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Benefits of ITR Filing in India

Benefits of ITR Filing in India

Benefits of ITR Filing in India

Filing Income Tax Returns (ITR) is not just a legal requirement but also a beneficial practice for individuals. It serves as proof of your income, helps you claim tax refunds, and can even assist in easy loan approval and credit card application.

Additionally, timely filing of ITR can help you avoid penalties and interest charges. Furthermore, if you plan to travel abroad, some countries may require your ITR as proof of your financial stability. By filing ITR regularly and within the due date, you can carry forward losses and set them off against future profits.

In this blog, we will discuss more about ITR and the various benefits of filing ITR, and why it is essential to comply with tax laws.


What is ITR (Income Tax Return)?

Citizens of India who earn an income file a form every financial year and submit it to the Income Tax Department. This form includes details about their income and taxes on them and is known as an ‘Income Tax Return’ or ITR. It is important for all taxpayers to fill out the ITR form before the specified due date.

This income can be in the form of:

●     Salary

●     Profits from business

●     Gains from Profession

●     Incomeon House property

●     Capital gains

●     Other sources such as winning a lottery, royalty income or interests on deposits


Types of ITR 

There are 7 types of ITR filing forms for Indian Taxpayers. You should be aware of these categories and confirm under which  category you have to file your ITR:


Type of ITR


ITR-1 or Sahaj

Income generated through:
-Salary and pension

-Income earned from other sources (except winning a lottery or horse racing)

-Agricultural income less than Rs.5,000

-Payments received for a single-house property with certain exclusions



Hindu Undivided Families with an income exceeding 50 lakhs received through salary, pension capital gains, or other resources.
- Agricultural income of more than 5,000.
- Income from foreign assets.


Hindu Undivided Families with:
- Income from a profession or business
- Income received as a partner in any firm
- Salary, pension, capital gains, and other sources

-Investments in unlisted equity shares

- Individual director in a company


ITR-4 or Sugam

Hindu Undivided Families or Firms with an income of up to 50 Lakhs from profession or business can opt for this form.


Instead of individual citizens, the ITR-5 form is intended for businesses, bodies of individuals, cooperative societies, limited liability partnerships, associations of persons, local governments, artificial judicial persons, estates of the bankrupt and the deceased, and business trusts.


It is filed electronically by the companies except those who claim an exemption under section 11.


Companies filing their return under section {139(4A),(4B),(4C) and (4D)} of Income Tax Act come under this.


Is it mandatory to file ITR?

The Tax Laws of India have made ITR a compulsion, where it is mandatory to file Income Tax Return if your income is more than the basic exemption limit. A delay in the filing of ITR will not only make you liable for late filing fees but can also hamper your chances of getting a loan or a visa for traveling.


What are the Documents required for ITR filing?

Every government work requires documents and so is when you file an ITR form, Here’s a list of documents that you’ll require while filing your ITR;

●     Your salary slips

●     Pan card and Aadhar Card

●     You savings account passbooks of Bank and Post Office, PPF account passbook

●     Form-16, Form-16 A, Form 16 B, Form 16 C


When is ITR filed?

To take advantage of ITR, it is recommended to file tax returns before to the deadline. For non-audit cases and individuals, the deadline to file income tax returns is typically July 31; for audit cases, it is October 31.


Who can file ITR?

According to the Income Tax Act people or businesses that come under specific income brackets are liable to pay the income tax. Businesses or entities that should comply fully with the filing of ITR are:

1. People who come under the age of 59 with an annual income of Rs. 2.5 Lakhs are subject to tax. This limit is extended to Rs. 3 Lakhs for senior citizens who are aged between 60 to 79 and super senior citizens aged 80 or above with an annual income of Rs. 5 Lakhs or more.

2. Registered businesses who produce revenue need to file ITR, whether they have made a profit or not in the previous year.

3. One can also ask for a refund through ITR for any overtaxes that they have paid.

4. People having assets or entities outside India and NRIs who earn more than Rs. 2.5 Lakhs in India in a single fiscal year.


How does filing ITR impacts your stock market journey?

1. Capital Gains Tax

If you have made profits from trading in stocks or other securities, you are required to pay capital gains tax on the profits earned. Filing ITR is necessary to report your capital gains and pay the applicable tax.


2. Set-Off of Losses

If you have incurred losses from trading in stocks or other securities, you can set off these losses against your capital gains from other stocks or securities. In order to carry forward these losses to future years, it is mandatory to file ITR within the due date.


3. Audit Requirements

Individuals who trade in stocks or other securities may be required to get their accounts audited under certain circumstances. Filing an ITR can regularly help you avoid any audit-related issues.


4. Compliance with SEBI Regulations

SEBI (Securities and Exchange Board of India) regulations require individuals who trade in stocks or other securities to file ITR regularly.  



Being responsible citizens of India, it is important for individuals to file an ITR who come under the specific brackets of income of the Income Tax Act. Filing an Income Tax Return is beneficial for individuals and also for traders who invest in the stock market. So, be a responsible citizen, collect your documents, and file your Income Tax Returns in a timely manner.


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