YOU NEED TO FILE AN ITR? EVEN IF MY TAXABLE INCOME IS BELOW THE THRESHOLD LIMIT?
Introduction of file itr
Income Tax Return (ITR) filing is a financial responsibility that many individuals and entities must adhere to in India. The threshold limit, also known as the basic exemption limit, refers to the income level below which individuals are not liable to pay income tax. While not all individuals with income below the threshold limit are required to file an ITR, there are situations where filing may be necessary or beneficial.
This comprehensive guide will explore the circumstances in which individuals, even with income below the threshold limit, may need to file an ITR in India. It will also discuss the importance and benefits of voluntary ITR filing, as well as provide guidance on how to file an ITR when your income is below the threshold limit.Visitofficialwebsite
Understanding the Threshold Limit
The threshold limit, or basic exemption limit, is the income level at which an individual or entity is not liable to pay income tax. In India, the threshold limit varies based on the individual’s age and income sources. As of the last update to my knowledge in 2022, here are the threshold limits for different categories of taxpayers:
Individuals Below 60 Years: The threshold limit is Rs. 2.5 lakhs for individuals below the age of 60. If their income is below this limit, they are not liable to pay income tax.
Senior Citizens (Aged 60 to 80): Senior citizens are eligible for a higher threshold limit of Rs. 3 lakhs. If their income falls below this limit, they do not have to pay income tax.
Super Senior Citizens (Aged 80 and above): Super senior citizens have the highest threshold limit, which is Rs. 5 lakhs. If their income remains below this limit, they are not required to pay income tax.
Importance of Filing an ITR
Filing an Income Tax Return (ITR) serves several essential purposes, even if your taxable income is below the threshold limit. Some of the key reasons why ITR filing is important include:
Legal Compliance: Filing an ITR is a legal obligation in India if your income exceeds the specified limit. Non-compliance can lead to penalties and legal consequences.
Proof of Income: An ITR serves as official proof of your income. It is often required when applying for loans, visas, or during various financial transactions.
Claiming Deductions and Exemptions: By filing an ITR, you can claim deductions and exemptions that you may be eligible for, even if your taxable income is below the threshold limit.
Record of Financial Transactions: ITRs provide a comprehensive record of your financial transactions, which can be useful for future reference or in the event of a tax audit.
Assessment and Tax Audits: Even if you are not required to pay taxes due to your income being below the threshold limit, your ITR may still be subject to scrutiny, assessment, or audit by the Income Tax Department.
Receiving Tax Refunds: If you have paid excess taxes, you can receive a tax refund by filing an ITR.
Is it mandatory to file income tax return below 2.5 lakhs
Provided it’s above Rs. 2,50,000, it’s mandatory to file Income Tax return as your income falls in the taxable slab . If it’s less than Rs. 2,50,000 you could skip it as the Income Tax Department exempts taxes for Individuals with income below Rs.
Is it possible to check the status of your income tax return (ITR) online without a PAN number
Step 1: Go to the e-Filing portal homepage.
Step 2: Click Income Tax Return (ITR) Status.
Step 3: On the Income Tax Return (ITR) Status page, enter your acknowledgement number and a valid mobile number and click Continue.
Step 4: Enter the 6-digit OTP received on your mobile number entered in Step 3 and click Submit.
How can a freelancer earning less than 2.5 Lakhs a year file income tax returns
As a freelancer earning less than 2.5 Lakhs a year, you are not required to file income tax returns in India. However, if you have a business or professional income, you will need to file returns. Additionally, if you have any other income such as rental income, capital gains, or interest income, you will need to file returns.You can file your income tax return online using the Income Tax e-filing website. You will need to register on the website first and then you can file your returns. The process is fairly straightforward and you can find detailed instructions on the website.It is important to keep in mind that you will need to keep accurate records of your income and expenses to ensure that your returns are accurate. I recommend consulting a tax expert or accountant if you have any questions or concerns about filing your income tax returns.
Is it mandatory for companies to file IT returns if the income is less than 2.5 lakhs
Yes, it is mandatory for companies to file ITR (Income Tax Return), even if the income is less than INR 2.5 Lakh in a financial year.
Each registered company have to file their ITR each year irrespective of their turnover or income for the financial year. In short, all companies are liable to file their ITR each year.
