Nil Income Tax Return

If your income in a financial year falls below the basic exemption limit, you can file a nil income tax return. This proves to the Income Tax Department that you did not pay taxes during the year for this reason. 

While it is not mandatory to file ITR in such cases, most individuals file nil returns in their own interest. Keep in mind that you can only file ITR for nil returns if your total income is below the exemption limit in the financial year.

Filing an ITR even if you come under the exemption limit can be beneficial for you. Here are some advantages:

Claiming Tax Refunds

During the financial year, Tax Deducted at Source (TDS) may have been deducted on earnings, like on savings account interest. By filing a nil income tax return, you can request a refund for the excess amount deducted as TDS. 

 

If you have failed to submit Form 15G/H to prevent TDS deductions, filing a Nil ITR can also help you claim a refund on the TDS deducted. 

Support Visa applications

This can also help you in case you are applying for a visa since many countries require proof of income for visa applications. By serving as valid proof of income, your Nil ITR documents could be helpful.

Scholarship Applications

Some scholarships may require students to provide proof of filing income tax returns. Therefore, filing nil ITR can be a smart decision in this case, as it serves as proof of income. So, in case you are planning to apply for scholarships in India or abroad, filing nil ITR could be beneficial. 

Carry Forward Capital Losses

Filing a nil ITR helps carry forward capital losses incurred during the financial year. You can offset these losses against future capital gains. This, in turn, could potentially reduce your tax liability in the following years.

You should file an ITR nil return in the following cases:

• If your income is below the taxable limit but you want to maintain a record and get proof of income

• If you have been filing tax for several years but your income fell in the ‘below taxable limit’ category in the current year 

• If your income before deductions was above the taxable limit but deductions bring it below the limit

Filing nil ITR is a simple process. It can be completed on the online portal of the Income Tax Department. Here are the simple steps you need to follow:

1. Check the documentation requirements and keep them handy for nil ITR filing

2. Go to the official website of Income Tax e-filing

3. Log in via your registered user ID and password and register if required 

4. Go to the e-Filing section on the website

5. Click on ‘e-File’ and click on the ‘Income Tax Return’ option

6. Fill in the required details regarding your income and deductions

7. Select the assessment year for which you are filing the nil ITR and the ITR forms

8. The system will compute your tax liability

9. Submit the nil ITR after e-verification

Since filing a nil income tax return is not mandatory, you do not incur any liabilities or consequences for not filing it. Know that ITR filing is compulsory when you exceed the basic exemption limit, which is ₹2.5 Lakhs in the case of the old regime. However, in the case of the new regime, it is ₹3 Lakhs.

 

If you choose to file it, you must complete the process before 31st July of the assessment year, as the due date for filing a nil ITR and regular ITR is the same. In case you file a nil return after the due date, it will be considered a belated return. However, it does not incur any fees or charges.