Income Below Exemption Limit? Check If You Need To File ITR

 The Indian taxation system is based on a system of tax progression, oddly known as the progressive taxation regime. It is based on the simple principle of ‘more income more tax’. The taxation rates are different for each income bracket and the tax rates increase with the increase in income.

Since we are also an economy based on natural principles of equity and justice, the government exempts the people earning less than a particular amount from paying any tax. Such an income bracket is ‘exempted’ under the taxation system.

Currently, India is following both old and new regimes of taxation at the option of the taxpayer. Read below to find out more about the exemption limit for filing ITR.

You Can File An ITR Even While Being Exempted: Benefits And More

An ITR need not necessarily be filed only when the income is above the exemption limit. Exempted taxpayers can also file an ITR which is known as a ‘nil ITR’.

A nil ITR is basically a declaration of income to the Income Tax Department. It is meant to declare one’s exemption from paying tax by giving records and details of one’s income falling below the limit.

You are not liable to pay tax despite filing an income tax return. It is not compulsory to file a nil ITR however it has multiple benefits attached.

Let us take a glance at the most lucrative benefits of filing a nil ITR:

• Proof of Income: Visa applications and banking activities such as loan, mortgage etc. evaluate the income credibility of a person. Filing a nil ITR helps in attaching authenticity and reliability upon one’s income. It is a declaration of income.

• Continuous Record: In cases of scrutiny by the Income Tax Department, the records of filing nil ITRs help. They act as a repository of proof that your income was below the maximum permissible limit for claiming exemptions.

• Refund Claim: In case your income without subtracting the deductions is above the exemption limit and will fall below it after deductions, you can claim refunds on expenses you might have spent on more than necessary. For example Tax Deductible at Source or TDS.

So you can file nil ITRs when you want to improve the chances of your visa application getting cleared or while you are applying for loan and other such things. Nil ITRs are a beneficial authoritative proof of your income.