01 Oct

Does your income fall below the threshold You may still need to file your income tax return

Does your income fall below the threshold? You may still need to file your income tax return

Filing an ITR is required to claim any tax refund deducted at the source

The Central Board of Direct Taxes (CBDT) has extended the deadline for filing income tax returns (ITRs) for the assessment year 2021-22 till the end of December. Those who do not have to file an ITR will have more time to go into the quality of filing returns. Here are some benefits of filing an ITR even if you have a below taxable income.

Who files the tax return?

All those under the age of 60 will have to file tax/return only if their taxable income is more than Rs 2.50 lakh, says Santosh P, Director, Alliance Tax Experts. He further said that those above 60 years of age but below 80 years can be exempted from filing returns as long as their income is less than Rs 3 lakh.

Further, senior citizens who have already crossed 80 years of age are exempted from paying tax if their income is less than Rs 5 lakh.

In the Union Budget 2021, the government had made provision for exemption of senior citizens aged 75 years and above from filing income tax returns for this year if they have pension income and interest from a fixed deposit in the same bank.

Santosh P, Director of Alliance Tax Experts, says that where a person's gross income (GTI) is between Rs 2.5 lakh and Rs 5 lakh, he can ask for tax exemption. “However, if the total income exceeds the basic exemption limit, they are required to file an income tax return for that year,” he says.

Further, the law provides for the mandatory filing in certain circumstances (such as overseas travel and spending on electricity bills, foreign income or assets, etc.) even if the total income is less than the basic discount limit.

Individuals with incomes below the basic exemption limit should consider this situation before deciding not to file an ITR, Santosh P further says.

Santosh P also adds that it will be mandatory for individuals who have deposited more than Rs 1 crore in one or more current bank accounts during the year to file a return.

Benefits of filing returns even when not required

Tax return filers can claim a refund of tax paid as TDS (Tax Deduction at Source). Conversely, if no one has filed a return, TDS cannot claim a refund.

If you want to claim a deduction for some expenses or investments, it is also necessary to pay a return, but you missed sharing it with your employer and faced higher TDS as a result.

Also, filing an ITR must claim a refund of the tax deducted at source on the payments received by an individual, who may not otherwise be liable for taxation.

If your income is higher than the basic exemption limit but less than Rs 5 lakh, you can claim a rebate of up to Rs 12,500 under Section 87A.

Santosh P says, “Where a person's GTI is between Rs 2.5 lakh to Rs 5 lakh, he can ask for tax exemption.

Santosh P further says, "Although it is not mandatory for some individuals to file an ITR, there may be some benefits if an ITR is filed."

It is necessary to file a return for further loss and for future income. They say that the income tax rules allow them to carry forward the losses away from the capital gains that are filed only in the relevant assessment year ITR.

ITR is also a common condition when applying for loans and credit cards. International visa applications may require a few years of ITR.

Keep documents

According to Santosh P, documentary evidence relating to the source of income and deduction or rebate claimed in the ITR should be preserved. Strong documents such as proof of investment/expenditure for claims under section 80C, donation receipts for section 80G, rent allowance etc., rent receipts etc. should be maintained.

According to the Finance Act, 2021, tax authorities can re-open assessments for up to three years in generic cases (six years for the earlier period) and for more than 10 years in certain cases. Therefore, based on the nature of income and assets, taxpayers should handle documents for at least six years

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