ITR filing 2024: What is NIL return and who all should file it? Check details here

Income Tax return: Tax season is upon us, and many people wonder if they must file returns if their income is below the taxable limit. Filing an Income Tax return (ITR) is a compulsory requirement if your total income surpasses the basic exemption threshold.

In cases where the income falls below this limit, specific types of income such as capital gains or earnings from foreign assets may necessitate the filing of an ITR.

Moreover, suppose Tax Deducted at Source (TDS) has been deducted from any income source, for instance, interest gained from a bank deposit. In that case, it becomes imperative to file an ITR in order to reclaim any surplus TDS or other tax payments made throughout the financial year.

Under the previous tax structure, the maximum tax rebate achievable is capped at Rs 12,500, while under the new tax regime, it may extend up to Rs 25,000. Consequently, if your income falls within these specified limits, you are exempted from paying any income tax. Regardless of the reduced tax liability resulting in no tax payment due to these rebates, it remains obligatory to file an income tax return (ITR).

What is a NIL return? 

A Nil ITR refers to an income tax return where there is no tax liability on the taxpayer.  It is an income tax return (ITR) filed to inform the tax authorities that no taxes were paid in the relevant financial year. Filing an ITR, even with no tax liability, offers various advantages such as the opportunity to claim a tax refund, support visa applications, carry forward capital losses, and more.

The following are a few of these benefits discussed in detail: Proof of income: Your ITR serves as an official document that can be used as proof of your income.  This can be helpful when applying for loans, visas, or other financial transactions where you need to demonstrate your financial standing.  

Claim deductions and refunds: When individuals have an income that falls below the taxable threshold, it is essential to consider the taxes deducted at the source (TDS) from various income sources such as salary or interest. Filing an Income Tax Return (ITR) allows individuals to claim refunds for any surplus taxes paid. Furthermore, individuals can optimize their tax situation by claiming deductions on investments and expenses specified under sections like 80C, 80D, and other relevant sections. Availing these deductions can significantly lower the taxable income and increase the chances of receiving a tax refund.

Loan approvals: Income tax returns serve as authenticated income proof, making it easier to obtain loans from lending institutions.  

Losses: If you have experienced financial setbacks, such as losses from stock market investments or business activities, you have the option to carry these losses forward to the following year and offset them against your future income. To execute this process, it is essential to submit your ITR. 

By filing your ITR, you not only manage your losses efficiently but also ascertain your eligibility for various government schemes and benefits. Some government programs, like scholarships or subsidies, mandate the submission of an ITR as a prerequisite. Thus, by fulfilling this requirement, you guarantee your access to these beneficial schemes.

Going abroad: The Income Tax Return (ITR) form is a crucial document requested by several countries during visa applications. Submitting ITRs showcases financial stability, enhancing the chances of visa approval.

Tax refunds: Failing to submit Form 15G/H for TDS can lead to deductions. Filing a Nil ITR allows taxpayers to claim a refund for the deducted TDS amount by financial institutions.

Filing a Nil ITR follows the same process as filing a regular ITR and can be done online with these steps:

> Log in to the official website of the Income Tax Department using your registered user ID and password.
> Navigate to the e-filing section.    
> Enter your income and deduction details.
> Enter your PAN, bank account details, salary information, Aadhaar, Form 16, and investment details.
> The system will calculate your income tax automatically, indicating no tax due if you have no income. File your return with the Income Tax Department.    
> You can complete the e-filing process by either sending your ITR-V to CPC Bengaluru or e-verifying your ITR.