Know about the benefits of filing a nil ITR in India, who should file it, why sould file it and how to file it. Understand the tax implications and exemptions.
A Nil Income Tax Return, or Nil ITR, is simply a way to tell the Income Tax Department that you earned less than the limit set by the government for paying taxes.
Even if you don’t owe any taxes, there are certain situations where filing a Nil Income Tax Return can be beneficial.
Who Needs to File a Nil ITR?
The following individuals should consider filing a Nil ITR:
Individuals with income below the basic exemption limit: If your income is less than Rs. 2.5 lakh (Rs. 3 lakh for the new tax regime), you are not required to pay income tax. However, filing a Nil ITR can serve as proof of income and help you claim a refund or carry forward losses.
First-time earners: If you have just started your career and your income is below the taxable limit, It can help you maintain a continuous financial record, which can be beneficial when applying for loans or credit cards in the future.
Individuals with no taxable income: If you have no taxable income for the financial year, It can help you carry forward losses and set them off against future gains.
Benefits of Filing a Nil ITR
- Creates Tax History: A Nil ITR establishes your tax compliance record.
- Claims TDS Refund: Get back the tax deducted at source if you had no tax liability.
- Enhances Financial Credibility: A filed ITR can improve your financial standing.
- Helps in Loan Approvals: Banks might find it easier to process your loan application.
- Supports Visa Applications: A Nil ITR can be a useful document for visa purposes.
How to fille a Nil ITR
The process of filing a nil ITR is similar to filing a regular ITR. You can file your nil ITR online through the Income Tax Portal: https://www.incometax.gov.in/ or through a tax expert.
The documents required to file a nil ITR include:
- PAN
- Bank account details
- Salary details
- Aadhaar
- Form 16
- Investment details
Nil Income Tax Return is not mandatory, but it is recommended to file one to claim your tax refund and to maintain a record of your income tax filing history.
The process of filing a nil ITR is similar to filing a regular ITR, and the benefits of Nil Income Tax Return filing include authentic proof of income, to claim a refund, to carry forward losses, legal proof, and maintain records.
If you are unsure about the process of Nil Income Tax Return filing, you can consult a tax expert or contact the Income Tax Department for assistance.