For the financial year 2022-23 and assessment year 2023-24, the deadline to file ITR or the Income Tax Return is July 31. The e-filing portal has been very active recently as the traffic of taxpayers has increased to file their taxes for the present assessment year.
Misconception Between ITR Filing and Zero Taxable Income
There’s confusion and misconception among the taxpayers having no tax liability. Their concept about ITR is that they don’t need to file Income Tax Return as their income is below the taxable limit. But this perspective is completely wrong.
There is a basic exemption limit set by the Income Tax Department of India as per which taxpayers are directed to file their ITRs if their income exceeds this limit in a financial year. However, in a few cases, even taxpayers having income below the exemption limit are required to file ITR irrespective of their eligibility.
Furthermore, ITR filing irrespective of the limit set by the Government offers many financial benefits that we will discuss in detail.
Here’re the Major Benefits of Filing ITR Even for Taxpayers Having Non Taxable Income:
Becomes a Legal Proof
ITR is a report that contains all your financial transactions. After approval by the Income Tax Department, it becomes a legal document proving your identity and income both. Hence, you can use this document where identity proof or income proof is required.
In Claiming Deductions
Some tax deductions or exemptions to lower the taxable amount of a person are allowed by the Income Tax Department. This helps to offer some relief to the taxpayers by reducing their tax burden. However, the relaxation for the tax liability is granted after making specific investments in Government assets or schemes, which also ultimately benefits the investor.
Moreover, if your income is below the taxable limit and your employer has cut TDS or if you are a freelancer and your wage is paid after a TDS deduction of 10 per cent then also you can claim a refund by filing ITR.
Easy Loan Applications
When you apply for a loan of any type, the lender always asks for the returns of three previous years. Whether it is a home loan, education loan, car loan, consumer durable, or any type, you will always have to provide ITRs as income proof to the lender. The simple reason behind this is that the lender just wants to know the financial situation of its borrower.
If you’re planning to go abroad and then not filing ITR can become a problem. It is because ITR is considered the most essential document that is required by the countries to know your financial status.
Getting Tax Refund
You can set off losses and claim tax refunds when only you have filed ITR. Moreover, the important part is that if you incurred losses in the current financial year and you want to carry them forward to the next year, the ITR will be required.