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A person earning an income less than Rs. 2.5 lakh in the financial year, usually has this notion that he need not file the income tax return. However, it should be noted that even if it is not compulsory for an Indian citizen to pay income tax and file the ITR if his annual earning is less than the basic exemption limit, it is recommended to file Nil tax as it helps in many ways. There is no separate process or form for filing nil tax and the entire process is similar to filing a normal return. The form to be used also remains the same. Here, we are going to brief our readers about everything they need to know about Nil Returns.
A nil income tax return is filed by a person whose taxable income falls below the basic exemption limit, therefore, the individual need not require to pay any taxes. A person falling in this category can choose to file a nil income tax return, by doing this you are declaring to the Income Tax Department that you have earned low/nil income during that particular financial year.
An individual can opt to file a Nil tax return when:
To show income tax return as proof of Income.
In a scenario where an individual has just started up with his career and his income falls below the taxable limit, however, he wants to keep a record by filing the Nil ITR. There are many other instances also where income tax serves as a proof of income like when one is getting a passport made or applying for a visa etc.
To claim a refund
There is a possibility that your income is above the taxable income but with the help of deductions u/s 80C etc, it might be below the exemption limit of Rs. 2,50,000. You must need to file an ITR to claim a refund, if the taxes / TDS paid are more than required.
To carry forward losses
To set off your capital gain losses with the capital gains in the upcoming assessment year you are required to file the current income tax return even if there is no taxable income.
The procedure of filing a Nil ITR is the same as filing a regular ITR. You can file a nil ITR online through the following steps.
| Alternatively, you can file a NIL ITR with Tax2win through the following steps: | ||
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 File it Yourself
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Upload form 16
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 Submit
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Filing Nil ITR is beneficial in the following ways:
It is mandatory for those whose total income is more than Rs. 2,50,000. However, we recommend that you should file your income tax return, even though it is not mandatory if your total income isn’t over Rs. 2,50,000. Further, the basic exemption limit has been increased to Rs 3 lakh from Rs 2.5 lakh under the new tax regime.
Yes, you have to file a nil return for your company, even if the company has no revenue or activity.
Yes, it is mandatory for a company to file a NIL return even If company does not have a bank account. Bank accounts must be opened to file the ITR.
Late fee or penalty is not applicable on NIL income tax return. These are applicable when gross total income exceeds basic exemption limits.
If you filed NIL tax returns after the due date then you will not be able to carry forward losses (other than house property loss) to the next year.
The following documents should be kept handy before filing the Nil ITR - PAN, Bank account details and Salary details, Aadhaar, Form 16 and Investment details etc.
ITR-2 needs to be filed by Non-Resident taxpayers. They can not file the ITR -1.
No, It is not mandatory to file NIL return.
Income tax form applicability for filing Nil returns depends on your source of income. Normally, you can file the ITR-1.
