Just the other day, I got a rather usual message from a teenage cousin. It was a troll message on the famous Alia Bhatt ( now you know why its rather usual :P). This is how the message goes (pardon me if you have already heard this one, because it is undoubtedly naïve)
Alia Bhatt: Dad, what is your plan for the weekend?
Mahesh Bhatt: Income tax returns!!
Alia: When did the first one release? 😛
To be honest, I know it is a poor joke. However, the only reason I put it here is to highlight the significance of filing Income Tax Returns [(Even Mahesh Bhatt files it ;)]. Also, the aim of this post is to assert the importance of filing returns when your taxable income is below the prescribed threshold.
Individuals, whose total income without allowing any deductions exceed the basic exemption limits are mandatorily required to file Income Tax Return (ITR).
So, what does total income, without allowing deductions mean?
For this, you first need to know the existing exemption limits, beyond which you are liable to pay tax.
For Assessment year 2015-2016, the basic exemption limits are the following:
- Individuals below the age of 60, the exemption limit is INR 2,50,000
- For senior citizens, whose age is between 60 to 80 years, the exemption limit is INR 3,00,000
- For super senior citizens, whose age is more than 80 years, the exemption limit is INR 5,00,000
Let’s say, Mr. X has an income of INR 2,80,000 and his deductions under section 80C come to INR 50,000 for A.Y. 2015-2016. Hence, taxable income is INR 2,30,000 (INR 2,80,000 – INR 50,000). Now, since this amount is below the thresholds mentioned above, the tax payable is nil.
However, here the striking point is – Mr. X is required to file his returns because his Gross Total Income (total income before allowing deductions) is above the exemption limit of INR 2,50,000 (assuming he is not a senior citizen).
Now, the question is “Why should one file the return when his/her income is below taxable limit?”
Filing income tax return does not necessarily means paying taxes. There are a number of benefits that will ease your life and future plans if you file tax return. ITR acts as a credential of your financial well-being and serves as an evidence of your income. Additionally, it makes you a good law abiding citizen (like how Mr. Modi says).