Often people think that if their annual income is less than the tax exemption limit, then they do not need to file Income Tax Return (ITR). But this is not true in every case. Under Income Tax rules, in certain circumstances, it may be mandatory to file ITR even if the annual income is less than Rs 4 lakh. In such a situation, it is important to be aware of the rules, so that you do not have to face any problem or notice later.
If your total income is not taxable, but you have made certain large financial transactions during the financial year, then you may have to file ITR. For example, if you have a large amount deposited in your bank account, have spent a lot on foreign travel, have paid huge electricity bills or have deposited more than the prescribed limit in a bank account, then it may be necessary to file a return.
Additionally, filing ITR is also beneficial if you want to get a refund of tax deduction (TDS), show a strong income record for future loans or set off capital losses in future years.
Even if your income is low, there are many benefits of filing ITR on time. ITR is considered an important document while taking home loan, car loan or personal loan from the bank. It is also needed in visa applications, government schemes and many financial processes.
If TDS has been deducted on your salary or bank interest, you can also get its refund by filing ITR. This is the reason why many people file returns every year despite not having any tax liability.
Before filing ITR, check your income, bank account, investments and TDS information carefully. Select the correct ITR form and keep all the necessary documents ready. After filing the return, it is also necessary to do its e-verification, only then the process is considered complete.
Experts say that it is not right to assume that there is no need to file ITR just on the basis of low income. If you fall under any of the conditions set by the Income Tax Department, it would be better to file the return on time. This can avoid legal and financial problems in the future and also keep your financial records strong.
