Top 5 Reasons to File Tax Returns with Non-Taxable Income

Tax filing is compulsory for those with a taxable income of Rs 2.5 lakhs and above, and in other specified scenarios.

1. Individuals with electricity bills over Rs 1 lakh.
2. Spending Rs 2lakh or more on foreign travel.
3. Having current account deposits exceeding INR 1 crore.

There are many benefits to filing tax returns.

Filing Tax Returns with Non-Taxable Income: Top 5 Reasons

1. Applying for Financial Instruments like Vehicle/Home Loan

Tax returns from the past years are needed when applying for loans like vehicle or home loans. They serve as evidence of your income. They may also be required for certain credit cards, insurance policies, etc.

2. Tax Refunds Claiming

Tax deduction at source applies to many services, including freelancing, contract work, and bank interest income. If you're not in the taxable bracket, you can only claim a refund by filing a tax return.

3. Applying for a visa

As COVID normalizes, international business travel will increase. Many countries' immigration authorities require past tax returns for income verification. These are essential for visas to the US, UK, Canada, and Schengen areas.

4. Proof of Income

Salary slips serve as income proof for employed people. However, self-employed individuals lack this proof. Here, a tax return can be used instead.

5. losses Claim

People invest in various assets like stocks, bitcoins, and real estate. Sometimes, these assets are sold at a loss. Some of these losses can be carried forward for 8 years if a tax return is filed. 

Taxable Income

Examples of taxable income include:

            Wages and salaries

            Profits from business and property

            Dividends, interest, and rental income

           Retirement distributions

Non-taxable Income: 

Examples of non-taxable income include:

Certain types of gifts and inheritances

Some types of insurance payouts

Certain government benefits

Specific type of investment income

Conclusion

Understanding non-taxable income is key to maximizing tax benefits and improving your finances. Including non-tax able income in your tax returns can lower your tax liability, help you qualify for tax credits and deductions, avoid penalties, and strengthen your financial profile. It's crucial to know what counts as non-taxable income and to correct any misconceptions. Consider consulting a tax professional for guidance. This way, you can fully utilize your tax returns to enhance your financial future.

 

If you're having difficulty filing tax returns, The Tax Heaven can help. We ensure accurate filing and assist you in getting maximum tax refunds. Hire our eCAs to file your ITR today!