Filling of Income Tax Return is mandatory in following cases:
♣ The exemption limit for a normal taxpayer is ₹ 2.5 lakhs, ₹ 3 lakhs for senior citizens, and ₹ 5 lakhs for super senior citizens. Filling of ITR is mandatory, if taxable income exceeding the exemption limit.
♣ Individual owning assets outside India and accruing income from the same must file ITR.
♣ A person paying more than ₹1 lakh for electricity within the fiscal year has to file IT returns.
♣ Assesses depositing more than ₹1 crore in one or more bank accounts in a financial year should file ITR.
♣ One should file for income tax returns if he/she spends more than ₹2 lakhs in overseas travel during the financial year.
However, there are many benefits pursuant to filing the tax return even if you don’t fall under any mandatory provision.
1. Easy processing of loans: Banks ask for a three-year ITR while processing a loan for its customers. ITR will be a very helpful document for you if you are planning to buy a car or a house, or looking for a personal loan. Besides securing a loan, the income tax return helps in the processing of obtaining credit cards, insurance policies, etc
2. Application for VISA: Where individuals are planning to take up a job or conduct business visits outside India, the immigration authorities request for copies of tax returns filed in the past. The tax return filing ensures in smooth processing of VISA applications as immigration authorities then deem the individual as tax-compliant. It is seen that certain embassies that of the US, Canada, the UK, etc. are particular about the tax return records of the individual.
3. Serves as Proof of Income: Self-employed taxpayers do not have any proof of income unlike salaried individuals who receive a salary certificate in Form 16. Therefore, the income tax return serves as a proof of income for these self-employed taxpayers with detailed break-down of income and expenses incurred by these individuals during any financial year.
4. Claim tax refund: One of the biggest benefits of ITR filing is you get to claim a tax refund.. If you have made investments in tax saving instruments and have paid more income tax, you are liable for a tax refund.
5. Carry Forward of losses: Filing of tax return within the due date is mandatory to claim specified losses for an individual taxpayer, such as losses from capital gains, business, or profession, etc. “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.
6. Avoid Penalty: If you are required to file your returns but didn’t, then the tax officer deserve the right to impose a penalty of up to ₹ 5000.
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