Did you know that you can file a tax return even if your income for the year is below the taxable limit? If your taxable income is less than the threshold limit of Rs 2.5 lakh in a year, you are not mandated to file income tax return. But if you want to, you can file a nil return.
But you may wonder why get into the hassle of filing a tax return when you don't have to pay any taxes. There are certain benefits of filing tax returns that you may not be aware of.1) To carry forward losses
The only condition to carry forward losses is that you have to file tax return on time. If you file your income-tax return after due date which is generally July 31 of the year, you will not be allowed to set off your capital losses against capital gains in a belated return.
For example, you have incurred a loss suppose on sale of equity shares. To carry forward these losses for future adjustment with capital gains you must file tax returns.2) To claim TDS refund
If your bank has deducted tax deducted at source (TDS) on your interest income over Rs 10,000, despite the fact that your income is below the taxable limit, you can claim a refund only if you have filed a tax return. Also, in case your rental income is more than Rs 1.8 lakh in a year, your tenant is liable to deduct TDS. You will have to file a tax return for refund of TDS.3) To show proof of your income
If you are applying for any kind of loan, most lenders ask for your income tax return of the past few years as a proof of income. Even if you are applying for a visa, foreign countries often ask for your income-tax return to know your financial position before issuing visa.