There is less than a month left to file income tax returns (ITR) for last financial year FY 2015-16 (AY 2016-17) and many people are still confused if they should even file their ITR.
Who needs to file ITR Mandatorily?
If your total gross income in FY 2015-16 was more than the taxable limit, you need to file your income tax returns. The limit was as follows:
- For people less than 60 Years of age – Rs 2.5 Lakhs
- For people between 60 to 80 years of age – Rs 3 Lakhs
- For people above 80 years of age – Rs 5 Lakhs
This income means income before availing any tax deductions from 80C to 80U.
Also Read: Verify Form 26AS while filing ITR
You also need to file your ITR if you are resident have any asset or financial interest in an entity located outside of India.
Why you should file ITR?
Even if you are not in the above category that needs to mandatorily file their return, you should file your returns.
1. Claiming excess Tax Refunds:
There is no other way to claim excess tax refunds than filing ITR. Today TDS deduction has become mandatory across a lot of payments. The employer deducts TDS from salary, bank from FD interest rates, companies from payments to consultants, etc. Due to this you might have paid extra tax. The only way to get it back is file your ITR.
2. Carry forward losses:
Income tax laws allow you to carry forward and adjust some losses like stock market transactions (short term capital gains) against future income. For this you need to file your ITR showing these losses.
3. Loan processing:
If you are hunting for loans from financial institutions, they insist on 2 to 3 years of ITR. ITR is the most authentic proof of income of person and it helps banks understand your financials over the years.
4. Visa Processing:
If you are planning to apply for work or immigration visa, you must have your 2 to 3 years ITR ready. This is especially applicable for US, UK, Canada and other European countries.
The good thing is over the years ITR filing has become easier and more and more information on how to fill forms are available online. Even if you hire a tax preparer it won’t cost much especially in low income cases.
All in all the effort involved in filing tax returns far out weights the advantages and hence go for it!