An individual or company usually file income tax returns for the annual income earned. Filing income tax returns is a good practice even if you’re not liable to pay tax. This is because there are several benefits associated with tax return filing. It is, of course, surprising to know that homemakers can file income returns even when they do not earn a regular income. Here you would know about some of the reasons that influence homemakers to file income tax returns.
Why Should They File Tax Returns?
Indeed, a homemaker who does not earn a monthly income is not liable to pay tax. Filing tax returns depends on the annual gross income earned by an individual. If an individual’s income is less than the tax exemption limit, then it is not mandatory to pay tax or file income tax returns. Thus homemakers who do not earn are not liable to pay tax. But a homemaker receives money from various other sources. Therefore it is recommended that they file their income tax returns annually.
Let’s check out some of the sources of money for homemakers.
Money Received From Husband: Homemakers manage the household expenses and thus receive money from their husbands for the same. This money cannot be treated as income. In some cases, when a homemaker gets money from her husband, which she invests and the interest earned is taxable under husbands income. If the interest generates further income, then the wife or homemakers are liable to pay tax on her name.
Interest from Investments: Homemakers makes investments with money from parents or others. Homemakers open fixed deposit accounts for investment purposes. If the annual interest of the fixed deposit exceeds the tax exemption, then the homemaker is liable to pay tax. Thus homemakers must file income tax returns when the yearly interest earned through fixed deposit exceeds Rs.2.5 lakhs.
Gifts from Others: Homemakers would receive gifts from others on various special occasions. Gifts received from others are not taxable. Thus home makers need not file income tax returns for gifts received from others. But in exceptional cases, when the gifts received exceeds Rs. 50,000 then the money is considered as a taxable income.
How are they benefitted by Filing Income Tax Returns?
There are several benefits that homemakers enjoy by filing income tax returns every year. The following are some of the unique benefits of homemakers of filing income tax return with nil income.
Proof Of Income: Filing income tax returns serves as a perfect proof of income, which is accepted by banks or other financial institutions.
Record Keeping: The income tax returns filed every year serves as a record for the income received and expenses made.
Visa Processing: When you file your nil tax returns, then this would serve as income proof for visa application.
Loan Processing: When you apply for a loan, then income tax return filings would serve as proof of your income. Income tax return helps banks to know about your transaction.
Claim Refund: Filing income return help to claim the tax returns if the tax is deducted despite your income is less than the exempted limited.
Who Can File Income Tax Returns?
The following are some of the people who must file income tax returns without fail.
- Individuals who earn an annual income of more than 2. 5 Lakhs is liable to file their income tax returns.
- NRI people with a taxable income must file their income tax returns.
- People who have made deposits should file income tax if the interest earned exceeds the taxable limit.
Filing income tax returns is made easy and less time-consuming. One can file income tax returns in online or offline mode. You have to fill the right forms for filing income tax returns.