If you are an Indian citizen and your gross total income in a financial year exceeds the taxable limit, you must file an income tax return (ITR) for that year. Similarly, persons whose income does not exceed the taxable limit in a financial year are not normally obliged to file an income tax return. This is not always the case, and some people may be required to file ITR even if their gross total income does not exceed the taxable limit. There are numerous benefits of filing an ITR even if you earn below the taxable limit.
The deadline for filing an ITR for the financial year 2020-21 or financial year 2021-22 is September 30, 2021. A resident individual under the age of 60 who earns less than 2.5 lakh rupees per year is exempt from income tax. If a person's gross total income above the tax exemption limit, they must file an ITR.
Individuals over the age of 60 but under the age of 80 are eligible for a 3 lakh rupee exemption, while those over the age of 80 are eligible for a 5 lakh rupee exemption.
Even though filing of ITR is not mandatory for some individuals, there are certain benefits that one can avail of provided the ITR has been filed. Here are few of those:
Certain passive income, such as term deposit interest or dividend income, is subject to tax withholding. Many people may be excluded if their income falls below a certain level. Tax refunds can be claimed in the bank account of a KYC-compliant individual by filing an ITR online.
Individuals, such as the one in the above example, will benefit from having submitted the ITR when applying for a vehicle loan (two-wheeler or four-wheeler). Tax returns can be requested by any large bank.
State Bank of India requires car loan applicants to provide the most recent pay stub with all deductions, a TDS certificate / Form 16, and a copy of their ITR for the previous two fiscal years.
ITR is a necessary document for processing applications for various purposes. For example, when submitting an application for a home loan or a car loan, the bank may request copies of tax returns filed in order to verify the individual's source of income. Filing tax returns on time enables for seamless processing rather than explaining why returns were not filed for particular years. Aside from securing a loan, the ITR aids in the processing of credit card or insurance policy applications.
When individuals apply for jobs or make business trips outside of India, the immigration authorities may request copies of previous tax returns filed by such individuals. Filing tax returns facilitates the processing of visa applications. This is because immigration authorities believe the individual is tax compliant. There are a few embassies, such as the US embassy, Canada, and the UK embassy, that are highly demanding about an individual's tax documents.
Self-employed taxpayers do not have any proof of income, whereas salaried employees obtain a wage certificate in Form 16. Thus, the income tax return is valuable since it provides as proof of income for self-employed taxpayers by providing a full breakdown of revenue and expenses incurred by the persons during the financial year. Self-employed taxpayers can use these documents as proof of income in a variety of forums.
While salaried employees receive Form 16, businessmen, consultants, and partners in enterprises do not. As a result, if their yearly income exceeds the basic exemption level of Rs 2.50 lakh, ITR receipts become an even more important document for them. ITR receipts are the only proof of income and tax payment for all selfemployed financial transactions.
Aadhaar – Number
PAN – Number
TDS Certificates – From 16
Bank Account – Account number, IFSC details, bank name, etc.
Tax payment Challan – For Advance tax payments or in cases of selfassessment
Original Return/Notice – Original return details if the revised return is being filed or response to notice is filed.
As you can see, there are various advantages to filing an income tax return and paying income tax. By understanding your tax duties and paying them on time, you may play a role in nation development while also receiving all of the other benefits described above. The last date of filing tax is 30th September and you should hurry up. Take advantage of this time to file your income tax return as soon as possible.