ITR Filing: 5 benefits of filing income tax returns you may not be aware of

Filing ITR on time is beneficial in many ways while keeping you tax-compliant. Here's all you need to know.

Individuals whose annual income is in excess of the basic exemption limit of Rs 2.5 lakh must mandatorily file their income tax returns. Even when there is no tax liability, an income tax return (ITR) must be filed if the total income exceeds the above-mentioned threshold.

‘Income tax return’ is a form in which taxpayers declare details of income, deductions, exemptions, and taxes payable on their taxable income. Filing ITR is mandatory to claim tax deductions under Section 80C, 80D, etc. and other eligible exemptions like long-term capital gains exemptions, which may eventually bring your taxable income to zero.

Filing income tax returns not only keeps you tax-compliant, but also offers the following benefits:

1. Filing ITR avoids penalties

Effective from FY 2017-18, the Income Tax Department levies a penalty of Rs 10,000 under section 234F on individuals who do not file their ITR. Filing ITR on time avoids unnecessary penalties. Even though the penalty has been kept at Rs 1,000 if your annual income is not more than Rs 5 lakh, as a law-abiding citizen, it is your duty to file your tax returns.

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