Budget Update 2025
No Income Tax on Annual Income Up to ₹12.75 Lakh!
The government has raised the Section 87A rebate limit from ₹7 lakh to ₹12 lakh, providing major tax relief to the middle class. Salaried individuals can also claim a ₹75,000 standard deduction, making incomes up to ₹12.75 lakh tax-free.
New Slab Structure under new tax regime:
- ₹0 – ₹4 lakh → No Tax
- ₹4 lakh – ₹8 lakh → 5%
- ₹8 lakh – ₹12 lakh → 10%
- ₹12 lakh – ₹16 lakh → 15%
- ₹16 lakh – ₹20 lakh → 20%
- ₹20 lakh – ₹24 lakh → 25%
- ₹24 lakh & above → 30%
Extended time for filing updated returns (ITR-U):
Taxpayers now get 4 years (instead of 2) to update their Income Tax Returns.
These changes will be effective from 1 April 2025 i.e. for FY 2025-26
What is a Nil Tax Return?
A nil income tax return is filed by a person whose taxable income falls below the basic exemption limit. It acts as a declaration to the Income Tax Department that you are not liable to pay any tax as your total income is below the basic exemption limit. Here, it is important to note that the Income Tax Department does not make it mandatory to file ITR for individuals falling below the basic exemption limit. Therefore, individuals filing a nil return do it at their own will.
Basic Exemption Limits in the Old and New Tax Regimes
The basic tax exemption limit in India depends on the chosen tax regime and the taxpayer's age.
| Tax Regime |
Age Group |
Basic Exemption Limit |
| Old |
Up to 60 years |
₹250,000 |
| Old |
60-80 years |
₹300,000 |
| Old |
80+ years |
₹500,000 |
| New |
All Age Groups |
₹4,00,000 (as of 2024 Budget) |
When a Nil Income Tax Return is Required to be Filed?
An individual can opt to file a nil tax return for the following reasons -
To show income tax return as proof of Income.
There are various instances in which you have to present your ITR as proof of your income. Some of these include applying for a passport or a visa. An Income Tax return can also serve as income proof when applying for a loan from a bank or financial institution.
To claim a refund
The total income without accounting for deductions can be more than the basic exemption limit, but deductions might be below the basic exemption limit. In such a case, if you have paid more tax than required, you might have to file an ITR to claim a refund of the excess tax paid.
To carry forward losses
To set off your capital losses with the capital gains in the upcoming assessment year, you are required to file your current income tax return, even if there is no taxable income.
Note:- Even if none of the above scenarios apply, filing a Nil ITR can still be beneficial. It creates a record of your income tax filing history, which can be useful for future financial needs.
How to file NIL Income Tax Return
The procedure of filing a Nil ITR is the same as filing a regular ITR. Tax2win’s AI-integrated ITR filing platform makes it extremely easy to file your ITR. With Tax2win, you can file it in less than 4 minutes.
Tax2win offers two types of ITR-filing options -
- DIY ITR Filing - If you are someone whose annual income is below the basic exemption limit and have little knowledge about taxation, you can opt for filing your ITR on your own.
- Expert-Assisted ITR Filing - If you are a complete novice when it comes to taxes and don’t know how to file your ITR, you can also hire an online CA to ensure accurate tax filing.
Read here to find out how to file ITR through Tax2win
Alternatively, you can also file your ITR using the Income Tax Portal.
Benefits of filing NIL Income Tax Return
Filing Nil ITR is beneficial in the following ways:
- Authentic Proof of Your Income: It serves as a legal document mentioning all the details of your financial status. It is considered a solid proof of income and is accepted by each and every financial institution.
-
To claim a refund: Sometimes, TDS is deducted from the income earned even if the total income during a financial year is below the exemption limit. To claim such a deduction, an individual must mandatorily file an income tax return.
- Legal proof while applying for loans: Bankers usually ask for the last three to five years of income tax returns while approving any kind of loan. A nil tax return can help in such a situation as it will act as a legal document.
- Applying for a Visa: A NIL tax return can act as legal proof of income when it comes to a VISA application. It is compulsory, even if you didn’t have any income, for instance, to show the returns filed over the last three years when applying for a Schengen Visa.
- Carry-forward of losses: Filing a return, even if it's a Nil return, becomes mandatory if an individual has suffered losses and wants to carry forward it to the next year.
- Maintain Records: Filing a Nil ITR creates a record of your income tax filing history. This can be useful for your own reference or for future financial needs.
What is the Due Date for Filing a Nil Return?
Even if you have no taxable income, you must file a nil income tax return (ITR) by July 31st of the assessment year—the same deadline as for regular returns. Filing a nil return after this date is considered a belated return. However, no late filing fees are charged for belated nil returns.
Can One Avoid Filing Nil ITR?
It is mandatory for those whose total income is more than the basic exemption limit, i.e., Rs.2,50,000 under the old regime and Rs.4,00,000 under the new regime.. However, we recommend that you should file your income tax return, even though it is not mandatory if your total income isn’t over the basic exemption limit. Further, the basic exemption limit has been increased to Rs.4 lakhs from Rs 2.5 lakh under the new tax regime.
Need tax help? Consult with our Online CAs Now!
Avoid Last-Minute Rush
Faster Refund Processing
Hassle-Free Filing with Experts
