The Importance of Filing ITR Even If You Have No Taxable Income

February 12, 2024

An ITR, short for Income Tax Return, is a document individuals are required to complete to avail various benefits. It contains details about the individual’s taxable income and the corresponding taxes owed for a specific financial year. The information provided in an ITR pertains specifically to the designated financial year.

Income can take diverse forms, such as earnings from salary, income derived from house property, capital gains, dividends, interest on deposits, royalty income, profits and gains from business and profession, among various other types. An Income Tax Return (ITR) is submitted, taking into account all these distinct sources of income.

The question that arises is whether an individual should file an Income Tax Return (ITR) if their income is below the taxable threshold. The straightforward answer is ‘yes.’ It is both a requirement and necessity to file the ITR even if the income is not taxable, serving various purposes. Most of them are confused with the same questions, getting an advice from experts like us will give you a clarity about this. As the leading Income Tax Return Filing Agency in Kochi, Kerala, Chennai, we at Emblaze will delve through your financial portfolio and double-check all of your income and savings. We can also advise you on how to manage your financial portfolio successfully.

Benefits of ITR Filing, and Why Filing is Important?

Submitting an Income Tax Return (ITR) is crucial as it serves as a fundamental document pertaining to an individual’s income. It plays a pivotal role in securing various benefits related to different taxes. Based on the tax Slabs for AY 2023-24, no need to pay income tax of Up to ₹ 3,00,000 income.

Numerous advantages accompany the filing of an Income Tax Return (ITR), including the ability to claim a tax refund, facilitate visa applications, carry forward capital losses, and more. The subsequent details delve into a few of these benefits: –

To claim a tax refund:

Individuals may have paid taxes on their income, even if it falls below INR 2,50,000. Filing an income tax return (ITR) online becomes essential to potentially receive a refund. This refund is based on taxes paid through self-assessment or Tax Deducted at Source (TDS) during a specific financial year.

Neglecting to file an ITR carries the risk of missing out on potential refunds and associated benefits. Therefore, filing an ITR is crucial to ensure individuals do not forego opportunities to receive refunds on taxes paid.

To facilitate visa application:

Numerous countries require individuals to submit an Income Tax Return (ITR) when applying for a visa. This document holds significant importance in the immigration process. Whether an individual is traveling abroad for leisure or education, possessing a valid ITR can streamline the visa application process.

Requirements vary among countries, with some requesting only a single year’s ITR, while others, such as certain governments and embassies, may mandate a two-year ITR for thorough documentation scrutiny. Therefore, it is essential to have an up-to-date ITR on hand to meet these requirements.

For expeditious loan applications:

The eligibility for a loan is intricately linked to an individual’s net income. To enhance the security and credibility of loan applications, financial institutions often require a minimum of two years’ worth of Income Tax Returns (ITR) as valid proof.

For self-employed individuals, the annual submission of ITR is a mandatory practice. Possessing an updated ITR when applying for a loan significantly improves the likelihood of loan approval, setting applicants apart from those who haven’t filed their ITR previously.

To capitalize on benefits from additional income sources:

While an individual’s taxable income may fall below the tax bracket, there could be opportunities to receive non-taxable income from sources such as tax-free bonds. Filing an Income Tax Return (ITR) becomes crucial to document and provide evidence of taxable income.

In unforeseen circumstances, having an ITR on hand can be instrumental, reducing the risk of potential penalties in the future. Serving as proof of income, an ITR also shields individuals from fines and disadvantages, underscoring its importance beyond tax payment obligations.

To utilize the carry-forward of capital losses:

In instances where an individual’s income falls below the taxable threshold, and they engage in stock market investments, buying and selling stocks to generate additional income, filing an Income Tax Return (ITR) becomes essential. This practice proves beneficial as it facilitates the carrying forward of capital losses.

By filing an ITR consistently, individuals can carry forward incurred losses for up to eight consecutive years. This enables them to offset these losses against their current and future income. Maintaining an uninterrupted annual filing of ITR is key to leveraging the option of carrying forward losses for future financial benefits.

Procrastination in filing an income tax return for one’s income should be avoided, considering the various benefits outlined above. These advantages not only assist individuals in legal procedures but also contribute to substantial tax savings. Filing an Income Tax Return (ITR) holds significance in diverse ways, and as responsible citizens, it is a moral obligation to adhere to government norms.

Therefore, everyone should file an ITR, even if their income falls below the taxable slab. For detailed information on the benefits of filing an ITR and different taxation processes, individuals can explore resources provided by Emblaze Tcs, recognized as the best Financial Consultancy in Kochi, Kerala, Chennai, India.