Filing an Income Tax Return (ITR) is an important financial responsibility that everyone should do. Salaried individuals’ taxes are deducted at source (TDS) by their employers, but non-salaried individuals like freelancers, business owners, housewives, and students need to file their ITR independently. Now the question arises, should students or unemployed individuals file their ITR if they are earning less or not earning at all? Well, the answer is that there is no legal compulsion, but we will discuss some benefits of doing that. Take a look:
1- Tax refunds
If your tax was deducted at source, you can claim the refund only by filing ITR. The TDS can be deducted from freelance work, FD, or any other work.
2- Big transactions
Are you preparing a significant financial transaction, such as adding Rs 40 lakh or more to your account? In the event of scrutiny, your financial situation can be supported by previous ITR files.
3- Proof of income
Applications for government grants or scholarships, personal loans, education loans, and student visas often demand proof of income, and for that, filing ITR is crucial.
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4- Capital losses
For tax reasons, capital losses can only be carried forward if returns are filed. To help lower taxable income in later years, short-term capital losses, for instance, can be carried forward for up to eight assessment years and offset against future capital gains.
5- Loan or credit card
Banks and financial institutions often demand ITR documents when they process for loan or a credit card.
