Individuals have until July 31, 2022, to file their income tax returns (ITR). However, if you haven’t yet submitted yours, you can do so until December 31, 2022, by paying the penalty and foregoing certain specified changes.
However, if you earned less than the basic exemption level (Rs 2.5 lakh per year) and hence did not file a zero ITR in July, you may consider filing a belated ITR now if you want any additional advantages.
Here is a list of their advantages.
Scholarships: Various authorities regard an ITR to be proof of income (both government and private). Certain institution and/or university scholarships, for example, can be claimed by submitting an ITR. The ITR assists in establishing the prospective student’s income evidence, and insurance companies accept them as acceptable proof as well.
“Showing my nil ITR and my parent’s ITR together with other documents to college officials helped me secure a grant on tuition costs in college,” says Sudipta Chowdhury, a college graduate from the University of Calcutta.
Visas: If you want to go outside of India, you must have a valid Indian passport as well as an authorized visa. However, it is necessary to demonstrate evidence of income, which may be easily accomplished using ITR data. Along with other economic and financial proof, the visa authorities analyze income tax returns when granting visas for international travel.
Some may claim that because they earn less than Rs 2.5 lakh, this advantage (international travel visa) is useless to them.
But suppose they receive a job or a scholarship overseas in five years. Then, having a documented track record of income (no ITR) will assist them in the visa application process and will take far less time than other means necessary to demonstrate one’s income.
Loan Applications: When a person asks for a loan, the lending institution will first request the PAN, then the credit bureau score, and finally the ITR (if available). This is because if ITR is available and provided, institutions can simply determine the borrower’s creditworthiness and authorize the appropriate loan amount and interest rate.
According to Abhishek Y. Bhavsar, a chartered accountant based in Ahmedabad, there have been frequent cases, particularly with young individuals, where the past three years’ I-T returns have to be provided to the concerned banks or financial institutions when obtaining a loan.
“They frequently experience difficulties during such times.” As a result, while filing tax returns is not required, it is a good practice,” says Bhavsar.
Additional Benefits: Various further deductions and adjustments may only be claimed by submitting an ITR, and there is no ITR if the income is less than Rs 2.5 lakh.
According to Mihir Tanna, associate director of SK Patodia and Associates, a Mumbai-based CA firm, if a taxpayer needs to claim certain deductions, or claims or carries forward any loss from the current or previous years, or needs a TDS refund or refund for the excess advance tax payment, among other things, filing an ITR is required.
If a person has invested money in the National Pension System (NPS), Public Provident Fund (PPF), or another instrument and wants to claim a deduction under Section 80C or 80 CCD (1) or any other deductions, such as interest on an education loan (80 E), he or she must file an ITR or nil ITR to claim all of these benefits, regardless of income level.
Tanna goes on to say that certain individuals are required to file their ITR even if they earn less than Rs 2.5 lac in a year. For example, spending more than Rs 2 lac on foreign travel, paying more than Rs 1 lakh on electricity bills, and so on.
“If you are a resident individual with an asset or financial interest in an entity located outside of India, you must file a return. If you are a resident and have signing authority over a foreign account, you must also file an ITR “Tanna adds.