Blog Outline
Importance of Filing Income Tax Return (ITR)
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 does not fall under the bracket of minimum income to file taxes, you are exempted from online filing an income tax return. But wait—read 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; 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 parents’ income tax ITR filing 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.
Question: What are the benefits of filing an income tax return?
Employees are issued form 16 by their employers, which is an individual’s proof of income. The ITR filing helps in giving a detailed breakdown of the income and expenses, and it serves as authentic income proof for people who are self-employed.
Carrying forward or setting off the losses incurred in a particular financial year is not possible if you are not filing an ITR return. When you file your income tax returns on time, you are helping the nation as the tax you pay can be used by the government to improve the existing infrastructure and improve other medical, health, and defence services.
Reasons why income tax return filing online is important:
The benefits far outweigh the effort involved in getting it done. Here are a few important benefits of filing an income tax return:
Adjust capital losses and gains
If you’ve mostly invested in equity or the share market, then filing an online 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.
Claim tax deductions
If your income exceeds the current basic exemption limit of ₹3 lakhs/year and is seeking 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 an online income tax return is mandatory if you seek any future deductions.
Question: What are the allowable deductions allowed to salaried employees?
Section 80C is the most extensively used option for saving income tax. The examples of such investments that come under Section 80C, 80CCC and 80CCD(1) that allow a maximum of Rs 1.5 lakh are:
- Life insurance premium
- Equity Linked Savings Scheme (ELSS)
- Employee Provident Fund (EPF)
- Annuity/ Pension Schemes
- Principal payment on home loans
- Tuition fees for children
- Contribution to PPF Account
- Sukanya Samriddhi Account
- NSC (National Saving Certificate)
- Fixed Deposit (Tax Savings)
- Post office time deposits
- National Pension Scheme
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.
Question: How to claim an income tax refund?
One of the easiest ways by which you can claim your income tax refund is by filing your ITR within the due date. The total advance tax payments can be obtained under form 26AS.
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 ITR filing as proof of income.
Income and address proof
Your income tax return in India serves the dual purpose of serving as your income and address proof as well for any official documentation.
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.
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, the tax authorities could impose a penalty of ₹5000. So make the right choice and file your ITR on time every year.
Now that you know what the benefits of filing ITR online are let us know what documents are required for e-filing of income tax returns.
Documents required for ITR Filing
Here is the list of documents required to file an income tax return or ITR in India:
- PAN Number
- Aadhar Number
- Bank account details
- TDS Certificates like Form 16, form 16A, and Form 26AS
- Tax Payment Challans
- Investment proofs can be claimed under sections 80C, 80D, 80E, and 80TTA
If you have paid more than your tax liability in a particular financial year, you are eligible to claim a tax refund. You need to keep in mind that the IT department takes 30-45 days from the date ofITR filing to process refunds.
File your ITR effortlessly
With the NiyoX app, filing your income tax return in India 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!
FAQs
Should I file ITR even if my income is not taxable?
It is considered good practice to file a tax return even if your income is not taxable. When you qualify for tax credits but do not owe tax, you will to able to claim the excess tax credit when you file your return.
How does ITR filing help when you are availing of a loan?
There are many banks that will ask you for a three-year ITR, which is required for processing the loan. ITR is considered an important document when you are looking for a personal loan or planning to buy a car or a house.
What is the last date to file ITR for FY 2022-2023?
It is 31st July 2023 for individuals and HUF and 31st October 2023 for businesses.
