Should I file Income Tax Return and why? If my income is less than 5 lakh

Filing an income tax return is important for several reasons, including fulfilling your legal obligation as a taxpayer, claiming eligible tax deductions and credits, and avoiding penalties or legal consequences for failing to file. Additionally, filing a tax return may also be necessary to receive certain government benefits or qualify for loans or other financial opportunities.

Filing income tax returns has several benefits, including:

1.       Compliance with the Law: One of the primary reasons for filing income tax returns is that it is required by law. If you earn a certain amount of income, you are obligated to pay taxes and file your income tax return on time.

2.       Claim Refunds: Filing your income tax returns allows you to claim a refund if you have paid more tax than you were required to. By filing your income tax return, you can ensure that you receive any refunds owed to you by the government.

3.       Loan Approval: If you are planning to take out a loan, such as a car loan or a home loan, you may need to provide your income tax returns as proof of your income. This is to ensure that you have the financial means to pay back the loan.

4.       Proof of Income: Income tax returns can serve as proof of your income, which may be required when applying for certain financial products or services.

5.       Avoid Penalties: Failing to file your income tax returns can result in penalties and interest charges. By filing your returns on time, you can avoid these penalties and save money in the long run.

6.       Fulfilling visa requirements: If you plan to travel abroad or apply for a visa, you may need to submit your income tax returns as proof of your financial stability.

7.       Building a Credit Score: Filing your income tax return on time can help you build a good credit score, which can be beneficial when you apply for credit in the future.

In summary, filing income tax is not just a legal obligation but also provides several benefits, including tax refunds, financial credibility, and avoidance of scrutiny from tax authorities.