Importance of Filing Income Tax Return (ITR)

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The benefits of filing income tax return on time whether your salary is exempt from it or not

Are you confused about whether to file your ITR or not? 

You might have heard from folks around you that if you are unemployed or your salary bracket is exempt from filing ITR and its not mandatory to do it. But waitread on to know the benefits of filing ITR before you decide on how to go about it.

Best practices recommend that you file your ITR every year on time and accurately even if your income falls in the non-taxable bracket. In a case like this, since you do not owe any taxes to the government, your liability will be NIL, and hence you can file a NIL-ITR. 

Here’s a real-life scenario shared by one of our users that reiterates the importance of filing a NIL-ITR even when unemployed, or your salary is below the taxable income: A student aspiring to study in the US had applied for a federal grant hoping to reduce the financial burden through his undergraduate studies there. The process undoubtedly involves a lot of documentation, including sharing ITRs of parents for two years. As luck would have it, the mother had been a homemaker and never filed an ITR. They finally had to file a NIL-ITR. There was a lot of time and effort wasted in getting things sorted. Long story short—file a NIL-ITR even when you’re exempt from paying taxes.

Reasons why ITR filing is important

The income tax return benefits far outweigh the effort involved in getting it done. Here are a few important advantages of income tax return filing:

1. Adjust capital losses and gains

If you’ve mostly invested in equity or share market, then filing your income tax return on time will prove extremely rewarding for you. In case your total annual salary is less than the basic exemption limit, then filing an ITR is not mandatory. However, your capital losses can be adjusted against your capital gains if you file ITR. Also, you can ensure that any losses are carried forward for the next eight consecutive years, depending on whether or not you have filed your ITR for that particular FY.

2. Claim tax deductions

If your income is more than the current basic exemption limit of 3 lakhs/year, and are seeking for multiple exemptions to bring your income down to that level, you will undoubtedly need to file your ITR. Even if you do not have any tax liability, filing a tax return is mandatory if you are seeking any deductions for the future.

3. Claim tax refund

Often times it happens that TDS (Tax Deducted at Source) is deducted from your income even when your total taxable income is less than the basic exemption limit and you owe zero tax for that financial year. In order to claim your TDS refund, you’ll have to file ITR without fail.

4. Easy loan approval

Filing your ITR regularly will also come in handy whenever you apply for a loan. It could be a vehicle loan (2-wheeler or 4-wheeler), housing loan, personal loan, etc. All leading banks mandatorily ask for a copy of income tax returns as proof of income.

5. Income and address proof

Your income tax return serves the dual purpose of serving as your income and address proof as well for any official documentation.

6. Quick Visa Processing

Most countries mandatorily require you to share your ITRs for the past couple of years along with your visa application. It serves as proof of income while processing your visa request

7. Avoid penalty

As per the income tax act, if your yearly income requires you to file an income tax return but for some reason don’t go ahead with it, a penalty of 5000 could be imposed by the tax authorities. So make the right choice and file your ITR on time, every year.

File your ITR effortlessly

With the NiyoX app, filing your income tax return yourself can be a cakewalk! NiyoX in partnership with Quicko makes filing ITR easy, quick, and light on your pocket. Use the coupon code NIYOX20 on Quicko to get a 20% OFF on their annual subscription. Redeem the offer here.

The ITR filing deadline for FY 2021-22 is almost here (31st July 2022). Don’t wait till the last minute, hurry now!

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