Benefits of filing ITR even when income is below exemption limit
Posted On April 4, 2020
Why you need to file ITR
“Income tax return gives you a detailed picture of your total income earned during a year and taxes paid on it. … Carry-forward of losses: Income tax rules allow carry-forward losses to set them off against capital gains only to those who file ITR in the relevant assessment year.
Who can file ITR 3?
The ITR 3 is meant for persons and HUF who earn their income, profits and gains from business or profession. This means individuals who generate income from the below two sources are should file ITR 3: Have a business or profession. Generate income from your property such as house, salary/pension and other sources.
Benefits of filing ITR
- Claiming refund
- Carry-forward of losses
- Buying a high life cover
- Avoid interest on tax liability
- Self employed
- Being a law abiding law abiding citizen
- Easy loan approval
- VISA processing
1 Claiming refund: There could be a possibility that there has been tax deducted at source (TDS) on some investment made in the name of the individual. “If TDS has been cut, one will have to file the ITR to claim refund.
2 Carry-forward of losses: If anyone has suffered losses in a year, then by filing income tax return he can carry forward that loss for next eight subsequent years to set off the same by the future income. This can help reduce the burden of tax in future years.
3 Buying a high life cover: These days life insurance companies asks for ITR receipts if you opt to buy a term policy with sum insured of Rs 50 lakh or more. Government tender: If you plan to start a business and need to fill a government tender, you will need to show your tax returns of the previous years.
3 Avoid interest on tax liability: If you don’t file ITR, the belated return could lead to extra interest on monthly basis for the remaining tax payable by you. Penalties and assessments: If any person liable to file tax returns does not file returns within the due date, then he is liable to pay penalty of up to Rs 10,000 for not filing the return within the due date in addition to the assessment findings.
4 Self employed: Salaried persons get Form 16 as their income proof but businessmen, consultants and partners of firms do not get Form 16. Hence, ITR receipts become an even more important document for them, provided their annual income exceeds the basic exemption limit of Rs 2.50 lakh. For all sorts of financial transactions, ITR receipts will be the only proof of income and tax payment for the self-employed.
5 Being a law abiding law abiding citizen: More than any other benefit, being on the right side of law helps. It is also recommended to keep the income tax department informed about your income and tax ability. This communication is only possible when you file your ITR
6 Easy loan approval: While applying for loans, the eligibility and quantum of loan would depend on one’s income which can be established through filed ITR. Income tax return gives you a detailed picture of your total income earned during a year and taxes paid on it
7 VISA processing: If you are traveling foreign consulates ask you to furnish ITR receipts of the last couple of years at the time of the visa interview. Some embassies may ask for ITR receipts of previous three years, while some others may ask for the most recent certificate.