Why Students And First-Time Earners Should File ITR Early
When you file ITR, you create documented proof of income. This record often becomes crucial while applying for loans, credit cards or renting property.
In India, many students and first-time earners believe filing an Income Tax Return (ITR) is only meant for high-income individuals or business owners. However, even if your annual income is below the taxable limit, filing an ITR can bring long-term financial benefits and should be seen as a good financial habit from the very start of your earning journey.
1. Build a Financial Record
When you file an ITR, you create documented proof of income with the Income Tax Department. This record often becomes crucial while applying for loans, credit cards, or renting property. For example, if you plan to buy a car or home in the future, lenders often ask for ITR copies of previous years to assess your repayment capacity.
2. Simplify Visa Processing
Many foreign consulates, including those of the USA, UK, Canada, and Australia, require ITR documents as proof of financial stability when you apply for a student or work visa. Having at least a couple of years of ITR filing history strengthens your application.
3. Claim Tax Refunds
Even students and beginners may face Tax Deducted at Source (TDS) on stipends, part-time job earnings, or freelance work. Filing an ITR helps claim a refund of any excess tax deducted. For instance, if your stipend is below the taxable limit but TDS has been deducted, you can get the entire amount refunded by filing returns.
4. Carry Forward Losses
If you have invested in shares, mutual funds, or crypto and suffered a capital loss, filing ITR allows you to carry forward these losses for up to eight years. These losses can be adjusted against future capital gains, reducing tax liability later.
5. Future Tax Compliance and Discipline
Starting early helps students and first-time earners understand the process of filing returns, PAN-Aadhaar linking, and managing digital tax platforms like the income tax portal. This builds confidence and ensures they are well-prepared when their income eventually crosses the taxable limit.
6. Build Better Financial Habits
Filing ITR encourages young earners to track income and expenses, invest wisely, and adopt better financial planning. It instils discipline and an understanding of how taxation works in India.
Filing ITR is not just a legal formality but an investment in your financial future. For students and first-time earners, it sets the foundation for responsible money management and opens up opportunities that require proof of stable and legal income.
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