Income Tax Return: Even if one has nil income or income below the exempted limits, one may voluntarily file the income tax return.
Income Tax Return 2019-20: To say filing of income tax return (ITR) is not necessary for all individuals may not be entirely wrong. Those who have an annual income below the exempted limits are not required to file the ITR. The basic exemption limit varies as per age – For those above age 80, it is Rs 5 lakh, for those between 60 years and 80 years, it is Rs 3 lakh and for all others, it is Rs 2.5 lakh. However, if one has nil income or income below the exempted limits, one may voluntarily file the income tax return. There are several benefits in doing so, let us see some of them.
1. Establishing compensation
As per the Claims Tribunals agreed procedures approved by the Delhi High Court, the compensation limit for accidental death or disability is to be established through the ITR of the affected person if he or she is a self-employed individual. For salaried individuals, a salary statement or bank statement will suffice. Therefore, it’s better to keep a record of income proof through the proper filing of ITRs.
ITR serves as an important income proof when one goes to a lender for taking a loan. Ensure that the ITR has been verified with the I-T department as the filing is complete only when it gets processed. The ITR carries a detailed break-up of the income which could be from different sources such as salary, business, capital gains, house property or any other income. It helps the lender in estimating the loan eligibility and also keeps the loan sanctioning process smooth. Non-salaried individuals may use this mode to establish income proof more than salaried employees as the latter are provided Form 16 which too can serve as income proof. Your income tax returns help in validating your creditworthiness when you go to any financial institutions to avail any credit such as personal loan, car loan or a home loan.
3. Life insurance
If you are looking to buy life insurance, you may be required to furnish the ITR. Although, it is not mandatory but to establish your income, insurers may insist for ITRs especially in the case of term insurance plans if the sum assured sought is high say, Rs 50 lakh or Rs 1 crore or above.
Must Watch: How To File ITR-1 for AY 2019-20 in less than 15 minutes; Explained on Income Tax Portal
4. Visa application
If you are going to go abroad, some foreign consulates may ask for ITR failing which the Visa processing may get prolonged or even be declined. Some may ask for at least three years while in some cases it could be for the latest assessment year.
5. Set-off of capital loss
If you have incurred a capital loss, it can be carried forward to subsequent assessment years and can be set-off against capital gains. But, if your total income is below exemption limit, you may not file ITR. In doing so, the benefit of set-off gets lost as it can be claimed only if you had filed the ITR in the relevant assessment year.