Benefits of filing ITR even when income is below the exemption limit

Last Updated at: January 07, 2020
2046
Benefits of filing ITR even when income is below the exemption limit

The last date for filing the ITR (Income Tax Return) for the FY (Financial Year) 2018-19 is July 31, 2019. However, there is a category of people who need not file their returns compulsorily even though they have earned some type of income during the year.

These are people with the GTI (Gross Total Income) below the exempted limit of Rs.2.5 lakh. For the individuals above 60 years of age but less than 80 years age, this exemption limit is Rs.3 lakh and for the individuals above 80 years age, the exemption limit is Rs.5 lakh.

Why should one file their ITR?

The gross total income denotes the total income from the five heads of the income and is calculated before allowing any kind of deductions under Sections 80C to 80U of the Income Tax Act, 1961. So, if any person’s gross total income is Rs.3.30 lakh and the investment under Section 80 C is Rs.1 lakh, the taxable income will become Rs.2.3 lakh. The ITR should be still filed as the GTI exceeds the exemption limit before adjusting for the deductions.

So, in this article, we will be discussing the benefits of filing ITR even when the income is below the exemption limit.

VISA processing

If one is travelling to foreign countries or has plans to travel in the near future, proof of earning is necessary. If one is salaried then the employer certificate will help but if one is self-employed then the income details should be submitted. So, ITR return will help as the income earning proof.

Proof of income for self-employed

When one is self-employed it will not provide the earning proofs such as salary certificate from the employer and Form 16. So, ITR return will help as the proof of income which is the most convenient proof.

E-file Your Income Tax Returns

Carrying capital losses forward

If one has incurred capital losses, the Income Tax Act allows them to carry the forward losses for eight consecutive years and balance it against future income and gains.

To keep a track of these losses, the Income Tax Department has made a rule that, losses for a year cannot be carried forward without that year’s return being filed before the due date. So, even if it is a loss return, one does not have any income to show, do file the return before the due date for declaring the capital loss incurred.

Small Earnings

There are many individuals who get some small incomes such as-

  1. Interest on bank or company deposits
  2. Dividends
  3. Family pension
  4. Tax-free incomes like agricultural income, tax-free bonds etc.
  5. These individuals total income mostly will be below the taxable limit and they might feel that they are not required to file any tax returns, as they do not have to pay any taxes (because TDS is already deducted). But by filing the ITR they will be able to get legal proof of income (if they require it).

Claiming Tax Refund

If one has paid excess tax on their income, then one can file for the refund from the income tax department. It is compulsory to file ITR in order to claim this tax refund.

Getting a refund of the taxes feels like getting the paycheck credited. Many salaried people do not file their ITR as they are in an assumption that the tax on their income has already been deducted and they have Form 16. But, in some situations, the employer has paid more tax on the employee behalf, not taking in consideration of the actual house rent, tax-saving investments or the insurances. So, in this situation filing of the ITR will lead one to ask for a refund from the income tax department.

Getting Loans

If one applies for any loans such as car loan, house loan etc., then the ITR for the last 2-3 years is asked as the compulsory documents. ITR will help the lender to assess the repayment capacity and is an important document.

Purchasing a high life cover

When one buys higher life insurance cover the insurance company will ask for the proof of income to assess the cover amount to be provided to the customer. For this bank statements, salary receipt or the ITR of last 3 consecutive assessment years are necessary.

Sometimes one does not get their salary receipt or their monthly income is being paid from the different groups so the bank statement will also not work as a strong proof. So, it is better to have the ITR return filed.

So, in this way, these are the benefits of filing ITR even when income is below the exemption limit. What are you waiting for? Go, file your ITR. The last date is July 31st, 2019.

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Benefits of filing ITR even when income is below the exemption limit

2046

The last date for filing the ITR (Income Tax Return) for the FY (Financial Year) 2018-19 is July 31, 2019. However, there is a category of people who need not file their returns compulsorily even though they have earned some type of income during the year.

These are people with the GTI (Gross Total Income) below the exempted limit of Rs.2.5 lakh. For the individuals above 60 years of age but less than 80 years age, this exemption limit is Rs.3 lakh and for the individuals above 80 years age, the exemption limit is Rs.5 lakh.

Why should one file their ITR?

The gross total income denotes the total income from the five heads of the income and is calculated before allowing any kind of deductions under Sections 80C to 80U of the Income Tax Act, 1961. So, if any person’s gross total income is Rs.3.30 lakh and the investment under Section 80 C is Rs.1 lakh, the taxable income will become Rs.2.3 lakh. The ITR should be still filed as the GTI exceeds the exemption limit before adjusting for the deductions.

So, in this article, we will be discussing the benefits of filing ITR even when the income is below the exemption limit.

VISA processing

If one is travelling to foreign countries or has plans to travel in the near future, proof of earning is necessary. If one is salaried then the employer certificate will help but if one is self-employed then the income details should be submitted. So, ITR return will help as the income earning proof.

Proof of income for self-employed

When one is self-employed it will not provide the earning proofs such as salary certificate from the employer and Form 16. So, ITR return will help as the proof of income which is the most convenient proof.

E-file Your Income Tax Returns

Carrying capital losses forward

If one has incurred capital losses, the Income Tax Act allows them to carry the forward losses for eight consecutive years and balance it against future income and gains.

To keep a track of these losses, the Income Tax Department has made a rule that, losses for a year cannot be carried forward without that year’s return being filed before the due date. So, even if it is a loss return, one does not have any income to show, do file the return before the due date for declaring the capital loss incurred.

Small Earnings

There are many individuals who get some small incomes such as-

  1. Interest on bank or company deposits
  2. Dividends
  3. Family pension
  4. Tax-free incomes like agricultural income, tax-free bonds etc.
  5. These individuals total income mostly will be below the taxable limit and they might feel that they are not required to file any tax returns, as they do not have to pay any taxes (because TDS is already deducted). But by filing the ITR they will be able to get legal proof of income (if they require it).

Claiming Tax Refund

If one has paid excess tax on their income, then one can file for the refund from the income tax department. It is compulsory to file ITR in order to claim this tax refund.

Getting a refund of the taxes feels like getting the paycheck credited. Many salaried people do not file their ITR as they are in an assumption that the tax on their income has already been deducted and they have Form 16. But, in some situations, the employer has paid more tax on the employee behalf, not taking in consideration of the actual house rent, tax-saving investments or the insurances. So, in this situation filing of the ITR will lead one to ask for a refund from the income tax department.

Getting Loans

If one applies for any loans such as car loan, house loan etc., then the ITR for the last 2-3 years is asked as the compulsory documents. ITR will help the lender to assess the repayment capacity and is an important document.

Purchasing a high life cover

When one buys higher life insurance cover the insurance company will ask for the proof of income to assess the cover amount to be provided to the customer. For this bank statements, salary receipt or the ITR of last 3 consecutive assessment years are necessary.

Sometimes one does not get their salary receipt or their monthly income is being paid from the different groups so the bank statement will also not work as a strong proof. So, it is better to have the ITR return filed.

So, in this way, these are the benefits of filing ITR even when income is below the exemption limit. What are you waiting for? Go, file your ITR. The last date is July 31st, 2019.

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A lawyer with 14 years' experience, Vikram has worked with several well-known corporate law firms before joining Vakilsearch.