Income Tax Filing: Benefits of Filing an ITR Even If Total Income is Below the Exemption Limit


Filing the tax return helps in faster and easier processing of loan documents.

The latest ITR filing date for fiscal year 2020-21 is approaching and unless there is an extension, it is set for December 31, 2021. It remains to be seen whether the latest ITR filing date gets a extension or not, if you are required to file an RTI, it is best to complete the RTI filing before the last date. ITR deposit is mandatory for those with income above a certain ceiling, below which ITR deposit is exempt. Filing an ITR with no income or with income below the exemption limit has its own advantages.

Taxpayers whose Total Gross Income (GTI) is below the exempt limit of Rs. 2.5 lakh are not required to file an RTI. For taxpayers over 60 but under 80, this exemption limit is Rs. 3 lakh and for taxpayers over 80, the exemption limit is Rs. 5 lakh. It is important to know if your income falls below the exempt limit before or after deducting tax deductions. Once you have calculated the GTI and then took advantage of the deductions available under Sections 80C to 80U of the Income Tax Act 1961, you must file the ITR because the GTI exceeds the limit for exemption before adjusting deductions.

However, although you are not required to file an ITR and there is no penalty if you do not. There are several reasons for filing an ITR even if you don’t have to. “RTI deposit is a very important task for every person earning a certain amount and it should be deposited even if the income limit is not reached. RTI filing is considered to be very successful because it provides a way to process loans faster and easier. Besides the loan, the RTI deposit would help in the easy processing of credit card or visa applications. All of the other benefits such as loss deferral and TDS claims are additions that should not be ignored, ”says Amit Gupta, MD, SAG Infotech.

This means that if you are looking to take out a loan from a bank or other financial institution, it is always better to file an ITR even if your income is below the exempt limit. Your tax return validates your solvency with financial institutions and gives you access to many financial benefits such as bank loans.

In addition, if you have incurred a loss during the year, which you propose to carry forward to the following year to adjust it for the positive income of the following years, you must make a claim for loss by filing your ITR before the due date.

Check from Form 26AS to see if there has been any withholding tax (TDS) on an investment in your name. In this case, to get a TDS refund, you need to file an RTI. In addition, ITR constitutes important proof of income while arriving at compensation for accidental death or disability resulting from an accident.

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