Benefits of Filing Income Tax Return (ITR) 2025

Filing your Income Tax Return (ITR) might feel like just another yearly chore. But it’s far more than that. It’s a financial responsibility and also a smart move if you want to enjoy long-term financial freedom and credibility. In India, the financial year runs from 1st April to 31st March. The deadline for filing your ITR for most individuals is 31st July of the assessment year.

Still thinking it’s not necessary? Let’s break down the benefits of ITR in the simplest way possible.

Also Read: ITR Filing Deadline for FY 2024-25 (AY 2025-26)

Why Filing ITR Matters

A lot of people believe they don’t need to file ITR if their income is below the taxable limit. That’s partly true. But the benefits of filing ITR go way beyond just paying taxes. Even if your income is not taxable, you still gain a lot by voluntarily filing your returns.

Here’s why it matters:

• Creates a record of income: ITR is your proof of earnings. It helps establish your income record officially.
• Avoids penalties: If you’re required to file but don’t, you can face a late fee of up to INR 5,000 under Section 234F of the Income Tax Act.
• Required for high-value transactions: Lenders and financial institutions often ask for ITRs when you apply for loans or credit.

Key Benefits of Income Tax Return File

Let’s talk about what you really gain when you file your ITR on time:

• Quick visa processing: Many embassies require ITR documents for the last 2–3 years during visa application processes.
• Loan approvals get easier: Want to apply for a Home Loan, Vehicle Loan or Personal Loan? Lenders will ask for your ITR as proof of income.
• Acts as income proof: Especially helpful for freelancers, self-employed individuals, and those without fixed salaries.
• Refunds for TDS: If your employer or a client deducted TDS (Tax Deducted at Source), you can only claim a refund by filing your ITR.

These are real, day-to-day uses. And yes, they save you money and time.

Get Tax Refunds Easily

One of the biggest benefits of filing ITR is that you can claim refunds. A lot of salaried people end up paying extra tax through TDS. If you don't file, that extra money is gone. But if you do, the refund will land straight in your account.

Helps When Buying Property or Shares

If you're planning to buy property, invest in shares, or even start a business, you’ll need to show your ITR. It gives your financial profile a boost. Investors and authorities treat you more seriously if you’ve been consistent with your ITR filing.

For example:

• If you're buying property above INR 50 lakh, the authorities may ask for your ITR for the past 3 years.
• When you invest in stocks, showing your past ITRs helps during verification processes by brokers or institutions.

Keeps You Financially Disciplined

This may not seem like a big deal at first. But over time, filing your ITR teaches you how to track your expenses, investments, and income better. That discipline is gold when you're planning your future.

It also helps you track:

• How much tax you're paying
• Where your money is going
• What savings or exemptions you're missing out on

Statutory Compliance is Crucial

Whether you’re a salaried employee, a freelancer, or a small business owner, filing your ITR helps you stay compliant. It shows that you're a responsible citizen. Even if you’re not earning a lot, voluntary filing keeps your financial records clean and up-to-date.

That’s one benefit of income tax return filing that often gets ignored — peace of mind.

Common Myths Around Filing ITR

There are numerous misconceptions amongst people when it comes to filing ITR.

• “I don’t earn much. I don’t need to file ITR.”
• “I’m a student, it doesn’t apply to me.”
• “Only salaried people file ITR.”

You may not need to, but it’s always wise to file ITR. If you earn even through internships or freelancing, filing ITR is a smart step. After all, the benefits of ITR go beyond just taxes. This is why business owners, freelancers, and even homemakers with income should consider filing.


Also Read: Everything you should know about ITR filing

Benefits of Filing ITR for Future Planning

When you start filing early in your career, you build a strong financial base. Whether it’s planning for a new house, child’s education, or retirement — a history of regular ITR filing shows you’re financially responsible.

This becomes even more important if you plan to start your own business, apply for government tenders or generate investment for your venture.

Each of these requires financial transparency, and that begins with your ITR. Don’t miss out on these long-term benefits of ITR.

The Bottom Line

Let’s be honest — filing your ITR is not just about paying taxes. It’s about planning ahead, saving money, building your creditworthiness, and being part of a growing economy. There are a lot of benefits of filing income tax returns, and skipping it means losing out on more than just refunds.

So even if you’re not earning a lot right now, the habit of filing ITR regularly will pay off later. From smooth visa applications to quicker loan processing, the benefits keep adding up.

Moreover, you should explore your options today if you're considering leveraging tax benefits through loans. Apply for a loan with favorable tax implications and move towards achieving your financial goals.

If you want to check your eligibility for the loan, use a loan eligibility calculator. This free online tool will take in all the necessary information and let you know the amount you can borrow through a loan.

FAQs

Q.1. How long does it take to get the money after filing ITR?

A. After filing for ITR, usually, it takes about 2 to 5 weeks for the refund to be credited to the account of the taxpayer. If not received, the taxpayer must check for intimation regarding discrepancies in ITR.

Q.2. How much salary is required for ITR filing?

A. Under the new tax regime, individuals with a gross income of INR 2.5 lakh or more in a financial year must file for ITR, regardless of what their age is.

Q.3. What if I don't file ITR?

A. Not filing your Income Tax Return (ITR) can lead to serious legal consequences. This is especially true if you owe more than INR 25,000 in taxes. In such cases, you could face imprisonment for 6 months to 7 years, along with a fine.

Q.4. What is the best time to file ITR?

A. The due date to file your ITR is 31st July of the same assessment year. However, if missed, you can still file belated ITR, latest by 31st December with a late fee under Section 234F of the Income Tax Act of India, 1961.

Q.5. Who should file for ITR?

A. Individuals whose annual income exceeds INR 2.5 lakh in a fiscal year, or who get income from multiple sources, foreign assets, or have had TDS deducted, should file for ITR.

Disclaimer:

The contents of this article are for information purposes only and not a financial advisory. The information is subject to update, revision, and amendment and may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Godrej Capital or its Affiliates to any requirements. Godrej Capital or its Affiliates shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any decisions, financial or otherwise based on the contents and information mentioned. For more information, please visit www.godrejcapital.com