Companies usually have to file ITR 6. However, if the company is a section 8 company i.e. a not for profit organization, in that case, it can file ITR 7.
ITR 6 is to be filed by any company other than those claiming exemption under section 11.
ITR 7 can be filed by Section 8 companies like trusts, political parties, scientific research organization, colleges and universities, etc.
when should i file an itr after the pan update
You can file an ITR after the PAN update as soon as you have the updated PAN details. There is no need to wait for the updated PAN card to arrive.
The due date for filing ITR for the financial year 2022-23 is 31st July 2023. However, if you have updated your PAN details after 31st July 2023, you can still file your ITR by 31st December 2023.
Here are the steps on how to file an ITR after the PAN update:
- Go to the Income Tax e-filing website and login to your account.
- Click on the “File Income Tax Return” tab.
- Select the “Update PAN Details” option.
- Enter your old PAN and new PAN details.
- Review your return and click on the “Submit” button.
You can also file an ITR after the PAN update through the Cleartax website or app.
If you have any questions about filing an ITR after the PAN update, you should consult with a tax advisor.
Here are some additional tips to help you file an ITR after the PAN update:
- Make sure you have the updated PAN details.
- Check your Form 26AS to make sure that the TDS details have been updated with the new PAN.
- Review your return carefully before submitting it.
I hope this helps!
Situations Requiring ITR Filing
There are specific situations in which you may need to file an ITR in India, even if your income is below the threshold limit. Here are some of the common scenarios that require ITR filing:
1. Claiming Tax Refunds:
If you have paid taxes or your employer has deducted taxes at source, but your income is below the threshold limit, you may be eligible for a tax refund. To claim this refund, you must file an ITR.
2. Foreign Assets and Income:
If you have foreign assets or foreign-sourced income, including interest, dividends, or capital gains, you are required to file an ITR, irrespective of your income level.
3. Mandatory Filing for Companies:
If you run a company, you are required to file an ITR even if the company’s income is below the threshold limit. There are no basic exemption limits for companies.
4. Carrying Forward Losses:
If you have incurred financial losses in a particular financial year, you may want to carry forward these losses to set them off against future gains. This requires filing an ITR.
5. Applying for Loans and Visas:
Many financial institutions and foreign embassies may require you to submit your ITR as proof of income and tax compliance when applying for loans, credit cards, or visas, even if your income is below the threshold limit.
Can I get a 5 lakh loan without filing an income tax return?
It is possible to get a home loan without a salary and without filing an income tax return, but it may be more challenging and may require additional documentation and proof of income.
- Proof of income: Banks and other financial institutions typically require proof of income to approve a home loan. If you don’t have a salary, you will need to provide alternative documentation, such as business income, rental income, or investment income.
2. Other forms of collateral: Banks may also consider other forms of collateral, such as property, shares, fixed deposits, NSC, KVP etc. as security against the loan.
3. Co-Applicant: You can also consider having a co-applicant who has a salary and filed ITR.
4. Credit score: A good credit score can help increase the chances of getting a home loan, regardless of whether you have a salary or not.
5. NBFC: You can also consider taking a loan from non-banking financial companies (NBFCs) which may have more flexible lending criteria.
Can you get a personal loan without submitting your income tax return (ITR) or PAN card
If you are going to approach any financial institute ( which you don’t know or have any financial relationship with bank or NBFCs in past) for personal without pan card and a salary slip then you will get a big No….!!
But Few financial institutions i.e NBFCs or banks consider giving a loan without documents and income proof, purely based on customer persona and relationship. If you have a good relationship with the NBFCs based on your timely payments and clear credit records, then they may offer you a personal loan based on the details already available with the bank.
Here are a few things you need to do, in order to avail a documentation-free unsecured personal loan:
- If you are holding a credit card with that particular bank or NBFCs, So make sure that you can pay all your credit card bills on time.
- Do not miss any payments, where you are looking applying for a personal loan. A missed payment is a sign of incapability of handling finances.
- Be loyal to your bank for all financial, and non-financial services. This will helps in building trust with the bank which then decides your loan eligibility as well as your repayment capacity.
Do I need to file an income tax return even if my income is less than 2.5 lakhs
Return filing is not necessary. However it is strongly recommended that you do.
Return filing is not as hectic as it used to be. With the introduction of ITR1 sahaj, you can file your return in minutes.
