As the last day of filing income tax return is coming near, it’s finally time for tax payers to do what they haven’t from so far. The question is it still mandatory to file return if the income is below the taxable limit of Rs. 2.5 lakh per annum. The answer is yes; under certain circumstances it is beneficial to file return even then. There are certain cases which are mandatory while others have benefits of filing return.
One of the biggest benefits of filing return is that it helps in applying for loan in future or applying for visa etc. For clearance of any loan by lender or bank for say home loan, car loan or any vehicle loan, they ask for proof of tax return statements of past three years.
So for instance, if you have monthly income of Rs. 20000 which amounts to less Rs. 2.5 lakh in a year, you are not obliged to file income tax return. But doing so can be beneficial in a long run to provide as a proof of your finances. Filing income tax returns act as a proof of your income when applying for loan as a co-borrower too.
Also, from the year 2012 it has been made mandatory for individual holding a foreign asset to file for income tax return if the asset has no yield. A foreign asset may refer to any foreign account, immovable property, partnership firm etc.
What happens when you file an income tax return?
Let’s take an example of a senior citizen who has an income of 7 lakh which is nontaxable, in the form of tax free shares. Her taxable income is Rs. 14000 which comes below the taxable limit of Rs. 2.5 lakhs. However, she is advised to file return for the same to have it as a proof that she has an income, though not taxable. When you fill a ITR form, it has a column where you are required to show your nontaxable income.
Filing for tax returns also helps in claiming tax returns or to set off the losses. You can set off the losses that may have incurred in share marketing by carrying forward them to the next year. This can be done by filing for a refund even if your annual income is less than Rs. 2.5 lakh.
Even in cases of tax deducted at source or in case of income earned through freelancing, you can file for income tax return for claiming it.
Last Date of filling of ITR for the A.Y. 2016-17 is 05 August 2016.
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