Filing Income Tax Return is an important thing and as the date for filing ITR is approaching you should have a clear idea about how to file ITR. But is it mandatory to file Income Tax Return?
A lot of people are confused about this simple question of when to file your tax return, In this short article lets see what are the conditions under which you need to file your tax return.
Who should file Income Tax Return?
As per Indian Income Tax Act 139(1), it is mandatory to file Income Tax Return, for every individual who’s income exceeds the exemption level.
People say that if you don’t have to pay tax , you don’t have to file returns which is not true totally. Lets see the simple rules.
Rule : You have to file your tax returns if your Total Income for the year exceeds the exemptions limit. That’s it !! This is the only rule which applies.
Exemption limit can be different for male (1.5 lacs), female (1.8 lacs) or senior citizen (2.25 lacs). So if your Total income for the year exceeds your exemption limit, you have to file tax.
Do you know how to calculate your tax?
Should I file Income Tax Return even if I don’t have to pay any tax?
Didn’t you read what is said above :-). The only rule is already mentioned above. You don’t have to pay tax. This can happen in two cases.
Case 1 : Income itself is below exemption limit
In this case you don’t pay tax and don’t file your Returns.
Case 2 : Your Income exceeds, but not taxable income
Though your Income exceeds, but After all the exemptions and deductions like 80C investments, HRA, Home loan interest exemption etc etc, your taxable income is below your exemption limit. In this case you don’t have to pay tax, BUT !! you have to file tax returns because your income (not taxable income) was above the exemption limit.
What are the other cases when I have to file the returns?
There are other cases also when its more than paying tax. lets see those cases
- If you have some form of losses carried forward in subsequent years to write off against profits in future, in that case its obvious, that you will have to file a return so that you can give this information.
- If Govt itself gives you notice to file tax return, it may happen that you are cheating this nation and making black money , then tax department can ask you for details and you will have to file tax return.
- If you want a Tax refund because of TDS (Tax deducted at Source by your company). This happens with people who do part time jobs for some months or with Interns in the company who are there for 3 months or 6 months and TDS is cut. So in order to get back the amount you have to file a tax return.
Watch the video given below to know why it is necessary to file ITR:
Why is it necessary to file Income Tax Return?
There are some reasons why should file income tax return, which may look simple but they have a major impact on your financial life. Lets see what are those reasons:
- If you are planning to take loan in future, the lender may ask the proof of your ITR filing.
- The ITR filing proof is also essential to get VISA if you want to travel abroad.
- It is also important if you want to claim the adjustment against past losses.
- ITR report is provided by Income Tax departments, so if you file Income Tax Return regularly on time, it will make your future transactions easier without any complications.
- In some states, you can not but an immovable property if you don’t have the Income Tax Return filing proof.
Besides all these reasons, filing Income Tax Return on time makes you a responsible citizen.