There are numerous instances where a proven track record of filing ITR has helped people, such as in scholarship as well as visa applications. Besides, filing ITR is also necessary if one needs to claim any deduction
July 31, 2022 was the last date for individuals to file their income tax return (ITR). But if you haven’t yet filed yours, you can still file a belated return till December 31, 2022 by paying the penalty and forgoing certain specified adjustments.
But if you are someone who has earned an income below the basic exemption limit (Rs 2.5 lakh per annum), and has, hence, not filed a nil ITR in July, you may consider filing a belated ITR now if you require some additional benefits.
Scholarships: An ITR is considered a proof of income by various authorities (both government and private). For instance, certain institute and/or university scholarships can be claimed by furnishing an ITR. The ITR helps in establishing the income proof of the prospective student, and insurance companies, too, consider them as a valid proof.
Sudipta Chowdhury, a college graduate from the University of Calcutta says, “Showing my nil ITR and my parent’s ITR along with other documents to college authorities helped me get a grant on tuition fees in college.”
Visas: If one is desirous of travelling overseas, then he/she needs to have a valid Indian passport and an approved visa. But for this, it is important to establish one’s proof of income which can be very easily done through the ITR records. Along with other income and financial evidence, the visa authorities also consider the income tax returns for providing visa approval in regard to foreign travel.
Some might argue that they are earning income below Rs 2.5 lakh, and hence this benefit (foreign travel visa) will be of no use to them.
But let’s assume they get a job or scholarship abroad five years from now. Then, having a proven track record of income (nil ITR) will help them in the visa application process and will be much less time consuming than other methods required to establish one’s income.
Loan Applications: Whenever someone applies for a loan, the lending institution will first ask for the PAN details, then the credit bureau score, and then ITR (if available). This is because if ITR is available and one furnishes that, then the institutions can easily judge the borrower’s creditworthiness, and accordingly, the proper loan amount and interest rate can be sanctioned.
Abhishek Y. Bhavsar, a chartered accountant based in Ahmedabad, says that there have been frequent cases, especially with young individuals, wherein at the time of obtaining a loan, past three years’ I-T returns have to be provided to the concerned banks or financial institutions.
“They often face difficultly during such times. As such, filing of tax returns, even though the same are not obligatory, is a rather good practice,” says Bhavsar.
Additional Benefits: There are certain other deductions and adjustments, too, which one can claim only by filing an ITR, and nil ITR, if the income is below Rs 2.5 lakh.
Mihir Tanna, associate director, SK Patodia and Associates, a Mumbai-based CA firm, says that if a taxpayer needs to claim certain deductions, or needs to claim or carry forward any loss of the current or previous years, or, if he/she need a TDS refund or refund for the excess advance tax payment among others, then filing of ITR is mandatory.
If one has invested some money in the National Pension System (NPS), Public Provident Fund (PPF), or other instrument, and wants to claim deduction under Section 80C or 80 CCD (1) or any other deductions, say, interest on education loan (80 E), then the individual will need to file a ITR or nil ITR to claim all these benefits irrespective of his/her income level.
Tanna further adds that certain specified persons are also mandated to file their ITR even if they have earned less than Rs 2.5 lac in a year. For example, spending above Rs 2 lac on foreign travel, payment of electricity bill above Rs 1 lakh, others.
“Return filing is mandatory if you are a resident individual and have an asset or financial interest in an entity located outside of India. If you are a Resident and a signing authority in a foreign account, then too filing ITR is mandatory,” adds Tanna.
Source: https://www.outlookindia.com/business/benefits-you-will-get-on-filing-a-nil-income-tax-return-news-238490
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