Income tax return: Advantages of filing ITR even if income is below exemption limit

Pros of filing ITR even if income is below exemption limit 

New Delhi: The last date to file an income tax return for the financial year 2018-19 or assessment year (AY) 2020 is July 31, 2019. There is a section of people who do not have to file their income tax returns mandatorily despite earning some income during the year.

It may be noted that the income tax slab for resident individual below 60 years of age earning up to Rs 2.5 lakh is exempt from income tax. Individuals aged above 60 years but less than 80 years (senior citizens), this exemption limit is Rs 3 lakh and for individuals aged above 80 years (super senior citizens), the exemption limit is Rs 5 lakh.

However, even if you are not required to file ITR by law, it is advisable that should do. Here's why-

1. If you are applying for the loan, banks check the eligibility which depends upon one's income. They also decide the quantum of loan on the basis of the income which can be established through filed income tax returns. Apart from this, ITR documents are accepted by various institutions for the easier loan and visa processing.

2.  If you are applying for the visa, most often authorities ask for the past income tax returns' copies. This would come handy if you apply for the visa in the future. ITR would ensure that you will be able to take care of your expenses during your trip.

3. An income tax return is important for freelancers, self-employed people or independent professionals. They do not have Form 16, therefore, this will help them to establish the fact he or she has filed ITR. 

4. If you have applied for the credit card, then banks or other financial institutions might reject your application if you have not filed your ITR.   

Worth mentioning here is that then Finance Minister Piyush Goyal in Interim Budget 2019-20, did not propose to change any income tax slabs for any citizen category. However, Goyal had proposed that individual taxpayers having a taxable annual income up to Rs 5 lakh will get a full tax rebate. All the applicable income tax rates were also kept unchanged. 

According to the Interim Budget proposals, a rebate of Rs 12,500 will be available for taxpayers who have taxable income up to Rs 5 lakh. Under Section 87A of the Income Tax Act, this rebate will be given. It was also proposed to increase the standard deduction by Rs 10,000 to Rs 50,000 from Rs 40,000. Therefore, all the salaried individuals can claim a standard deduction of Rs 50,000 on their respective taxable income.