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Discover the benefits of filing nil income tax returns and how it can help you with loans, refunds, and more. Read on!

income tax returns can be advantageous
  • Filing nil returns can bring advantages even with minimal income.
  • A nil ITR can serve as proof of address and support visa applications.
  • Filing a nil return supports eligibility for loans.
  • Claim TDS refund by filing a nil ITR.
  • Carry forward losses and set them off against future gains.

Filing income tax returns (ITR) is often associated with individuals earning a significant income. However, even if you fall below the Rs 2.5 lakh tax limit, filing a nil return can bring numerous advantages. Let’s explore the importance of filing nil returns and the benefits it offers to individuals with minimal taxable income.

What is nil return filing?

A nil income tax return is filed to inform the income tax department that your income falls below the taxable threshold, resulting in no tax liability for the financial year. While it may not be mandatory to file nil returns, there are compelling reasons to consider doing so.

What are the benefits of filing nil returns?

1. Proof of address and visa applications

The ITR form serves as a necessary document for various purposes, including applying for visas and passport applications. Additionally, a nil ITR can be accepted as valid proof of address, making the filing process beneficial beyond tax-related matters.

2. Supporting eligibility for loans

When applying for loans, financial institutions often require supporting evidence of income and financial stability. Even if your income is below the taxable limit, filing a nil return can act as essential documentation to establish eligibility, increasing your chances of securing a loan.

Also Read What are the different types of ITR? Which ITR form should I file?

3. TDS refund and freelancers

In some instances, organisations deduct Tax Deducted at Source (TDS) from payments made to freelancers or consultants. However, if these individuals fall below the tax bracket, they can claim TDS refund by filing a nil ITR.

4. Carry forward losses and set off against future gains

Investing in the stock market involves risks and losses are sometimes incurred. Filing a nil return allows you to carry forward these losses, which can be set off against future gains in subsequent years.

How to file a Nil ITR?

Filing a NIL ITR is a straightforward process. Provide your income details and deductions accurately. Once the income tax computation shows no tax due, submit your return to the income tax department. Complete the e-filing process by sending your ITR to the CPC in Bengaluru.

When is filing an ITR mandatory?

If your income is under Rs 2.5 lakhs and you have undertaken specific high-value transactions during the previous financial year, filing an ITR becomes compulsory. Such transactions include:

  • Depositing amounts exceeding Rs. 1 crore in one or more bank accounts.
  • Incurring expenditure of an amount or aggregate of amounts exceeding Rs 2 lakhs for yourself or any other person to travel to a foreign country.
  • Incurring expenditure of an amount or aggregate of amounts exceeding Rs. 1 lakh for electricity consumption.

Find the latest articles on savvy women here.

Also Read Should you invest in ELSS funds if your income is below the income tax limit?

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.

  • Filing nil returns can bring advantages even with minimal income.
  • A nil ITR can serve as proof of address and support visa applications.
  • Filing a nil return supports eligibility for loans.
  • Claim TDS refund by filing a nil ITR.
  • Carry forward losses and set them off against future gains.

Filing income tax returns (ITR) is often associated with individuals earning a significant income. However, even if you fall below the Rs 2.5 lakh tax limit, filing a nil return can bring numerous advantages. Let’s explore the importance of filing nil returns and the benefits it offers to individuals with minimal taxable income.

What is nil return filing?

A nil income tax return is filed to inform the income tax department that your income falls below the taxable threshold, resulting in no tax liability for the financial year. While it may not be mandatory to file nil returns, there are compelling reasons to consider doing so.

What are the benefits of filing nil returns?

1. Proof of address and visa applications

The ITR form serves as a necessary document for various purposes, including applying for visas and passport applications. Additionally, a nil ITR can be accepted as valid proof of address, making the filing process beneficial beyond tax-related matters.

2. Supporting eligibility for loans

When applying for loans, financial institutions often require supporting evidence of income and financial stability. Even if your income is below the taxable limit, filing a nil return can act as essential documentation to establish eligibility, increasing your chances of securing a loan.

Also Read What are the different types of ITR? Which ITR form should I file?

3. TDS refund and freelancers

In some instances, organisations deduct Tax Deducted at Source (TDS) from payments made to freelancers or consultants. However, if these individuals fall below the tax bracket, they can claim TDS refund by filing a nil ITR.

4. Carry forward losses and set off against future gains

Investing in the stock market involves risks and losses are sometimes incurred. Filing a nil return allows you to carry forward these losses, which can be set off against future gains in subsequent years.

How to file a Nil ITR?

Filing a NIL ITR is a straightforward process. Provide your income details and deductions accurately. Once the income tax computation shows no tax due, submit your return to the income tax department. Complete the e-filing process by sending your ITR to the CPC in Bengaluru.

When is filing an ITR mandatory?

If your income is under Rs 2.5 lakhs and you have undertaken specific high-value transactions during the previous financial year, filing an ITR becomes compulsory. Such transactions include:

  • Depositing amounts exceeding Rs. 1 crore in one or more bank accounts.
  • Incurring expenditure of an amount or aggregate of amounts exceeding Rs 2 lakhs for yourself or any other person to travel to a foreign country.
  • Incurring expenditure of an amount or aggregate of amounts exceeding Rs. 1 lakh for electricity consumption.

Find the latest articles on savvy women here.

Also Read Should you invest in ELSS funds if your income is below the income tax limit?

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.