Income Tax Return (ITR) filing deadline is just around the corner, i.e. 31st July. We may miss filing our taxes due to genuine oversight, ignorance, or tend to put it off till the very last minute in the hope of extensions. It is recommended to file your taxes on time. However, in some cases, it is also advised for individuals whose annual income is less than 2.5 lakh rupees. Filing taxes and doing them on time is more valuable than we may realise for 6 reasons:
REFUND OF TDS: Have you received any income during the financial year 2021-2022 (April 2021-March 2022), which was less than what you were entitled to receive because TDS was deducted? You can claim a refund of this amount if your annual income is below Rs. 2.5 lakhs. But you can claim the refund only if you file your returns on time.
LOSS ADJUSTMENT: If you have incurred losses from the stock market, mutual funds, properties, or any of your businesses, then you can carry them forward and adjust them with next year’s income. This helps in reducing your tax liability to a great extent. Loss adjustment is permitted only if you declare the losses in your ITR and file it with the income tax department before the deadline.
IF YOU HAVE DONE THESE TRANSACTIONS: If you have undertaken the following transactions, it becomes mandatory for you to file your ITR even if your annual income is less than Rs. 2.5 lakh:
- Spent more than Rs. 1 lakh on electricity consumption
- Spent more than Rs. 2 lakhs on foreign travel for yourself or anybody else
- Deposited more than Rs 1 crore in current accounts of banks or co-operative societies.
- Deposited more than Rs. 50 lakhs in aggregate in all savings bank accounts
- Made total sales of more than Rs. 60 lakhs
- Earned gross receipts of more than Rs. 10 lakhs as a professional
- Total tax deducted or collected (TDS/TCS) is Rs. 25000 or more (Rs. 50,000 in case of senior citizens)
VERIFIED INCOME RECORD: There is no record of your income as authentic as the ITR. The Government of India (GoI) confirms through ITR that you have made this amount of money during the relevant financial year. Unlike salaried people with pay slips, freelancers do not have a valid income statement. They may use this as a verified income record wherever necessary.
VISA APPROVAL: If you want to travel abroad, you might need a visa. The visa-issuing authorities request proof of income for the last few years to ensure you are not fleeing the country without paying your dues. In these circumstances, your ITR is the most reliable proof. So, if you intend to move abroad shortly, then it is advisable to file your ITR even if your annual income is below ₹2.50 lakh.
LOAN SANCTION: If you want to apply for a loan, the bank or lending institution will require your ITR. Submitting your ITR gives them the much-needed confidence and trust to approve your loan. So, if you are considering applying for a loan, we urge you to file your ITR by the deadline to ensure a smooth loan application process.
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