File your IT returns even if you are not a taxpayer!

If your annual income is less than the minimum taxable income and, therefore, you are not liable to pay any tax, is it still necessary to file income tax return? Of course, it is! And there are many reasons for filing IT return even if your earnings are not taxable. Currently, the basic limit for income tax exemption for individuals is Rs 2.5 lakh, Rs 3 lakh for senior citizens and Rs 5 lakh for super senior citizens (above the age of 80 years). 

Filing of IT return is necessary because it serves as a proof of income for the employed (apart from the salary certificate) and the self-employed. Also, filing ITR is necessary if the individual wishes to avail exemption for investments under Section 80C (such as contribution to PF, investments in NSC, ELSS, etc.) That apart, the IT return receipt has the residential address, so it serves as a residential proof. A person who has filed IT return can avail various types of loans such as vehicle loan, home loan, personal loan, etc. as banks ask for IT returns for the past two-three years before giving loans to individuals.

If you have filed IT return, you can also adjust current year’s losses against income/profit made in future years. The benefit of carrying forward losses will not be available if IT return is not filed. You need to file IT return if you wish to claim refund of tax on interest deducted by the bank, irrespective of whether your income is taxable or not taxable. If you are planning a trip abroad, you need to file your IT return for smooth processing of your visa application. Also, if you are a self-employed and independent professional, you do not have Form 16, so you can show ITR as a proof of your income.