The filing of income tax return helps in a faster and easier processing of loan documents.
The last date of filing the ITR for FY 2020-21 is nearing and unless there is an extension, it stands at December 31, 2021. It remains to be seen whether the last date for ITR filing gets an extension or not, if you are required to file ITR, it’s better to complete ITR filing before the last date. ITR filing is compulsory for those who have an income above a certain limit, below which the ITR filing is exempted. Filing ITR with no income or with income below the exemption limit has its own advantages.
Taxpayers with gross total income (GTI) below the exempted limit of Rs. 2.5 lakh are not required to file ITR. For taxpayers aged above 60 years but less than 80 years, this exemption limit is Rs. 3 lakh and for taxpayers aged above 80 years, the exemption limit is Rs. 5 lakh. Importantly, whether your income falls below the exempted limit before or after taking into income tax deductions. Once you calculate the GTI and then take the benefit of deductions available under sections 80C to 80U of the Income-tax Act, 1961, you need to file the ITR as GTI exceeds the exemption limit before adjusting for deductions.
However, even if you are not required to file ITR and there is no penalty if you don’t file. There are several reasons why to file ITR even if you are not required to file. “ITR filing is a very important task for every individual earning a certain amount and it needs to be filed even if the earning limit is not met. The filing of ITR is seen very much fruitful as it offers a way to a faster & easier loan processing. Apart from the loan, the ITR filing would return favors in easy credit card or visa application processing. All other benefits like carry forwarding of losses and TDS claims are additions that one must not ignore,” says Amit Gupta, MD, SAG Infotech.
This means, if you are looking to take a loan from a bank or any other financial institutions, it is always better to file ITR even if your income is below the exempted limit. Your income-tax return validates your credit worthiness before financial institutions and makes it possible for you to access many financial benefits such as bank credits.
Also, if you have sustained a loss in the financial year, which you propose to carry forward to the subsequent year for adjustment against subsequent years’ positive income, you must make a claim of loss by filing your ITR before the due date.
Check from Form 26AS if there has been any tax deducted at source (TDS) on some investment in your name. In that case, to get TDS refund you need to file ITR. Also, ITR forms an important income proof while arriving at compensation in case of accidental death or disability arising out of an accident.
