Filing of tax returns in India is mandatory for folks only when their taxable revenue exceeds Rs 250,000. Besides, folks paying towards consumption of electrical energy more than Rs one hundred,000 or these who have undertaken foreign travel for more than Rs 200,000 are also necessary to file a tax return.
However, there are numerous other added benefits pursuant to filing the tax return even if you earn under the taxable limit. Here we are taking a look at some of them:
1. Claiming a tax refund
Certain passive revenue such as term deposit interest or dividend revenue suffers tax withholding. For numerous folks these could be exempt if it is under the threshold. “Most of the individual taxpayers having only the above-mentioned income would need to file the tax returns for claiming refund of taxes. Even in the cases of salaried taxpayers where excess taxes are withheld, filing of returns would be mandatory to claim the refund of excess taxes. By filing an ITR online, the refund of taxes can be claimed in the individuals bank account that is KYC-compliant,” says Sudhakar Sethuraman, Partner, Deloitte India.
2. Processing of Documents
Income-tax return is a essential document for the objective of processing applications for a variety of purposes. For instance, at the time of lodging an application for processing of a home or auto loan, bankers seek the copies of tax returns filed to confirm the individual’s sources of revenue. The tax returns filed on prudent basis assistance in smooth processing than possessing to clarify why returns for specific years have been not filed. Besides securing a loan, the ITR assists in the processing of getting credit cards, insurance coverage policies, and so on.
3. Application for VISA
Where folks are preparing to take up a job or conduct company visits outdoors India, the immigration authorities request for copies of tax returns filed in the previous. The tax return filing guarantees in smooth processing of VISA applications as immigration authorities then deem the person as tax-compliant. It is seen that specific embassies that of the US, Canada, UK, and so on. are certain about the tax return records of the person.
4. Claiming losses
Filing of tax return inside the due date is mandatory to claim specified losses for an person taxpayer, such as losses from capital gains, company, or profession, and so on. “By opting to file tax returns, not only does it benefit the individual to claim the losses carried forward in future years, but it also serves as a document to track losses that can be claimed in the future. For example, an individual taxpayer who makes a profit from the sale of mutual funds or equity shares can adjust these profits with losses incurred in the past by filing tax returns on time,” informs Sethuraman.
5. Serves as Proof of Income
Self-employed taxpayers do not have any proof of revenue as opposed to salaried folks who obtain a salary certificate in Form 16. Therefore, the tax return serves as a proof of revenue for these self-employed taxpayers with detailed break-down of revenue and costs incurred by these folks in the course of any monetary year. Besides, self-employed taxpayers can also furnish these documents ahead of a variety of forums as proof of revenue.