The question whether filing ITR is mandatory, depends on a number of factors like income, age, residence etc. Even if a person does’t fall in these categories he can still file ITR to enjoy many benefits. Such as getting refunds, applying for loans, applying for tenders, startup funding etc. Before going further into the details lets understand the importance and meaning of filing ITR.
What is filing Income Tax Return?
ITR is a statement of an individual’s annual gross income earned across different sources, his tax liabilities, taxes paid and refunds (if any) that the government is supposed to pay. An Individual is legally required to file ITR if his total income without allowing deductions under section 80C to 80U goes over the basic exemption limit. This action provides proof for the income as legal and disclosed.
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Who needs to file Income Tax Return?
- Individuals with gross total income (before allowing any deductions under section 80C to 80U) exceeding Rs. 2,50,000 in a financial year, for resident senior citizens (between 60 years to 80 years) exceeding Rs. 3,00,000 and Rs. 5,00,000 for resident super senior citizens (above 80 years).
- Individual who wants to claim a tax refund for the financial year.
- Indian resident who owns an asset or financial interest located abroad and acts as a signing authority for any foreign account.
- Individuals with tax-exempt long-term capital gains from the sale of equity shares in a company or unit of an equity oriented mutual funds or unit of business trust for more than Rs.2,50,000.
- Income earned from the sale of a property which had been held under a charitable trust, religious trust, political party, educational institution, any authority, body or trust.
Company or Firm
- It is mandatory to file ITR for a company or a firm, irrespective of whether you have profit or loss.
- It is mandatory to file ITR for a foreign company which has been taking treaty benefit on any transaction made in India.
- NRI (Non-Resident Indian) with total gross income earned or accrued in India exceeds Rs. 2,50,000 in a financial year.
Benefits of filing Income Tax Return
Even if you do not fall into any of the above criteria but are looking forward to avail any kind of loan, then you should file Income Tax Return. ITR filings are taken as valid income proofs and are often asked while opting for any kind of loan.
- Saves you from being subjected to respective penalties for the default.
- Increases chances of availing any kind of loan if required in future.
- It helps you provide authentic proof and decreases complications while applying for loans or making any transactions.
- Helps in claiming adjustment against past losses, filing returns are useful when someone needs to file a revised return. An individual cannot file a revised return unless he has filed the original return.
It is better to file ITR not just to save yourself from getting penalized but also to act as a responsible citizen. Even if you think it’s not mandatory for you, it is still wise to voluntarily do so. So don’t sit back and relax as you must have noticed that filling ITR comes with a number of benefits.
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