If your annual income is less than 2.5Lakhs, you need not pay taxes. But that doesn’t mean you need not file ITR. Everyone should file returns even if their income is less than the exemption limit. Such returns are called NIL returns.

There are many benefits to filing NIL ITR. Some of those are,

  • If you file your returns, your income is authenticated and recorded. Your ITR acts as your income proof and used on several occasions.
  • If you plan to travel abroad, your income proof helps you a lot in getting a VISA earlier. 
  • If you avail of a loan, your ITR acts as a necessary document for the process of the loan.

Thus, filing of NIL ITR also has its benefits which you should take care of.


Here comes the end of this article, wherein you might get aware of the benefits of filing an Income Tax Return. Filing your returns plays a vital role in your personal and social life. Your ITR is your legal document, it helps to claim deductions, and it helps to avail of loans. Thus there are numerous benefits to filing an ITR. 

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