The last date for filing an income tax return (ITR) for FY 2022-2023 is 31st July 2023. However, many people think that they do not have to file income tax returns as their annual income does not fall under the income slab and it is below Rs. 2.5 Lakh.
If you do not fall in the income tax slab to file ITR, you should do. We are telling you why you should consider ITR returns.
Ease of getting a loan – ITR acts as income proof. All public, private, and NBFCs accept it as proof of income. Your annual income and the taxes you pay on it are shown in full on your income tax return. Most banks ask for an ITR return when you apply for a home loan or big ticket-size loan. When you file ITR regularly, it is easier to get a loan.
Helps in getting a visa – If you are planning to go to another country, at the time of visa application, you will ask for ITR returns. Visa authorities in many countries ask for a 3 to 5-year ITR for the visa. This helps them to get a glance at your financial status.
Claiming refund – There’s a chance that tax deducted at source (TDS) was applied to an investment made in the person’s name. If TDS has been reduced, one must submit an ITR to request a return of that amount. The Income Tax Department evaluates your ITR once you file it. If you receive a refund, the money is credited right away to your bank account.
Acts as an address proof – Your registered address will receive the ITR receipt, which can be used as proof of residence. In addition, it acts as your proof of income for you.
Medical Insurance – The IT Department provides deductions for health insurance premiums paid within a certain fiscal year up to a maximum of Rs. 50,000. The Income Tax Act’s Section 80D applies to this. Senior citizens who have medical insurance may use this deduction and receive treatments without difficulty.
Loss compensation – Any corporation or firm may suffer a loss at any point within a certain fiscal year. Companies must submit IT returns to make up for the loss. This process allows one to carry over their tax losses to the following year. To claim the losses in the future assesses must submit ITR before the deadline.
Acts as income proof – For those who are salaried, Form 16 suffices as proof of income. ITR becomes evidence of income and taxes paid in the case of businesspeople, professionals, consultants, partners of the firm, and other linked people.
For getting yourself insured – Insurance firms request copies of the completed income tax returns for ITR receipts when a customer purchases a term policy for Rs. 50 lacs or more. As a result, filing an ITR is crucial when purchasing expensive insurance.
Owning property (international property) will be a lot simpler – If a person has any foreign assets, they are required by law to appropriately file their income tax reports. This clause also applies to any immovable property you may own, such as a bank account. Failure to follow this rule may result in substantial penalties and is also regarded as a serious economic infraction.
If you invest in stocks or mutual funds and incur losses, you must file income tax returns within the required time frame to carry the loss over to the following year. Otherwise, if you experience capital gains in the following year, the loss will be carried back.
Who has to file ITR?
Even if their income is below the tax threshold, these individuals are nonetheless required to pay income tax if any of the following conditions are met.
- A person must file an income tax return if their business’s annual total sales, turnover, or gross receipts exceed Rs. 60 lahks.
- If the individual’s professional gross income for the previous year totaled more than Rs 10 lakh, they are required to file an ITR.
- If TDS or TCS totaled Rs 25,000 or more for the year, a tax return for that period must be filed. If a senior citizen’s total TDS or TCS for the fiscal year is Rs. 50,000 or more, this rule will apply to them.
- If a person made at least Rs. 50 lakh in deposits into one or more savings accounts during the previous year, they are required to file an income tax return.
Under the seventh provision of Section 139 (1) of the Income Tax Act, 1961, below are the conditions;
- who maintains one or more current accounts with a bank or cooperative bank and has deposited a sum of money, individually or collectively, that exceeds Rs. 1 crore.
- anyone has spent more than Rs. 2 lahks for themselves or another person to travel abroad, whether individually or collectively.
- who has spent more than Rs 1 lakh on energy in a single bill or overall during the fiscal year.
- folks who are typically residents and receive their money from elsewhere.
- if a person is not eligible for a capital gains tax deduction under sections because their gross annual income exceeds the exemption level.
Before allowing any deductions under sections 80C to 80U of the Income-tax Act, 1961, the gross total income is determined as the sum of the income from each of the five heads of income. The ITR still needs to be submitted because the gross total income (GTI) exceeds the exemption level before adjusting for deductions, thus if one’s gross total income is, for example, Rs 3.30 lakh and an investment under Section 80 C is Rs 1 lakh, the taxable income becomes Rs 2.3 lakh.
