Many Indian citizens recoil at the mere mention of taxes and tax returns. Thus very often around tax season some people are found asking, whether or not it is necessary to file returns at all. According to the current tax regulations if you have an annual income of ₹ 2.5 lakhs and above your income is considered taxable and if your income is ₹ 5 lakhs and above you are mandatory required to file returns. For senior citizens above the age of 60 any income of ₹ 3lakhs is considered taxable and super senior citizens who are above the age of 80, an income of ₹ 5 lakhs is considered taxable.
This brings us to the obvious question of whether or not it is necessary for those below the taxable income to file returns. The straight answer to this is no, however it does make sense for youngsters who are below the age of 30 to begin filing his returns, even if he does not fall into any of the tax slabs. You must be wondering how indeed does that make sense if you have a chance to evade paying taxes altogether since your income is still low. Well, give us the opportunity to elucidate:
A proof of your income
The reason your income is not taxable is that you current salary is low because you have just joined your first job. However it is a given that you will rise in your chosen path and may at a later date seek employment overseas or may want to take an academic break. At such times, your ITR will come in handy because it is considered a standard proof of income not only in India but abroad. Thus it makes sense to file your IT returns from the very beginning of your career.
Your PAN card yields great power
As you may already be aware, your PAN card that holds your permanent account number is not just a proof of your identity but is also mandatory for any other financial transaction, be it opening a savings account or a demat account. Thus it is advisable to get a PAN number as soon as you can, even if your salary is nothing to boast about.
Fetches brownie points with lenders
You may already be aware that it is necessary for everyone to build a good credit and make continual attempts at improve CIBIL score. If you make it a habit of filing ITR right from the beginning and enhance your credit score as well, you will certainly improve your chances of getting your loan application approved. With a good CIBIL score the bank will not only find you creditworthy, but will also like the fact that you are a law abiding citizen who has filed ITR voluntarily. This is will give the bank the confidence to approve the credit line you have applied for.
Claim your tax refund
This is perhaps the best part of filing your returns. By filing returns you can claim refund if your tax outgo has actually been more than the taxes you have paid. This is applicable to all those for whom tax is deducted at source (i.e TDS).
In the present day and age it has indeed become rather simple to file your own returns as the entire process can be done online, so long as you have the right documents handy. If you still don’t feel confident enough to do it on your own, take the help of a chartered accountant. Whatever you do, do not miss out on the opportunity to keep the records straight by filing ITR even if you are not under any tax slabs yet. (Check out the tax slabs in the tables provided below)
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