I will tell you why return filing is important. Did you know to take long term loans from a bank, you have to submit your past returns too… apart from that, you can claim deductions against things you have invested, or made payments to…
And finally, filing your return may give you a refund against the taxes, including TDS, you have paid throughout the year.
Again, there is no need to file your return if your income is less than the basic exemption limit. But return filing won’t do you any harm.
It is always the best to file your return, and if you want any assistance… just send me a DM, I will help you out.
Hope it helps
How to File an ITR When Below the Threshold Limit
If you decide to file an ITR in India, even with income below the threshold limit, you can follow these steps:
Choose the Appropriate ITR Form: Select the correct ITR form based on your income sources and other factors. The Income Tax Department provides different forms for different types of taxpayers.
Gather the Necessary Documents: Collect all relevant documents, including Form 16 (if applicable), bank statements, investment details, and any other income-related records.
File the ITR Online: The most convenient and commonly used method is to file your ITR online through the official Income Tax Department’s e-filing portal. Create an account or log in if you already have one.
Fill in the Details: Enter all required information in the ITR form, including your personal details, income sources, deductions, and exemptions. Double-check the accuracy of the information.
Calculate Tax Liability: Use the form to calculate your total taxable income and the resulting tax liability. If your income is below the threshold limit, your tax liability should be zero.
File the ITR: After verifying the information, submit your ITR online. You will receive an acknowledgment that your return has been successfully filed.
Keep Records: Maintain copies of the filed ITR and acknowledgment for your records. This documentation may be required for future reference.
Benefits of Voluntary ITR Filing
Filing an ITR voluntarily, even if your income is below the threshold limit, can offer several benefits:
1. Proof of Income:
An ITR serves as official proof of your income, which can be useful in various situations, such as applying for a loan, renting property, or securing a job.
2. Creditworthiness:
A history of ITR filing, even with no tax liability, can positively impact your creditworthiness. It demonstrates financial responsibility and can lead to more favorable terms for loans and credit.
3. Visa and Immigration:
For foreign travel, visa applications, or immigration, providing your ITR as evidence of financial stability and compliance with tax laws can be a significant advantage.
4. Claiming Deductions and Exemptions:
Voluntary ITR filing allows you to claim deductions and exemptions that you may be eligible for, reducing your tax liability in the future.
how auriga accounting help you to file ITR income below threshold limit
Auriga Accounting, as a professional accounting and financial services firm, can provide valuable assistance to individuals who need to file their Income Tax Return (ITR) in India, even when their income is below the threshold limit. Here’s how Auriga Accounting can help in this specific scenario:
1. ITR Form Selection:
- Auriga Accounting can assist you in selecting the appropriate ITR form based on your specific income sources and financial situation, ensuring that you use the correct form for filing.
2. Documentation Guidance:
- They can provide guidance on the documentation you need to collect, such as Form 16 (if applicable), bank statements, investment records, and any other relevant financial documents to support your ITR filing.
3. Data Entry and Accuracy:
- Auriga can help you accurately enter the necessary information into the ITR form, minimizing the risk of errors that might lead to discrepancies or complications in the future.
4. Calculation of Tax Liability:
- Even if your income is below the threshold limit and you don’t have a tax liability, Auriga Accounting can help ensure that the tax liability is correctly calculated and verified.
5. Claiming Deductions and Exemptions:
- They can assist you in identifying and claiming any deductions or exemptions that you may be eligible for, even with income below the threshold limit. This can help reduce your taxable income in future years.
6. Online Filing:
- Auriga can guide you through the process of filing your ITR online using the official Income Tax Department’s e-filing portal, ensuring that you meet all the online filing requirements.
7. Record Keeping:
- They can emphasize the importance of keeping records of your filed ITR and acknowledgment for future reference or in case of any inquiries from tax authorities.
8. Compliance and Updates:
- Auriga Accounting can help you stay informed about any changes in tax laws, threshold limits, or other relevant regulations to ensure continued compliance.
9. Voluntary ITR Filing:
- If you choose to file your ITR voluntarily for the benefits it offers, Auriga Accounting can provide guidance and support to facilitate this process.
10. Future Tax Planning: – Auriga can assist you in developing a tax planning strategy to optimize your financial situation in the long term, even if your current income is below the threshold limit.
