Why Do You Need to File an ITR? 6 Key Reasons Every Taxpayer Must Know Before July 31 Deadline:

The Income Tax Return (ITR) filing deadline is just two days away; several taxpayers are not even aware of the reason why an ITR is filed. What is the reason for filing a tax return? This confusion has emerged in the minds of numerous taxpayers.

This topic has become the most searched tax-related question on search engines during this ITR filing season. While numerous taxpayers are anxious about that, selecting the wrong preference can invite scrutiny, penalties, notices, delayed refunds, and litigation.

The following are some key reasons why income tax returns are filed:

1. Income Above Exemption Limit: Every taxpayer whose income is above the basic exemption limit set by the income tax department is required to file an ITR (2.5 lakh under the Old Tax Regime and 4 lakh under the New Tax Regime).

2. High-Value Transactions: If a taxpayer spends more than Rs 2 lakh on foreign travel, pays over Rs 1 lakh in electricity bills, or deposits large sums in bank accounts, then he/she becomes liable to file an ITR.

   

3. To Claim Tax Refund: When a taxpayer files an ITR, he/she can get the excess TDS or tax paid amount back.

1. Loan and Visa Approval: An ITR acts as key evidence/proof of income and financial stability for banks and embassies at the time of loan and visa approvals, respectively.

2. Carry Forward Losses: If you have suffered losses from shares, mutual funds, business, etc. during the relevant year, then by filing an ITR you can carry forward them (if you want).

3. Other Reasons: If none of the aforementioned conditions applies to you, but you are willing to file an ITR, you can. Several individuals file a zero-tax or voluntary return because it serves as official proof of income.