Yes, you should file your income tax returns – even if you aren’t on a salary
‘I gave up my full-time job last year and started working from home. Until then, I had been filing my returns religiously. My present income does not fall within the taxable bracket, yet a friend insisted I needed to file them. Last week I reached out to my brother-in-law, who happens to be a tax consultant. After a lengthy discussion (which had me much the wiser!), I realised it was the ‘thing to do’. I must file my returns!’ – Stay-at-home mom, Ranjini
So, if you are earning income from any source, you must file your Returns. However, like Ranjini above, you may not know the protocol for citizens whose earnings are below the taxable limit or someone who does not earn anything at all. Here’s some good-to-know.
Here is what the Income Tax Act says: For the financial year 2017-18, individuals less than 60 years old and earning less than 2,50,000 are exempt from filing ITR. For those between 60 and 80 years of age, income tax is exempted up to Rs.3 lakh and for those who are 80 years and above exemption level is Rs.5 lakh. If you are in the taxable bracket, here are some ways you can save tax.
But here’s the thing: Even if you are not in the taxable bracket, there are advantages to filing what is termed, ‘Nil Taxable Income Return’. The filing procedure is as simple as filing your ITR and the form to be utilized remains ITR-1 Sahaj. Even if you are not coming in the taxable income bracket, please make a Nil Tax filing. It will come in handy in situations like these:
Approval of loan
If you find yourself applying for a loan, you will see that there is one aspect common to avail all types of loans: proof of having filed your ITR. So while applying for a loan at any point, it is best to keep your ITR filing up to date.
Should you be planning a foreign trip to countries such as the USA, UK and Canada, you have to apply for a visitor’s visa which must be accompanied by your ITR files for three previous financial years for approval..
It is mandatory to file ITR if you own a foreign asset even if it does not yield any income. (So if you dream of owning that dream apartment in the UK, you know what you’ll have to do!)
ITR is not only about paying taxes, but it is also about claiming TDS refunds. Despite having an income below taxable limit, there are occasions when agencies/employers may deduct TDS upfront from your income and deposit the same to the Income Tax Department. In order to claim that refund, you must file an ITR.
Approval of credit cards
Nowadays plastic money is more important than cash. With some companies, approval or even processing of an application for credit cards must be accompanied by proof of your ITR.
Accidental insurance claim
Though it is not mandatory for persons claiming accidental death or disability benefit under the Motor Vehicles Act to produce ITR, in most cases, the claims tribunal at the Delhi High Court insists on submission of the same for processing such claims.
Addressing financial loss
Regular filing of IT returns and notifying of any financial loss incurred in a particular year empowers one to claim the same for future adjustments. You never know what the future holds – so best to be safe and file. These are called capital gains or losses and have other aspects attached to them.
In most states, registration of immovable properties requires proof that ITR has been filed for the preceding three years.
So go ahead file your Returns and secure your potential needs. Don’t forget to share this vital but less known information with anyone you know who may need it.