Even if you make less than the taxable limit, there are numerous advantages to filing a tax return.
Individuals in India are only required to file tax returns if their taxable income exceeds Rs 250,000. Individuals who pay more than Rs 100,000 for energy use or who spend more than Rs 200,000 on foreign travel are also required to file a tax return.
Even if you make less than the taxable limit, there are numerous other advantages to filing a tax return. We'll take a look at a few of them here:
1. Claiming a tax refund
Certain types of passive income, such as interest from term deposits or dividends, are subject to tax withholding. If the amount is below the threshold, many people may be excused. “Most of the individual taxpayers having only the above-mentioned income would need to file the tax returns for claiming refund of taxes. Even in the cases of salaried taxpayers where excess taxes are withheld, filing of returns would be mandatory to claim the refund of excess taxes. By filing an ITR online, the refund of taxes can be claimed in the individuals bank account that is KYC-compliant,” said by one expert.
2. Processing of Documents
The income-tax return is a crucial document for the processing of many applications. Bankers, for example, need copies of tax returns filed to verify an individual's sources of income when processing an application for a home or auto loan. Filing tax returns on a timely fashion facilitates processing rather than having to explain why returns for specific years were not filed. Aside from receiving a loan, the income tax return aids in the processing of credit cards, insurance policies, and other financial transactions.
3. Application for VISA
When people plan to work or travel outside of India, the immigration officials ask for copies of previous tax returns. The filing of tax returns helps that VISA applications are processed quickly because immigration officials consider the individual to be tax-compliant. Certain embassies, such as those of the United States, Canada, and the United Kingdom, are known to be fussy about an individual's tax return records.
4. Claiming losses
To claim specified losses for an individual taxpayer, such as losses from capital gains, business, or profession, filing a tax return by the due date is required. . “By opting to file tax returns, not only does it benefit the individual to claim the losses carried forward in future years, but it also serves as a document to track losses that can be claimed in the future. For example, an individual taxpayer who makes a profit from the sale of mutual funds or equity shares can adjust these profits with losses incurred in the past by filing tax returns on time,” informed by expert.
5. Serves as Proof of Income
Unlike salaried taxpayers who receive a salary certificate in Form 16, self-employed taxpayers have no proof of income. As a result, the income tax return acts as proof of income for these self-employed taxpayers, providing a full breakdown of their earnings and spending for any given fiscal year. Furthermore, self-employed taxpayers can use these records as proof of income in a variety of forums.
Tags: INCOME TAX