It is the responsibility of every responsible citizen to pay taxes. However, what happens if your income is so low that you are not even considered to be in the taxable slab? Does filing your income tax return still make sense? The short and straightforward response is that you should.
There are numerous advantages to filing your income tax return, even if your income is below the taxable limit. This blog will provide straightforward, understandable explanations of the following topics: the significance of filing an income tax return, how to file online, the advantages of filing electronically, and the long-term advantages of filing online.
An income tax return: what is it?
Let’s first define an income tax return before discussing the reasons you should file one.
You file an Income Tax Return (ITR) with the Indian Income Tax Department each year, which includes the following information:
- Your entire earnings for a fiscal year.
- Your exclusions and deductions.
- already-paid taxes (such as TDS).
- any further taxes owed or reimbursements that may be requested.
If your income exceeds the basic exemption limit, which is currently ₹2.5 lakh for the majority of people, you must file an income tax return. However, you can choose to voluntarily file your return even if your income is lower.
Even if your income is below the limit, why should you still file an income tax return?
Everyone, even those with modest incomes, should file an income tax return for the following compelling reasons.
1. Submit a TDS refund claim
Your bank or employer may still deduct Tax Deducted at Source (TDS) from your salary or interest on a fixed deposit even if your total income is less than ₹2.5 lakh.
Filing an income tax return is the only method to request a refund of this TDS. The government keeps your money if you fail to file.
2. Evidence of Income
Your income tax return serves as official documentation of your earnings. This comes in very handy when you
- Apply for a loan for your house, vehicle, or schooling.
- Make a credit card application.
- Hire a property.
- Put in a visa application.
As evidence of consistent income, banks and other financial institutions frequently request the last two to three years’ worth of ITRs.
3. Establish Your Credit History
Even if you have a modest income, filing your taxes online each year contributes to the development of your financial history. This facilitates future access to financial products and demonstrates your civic responsibility.
4. Forward Carry Losses
You can only use any losses you incurred this year—whether from business, capital gains, or other sources—to offset future profits if you submit your income tax return by the due date.
5. For Independent Contractors or Self-Employed
It is still preferable to file your income tax return online if you are self-employed or a freelancer with irregular income under ₹2.5 lakh. This demonstrates your company’s legality and openness, which aids in attracting customers or contracts.
6. Maintain Compliance and Steer Clear of Penalties
Authorities occasionally send notices if you fail to file, even though it is technically not required if your income is below the threshold. Avoid needless legal issues by submitting your e-file income tax return on time.
7. To submit a visa application
Many embassies require ITR receipts from the previous two to three years as evidence of financial stability if you intend to travel overseas for business, education, or pleasure.
How Can I Online File My Income Tax Return?
The government’s e-filing portal has made it incredibly simple to file your income tax return online. Here’s a step-by-step guide to online income tax filing:
Step 1: Create an account on the Income Tax E-Filing Portal.
Visit https://www.incometax.gov.in and use your PAN to register.
Step 2: Select the Appropriate ITR Form
Depending on your income type, choose the relevant ITR form:
- ITR-1: People who are paid.
- ITR-2: People who own several properties or have capital gains.
- ITR-3: Profession or business.
- ITR-4: Professionals and small businesses’ presumed income.
Step 3: Enter Your Information
Describe your income, any deductions you have made under 80C, 80D, etc., and any taxes you have already paid (such as TDS).
Step 4: Check and Send
After completing the form, make sure all the information is correct and submit it. E-verification can be done via net banking, Aadhaar OTP, or by mailing a signed ITR-V to CPC, Bengaluru.
Step 5: Acknowledgment Download
As evidence of filing, download and retain a copy of the acknowledgment after it has been filed.
The Advantages of E-Filing Your Income Tax Return
There are numerous benefits to filing your income tax return electronically:
- Quick and simple: Completed in a matter of minutes without having to go to an office.
- Trackable and secure: You can monitor the progress of your return at any time.
- Quicker refunds: Online filers receive their refunds more quickly.
- Eco-friendly: No documentation is needed.
Typical Myths Regarding Filing Income Tax Returns
Let’s dispel a few widespread myths:
Myth 1: Filing is useless because I don’t make enough money.
Truth: Filing keeps you compliant, helps you establish your financial history, and allows you to claim refunds.
Myth 2: Filing is excessively difficult.
The truth is that you can easily file your income taxes online or with professional assistance.
Myth 3: Filing will cause issues with the tax department.
The truth is that timely filing actually protects you from scrutiny.
Advice for Easy Income Tax Return Submission
- Form 16, TDS certificates, bank statements, and investment proofs should all be kept on hand. Prior to the deadline, file: July 31st is typically the date for individuals.
- Verify your bank information, Aadhaar, and PAN again.
- A copy of your filed return should be kept for future reference.
- See a tax professional if you’re not sure.
The Benefits of Filing for Both Students and Retirees
If they exceed the basic exemption or have TDS withheld, even students who work part-time or retirees who receive pensions or interest should file an income tax return. This aids in record-keeping and refund claims.
How Businesses Benefit from Filing Tax Returns Online
Filing your income tax return online as a startup or small business owner benefits more than just compliance; it also helps:
- Show off your company’s revenue.
- Make a business loan application.
- Show transparency to draw in investors.
Therefore, filing tax returns online is advantageous for both individuals and businesses.
The Future Is in E-Filing Income Tax Returns
India’s economy is transitioning to a fully digital one. You stay ahead of the game by filing your income tax return electronically. The government is streamlining, simplifying, and increasing the transparency of its procedures. Instead of using outdated, paper-based filing systems, use online ones.
What Takes Place When You Don’t File?
Even if your income is less than the threshold, if you fail to file your income tax return:
- TDS refunds are not available to you.
- You lose out on the advantages of financial history.
- If you report your income incorrectly elsewhere, you could face notices or penalties.
- It is always preferable to voluntarily file.
Concluding Remarks: Be an Informed and Conscientious Taxpayer
Paying taxes is only one aspect of filing your income tax return; another is managing your finances. Filing an income tax return helps you in many ways, whether you want to claim refunds, prove your income, establish your creditworthiness, or stay out of trouble with the law.
With the ease of online income tax filing options available today, there’s no excuse for skipping it. Enjoy peace of mind by taking a few minutes to electronically file your income tax return. Online tax return filing is quick, simple, and the wise choice.
Therefore, even if your income is below the taxable limit, you should still file your income tax return because compliance now can lead to many opportunities later.
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