Filing an ITR (Income Tax Return) helps reduce one’s taxes and get many other benefits. It can help in cases of emergency as well. It is a misconception that if the income is less than the taxable amount, one should not file an ITR. One must file an ITR even if the payment is below the taxable income slab. It helps for security purposes and is also essential for other legal procedures.
An ITR stands for Income Tax Return. It is a form that an individual is supposed to fill out to get several benefits from it. This form has information about the person’s taxes to be paid during a financial year and his income. The information in an ITR must pertain to a specific financial year. For example: – the information in an ITR must be from 1st April 2021 to 31st March 2022.
There can be various forms of income like income from salary, income from house property, capital gains, income from dividends, interests on deposits, royalty income, profits and gains from business and profession, and several other types. An ITR is filed based on all the different income sources.
The question now arises, if an individual’s income is less than the taxable income, then do we file ITR even if income is not taxable? The simple answer to this is ‘yes.’ We are supposed to file the ITR even if the income is not taxable for many purposes.
Why is filing an ITR is essential?
Filing an ITR is important, as it is an essential document regarding one’s income. It helps in getting several benefits on different taxes. The Indians whose annual income is less than INR 2,50,000 are exempted from the tariffs in India; hence, most of these people prevent filing an ITR. One can research more aspects about it on the internet.
Filing an ITR is an essential task though it is not compulsory. It works as proof of one’s income. While applying for a government subsidy you won’t need income proof if you have an ITR. Along with this, there are several other benefits of filing an ITR, which one can avail easily.
Benefits of ITR filing: –
There are many benefits of filing an ITR, like claiming a tax refund, getting a visa, carrying forward capital losses, and many more. The following are a few of these benefits discussed in detail: –
To claim tax refund: –
A person may have paid taxes on one’s income, even if it is below INR 2,50,000. Hence, one can file an income tax return (ITR) online to get the taxes refunded. One can get a refund based on taxes paid through self-assessment or TDS in a particular financial year.
If a person ignores to file an ITR, there are possibilities of not getting the refund and not availing of the benefits. Hence, filing an ITR ensures that an individual loses no chances of getting a refund on his taxes paid.
To get a visa: –
Many countries ask for an ITR while applying for that country’s visa. It is an important document when it comes to immigration. If an individual is going abroad to travel or for education, one needs an ITR, which can help make the visa process easy.
Some countries ask for only a single year’s ITR. At the same time, some governments and embassies ask for an ITR of two years to check the documents wisely. Hence, one must have an updated ITR in hand for this purpose.
- To quickly apply for a loan: –
The loan eligibility of an individual and the net income is connected. To assure more security while applying for a loan, financial institutes ask for at least two years of an income tax return, which acts as valid proof.
If an individual is self-employed, furnishing the ITR every financial year is a mandatory process. Having an ITR while applying for a loan increases the approval chances for the loan compared to those who haven’t filed the ITR previously.
To carry forward capital losses: –
If an individual’s income is below the taxable slab and the person is investing in the stock markets and is buying and selling stocks to get more income, they must file an ITR, as it can benefit such people. It helps to carry forward the losses.
Filing an ITR can help an individual carry the losses for almost eight consecutive years. Then one can offset it against one’s income and future income. If one files an ITR without any annual break, it can help carry forward the incurred losses.
To own foreign assets, ITR is mandatory: –
If an individual from India owns any asset in some different country, it becomes necessary for him to file for an ITR. It helps get taxation benefits over foreign investments and acts as a document of proof.
The foreign assets can be immovable or movable, but filing an ITR for any kind is necessary. If one fails to do it, it can lead to severe penalties and fines. Also, such kind of behavior is regarded as an economic offense.
To avail benefits from other income sources: –
One’s taxable income may be less than the tax bracket, so one doesn’t need to pay any taxes. But, there can be chances of getting additional non-taxable income from non-taxable sources like tax-free bonds.
So, filing an ITR will help you get proof of your taxable income. It can help in an emergency and reduce the risk of any penalties in the future. As it acts as proof of income, it can also save an individual from many fines and disadvantages.
One must not procrastinate in filing an income tax return for one’s income. the benefits mentioned above can help an individual in many legal procedures and in saving lots of taxes. It also allows an individual in many different ways. As a responsible citizen, it is the moral responsibility to file an ITR and follow the government norms.
Hence, everyone must file an ITR even if the income is below the taxable income slab. To get detailed information about the benefits of filing an ITR and different taxation processes, one can visit India’s best legal, taxation and compliance company known as ‘Vakilsearch.’
Vakilsearch is a law-based company that works to resolve companies’, businesses’, and individuals’ law-related issues. Their services are the best as they provide the best expert solution to tax or court-related matters. They have worked with many great Indian companies and helped many individuals fight and win many cases.
One can visit their website to get information about legal procedures and proper knowledge regarding one’s problem.