Now that the income tax returns(ITR) filing is extended till August 31, you must have got a breather. Have you just started working and your income falls below the taxable limit? Even in this scenario, filing tax returns is important. There is a misconception that you don’t need to file if you fall below the taxable limit. But there are many benefits of filing ITR even if your annual income is less than Rs.2.5 lakhs.
As per the interim budget 2019, individual taxpayers with taxable annual income up to Rs.5 lakh will not have to pay any income tax. However, the income tax slabs and rate remains unchanged.
Here are some of the reasons why you need to file an ITR:
While your income may be under taxable limit, you may have paid taxes in other forms via TDS. The interest earned through fixed deposits, gains on your mutual fund investment can also be taxed. Hence, by filing an ITR, it is likely that you will get a refund of the taxes that you have paid. When we crave for cashbacks, then why should you let go of a possible refund.
ITR filing is absolutely necessary if you are looking forward to job opportunities in other countries. Countries like US, UK among others ask for a few years of filings. Without the ITR, it may be difficult to land with visa. Hence, if you are looking forward to work overseas, ITR will help to process your visa application.
Whether it is applying for a credit card, home loan or car loan, you will be asked to provide ITR of three years along with other documents. It helps banks to assess their customer’s repayment capacity.
If you don’t have it, taking a loan may become very difficult. In this scenario, you may have to prove your earnings and explain how you are planning to repay it and many other. You may have to apply for the loan with a co-applicant or submit collateral to cover for the repayment risk.
According to the Income Tax Act, capital losses can be carried forward for eight consecutive years. This can help you to offset future gains. But, in order to do so, you have to file ITR every year. Even if your salary is not taxable, you may have incurred capital losses in investment. Filing an ITR will help you to negate future capital gains. So, if you have investments in the stock market, then it is good practice to fileit yearly.
While your salary may not fall in the tax bracket, your income from other sources such as investments and rental income put together i.e. gross income may be well above Rs.2.5 lakh. It is better to declare your earnings from other sources which will be taken as an income proof.
Now, that you know the various benefits of filing ITR, don’t just sit back and relax while your colleagues are busy efiling. Now, it is easy to file your tax returns online through www.incometaxindiaefiling.gov.in.
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