Few reasons why filing ITR is important even if annual income is below Rs 2.5 lakh threshold

Filing ITR despite the Rs 2.5 lakh income limit will ensure that the taxpayer does not get the automated non-filing notice from the income tax department. Experts say that a nil ITR may be filed even when the individual's income is less than the threshold for a couple of years.
ITR.

Few reasons why filing ITR is important even if annual income is below Rs 2.5 lakh threshold

The July 31 due date to file the Income Tax Return (ITR) for the current Assessment Year 2022-23 or Financial Year 2021-22 (FY22) is fast approaching. Filing ITR is a mandatory requirement for all income earners as it allows the government to assess whether the tax paid on income earned during a financial year is accurate.
Under the new income tax regime, all individuals irrespective of age are required to file ITR if their income is above the Rs 2.5 lakh threshold; however, under the old regime, the threshold for mandatory filing of ITR is Rs 2.5 lakh for those below the age of 60; it is Rs 300,000 for senior citizens in the age bracket of 60-80 and Rs 5 lakh for those aged above 80.
Beyond compliance, ITR filing is important for a number of reasons.
It is best to file the ITR even if the income of an individual is below the threshold. Filing ITR despite the Rs 2.5 lakh income limit will ensure that the taxpayer does not get the automated non-filing notice from the income tax department. Experts say that a nil ITR may be filed even when the income is less than the threshold for a couple of years to ensure that there is no gap year in the tax filing records
ITR refund
Also, the assessee would not be eligible for an ITR refund if the return is not filed. Filing ITR is important even for those earning less than Rs 2.5 lakh per year if they pay the tax deducted at source (TDS) in income earned. Any dues from the Income Tax department are foregone if ITR is not filed. .
Loans
Banks demand copies of ITR to disburse loans and losses; they also ask for salary slips showing all deductions, TDS certificate, and copies of income returns for the last two years.
Visa
Some consulates demand ITR for the last two years from applicants seeking visas for travel. Travellers to US, Europe, Canada, and European countries are required to furnish ITR to prove that they have a legitimate source of income in India and do not plan to leave the country for good.
Purchasing life insurance
Insurance providers demand to see proof of income from those looking to buy a large cover in order to establish their annual income. The size of the cover is dependent on the size of the annual income of the person seeking the insurance.
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