Paybacks of filling Income Tax Return (ITR)
o Is it mandatory to file ITR?
o Is it important to file ITR?
o Does ITR filling is beneficial if I have income below taxable limit?
o Why should I file ITR when I do not have income more than 2.5 lakhs?
These are some of the basic questions asked by the persons who just started earning or the people who are not aware of filling ITR’s benefits and responsibility. Here we are with the answers of the above questions.
First of all, it is required to understand who is mandatorily required to file income tax returns? Person, who is having income above taxable limit are mandatorily required to file income tax return.
Now the second question arises is, do the persons having income below taxable limit need to file income tax return? The answer is no, they do not need to file income tax return as per law.
Third question, should the person file ITR when he do not have income above taxable limit? The answer is yes, it is advisable that he should file income tax return even if he do not income above taxable limit.
Next question is what are the paybacks or benefits or advantages of filling ITR even after having income below taxable limit? The answer of this question is even though for some persons ITR filling is not mandatory in India, but there are certain advantages that one can obtain provided ITR is filed. Some of them are as under:
Ø Hassle free Loan Processing: Any person who intends to take any kind of loan and approach bank for the same, bank asks for income tax returns of last 3 years for checking the eligibility and quantum of loan. Hence, being a diligent return filer makes it easier to apply for loan and loan processing.
Ø Claim Refund of TDS deducted: There can be situation where one is not aware of TDS deduction over his investments but when ITR is prepared to file he will know this and will be able to claim refund of such TDS. To claim refund of TDS deducted, one needs to file ITR.
Ø Set off of losses in future: If any person incurs loss due to any reason in business or sale of any asset, he can set off that loss with future year income but only if he filed his return on or before due date.
Ø Additional deduction: A salaried person, who wants to claim additional deductions which his employer either forgot or did not provided in Form-16, can claim such deductions while filling ITR. Otherwise he may end up paying high taxes in the name of TDS deducted by employer.
Ø Residence Proof: In case of applying for AAdhar or Passport, Income Tax Assessment Order fulfills the purpose of Residence Proof, which one will get if he files ITR.
Ø Hassle free Visa Processing: At times visa authorities ask for copies of past tax returns, hence to apply for a visa a tax return would be required to be filed. Embassies, especially those of US, UK, Canada etc. when processing your foreign visa application, are particular about your tax-compliance.
More than any other benefit, being on the right side of law helps. "It is also recommended to keep the income tax department informed about your income and taxability. This communication is only possible when you file your ITR,"