Don’t Have Taxable Income? Here’s Why You Should Still File a “Nil ITR”
Think filing an Income Tax Return (ITR) is only for those who owe taxes? Think again! Even if your income falls below the taxable limit, filing a “Nil ITR” is a smart financial move with big long-term benefits, according to experts.
A Nil ITR simply means you’re filing a tax return where your tax liability is zero. While it might seem unnecessary, it’s actually about building a strong financial foundation. As tax-saving strategist Kaukab Razvi puts it, “Not all responsibility comes with bills, some comes with benefits. Your ITR is one of them.”
Key Advantages of Filing a Nil ITR:
- Claim Your TDS Refunds: If tax has been deducted at source (TDS) from your income – perhaps on fixed deposit interest or freelance payments – you can only get that money back by filing your ITR. This is super important for freelancers, students, and first-time earners who often fall below the tax threshold but still see TDS deductions.
- Proof of Income & Address: Your filed ITR acts as an official, valid document for both income and address proof. This is crucial for:
- Visa applications
- Loan applications (banks often check your ITR history to assess creditworthiness)
- Applying for government subsidies or benefits
- Even for passport applications
- Carry Forward Losses: If you incur capital losses (e.g., from stock market investments) or business losses, filing an ITR allows you to carry these losses forward to future years. This means you can offset them against future gains, potentially reducing your tax bill down the line. Without an ITR, this benefit is lost.
Who Should Definitely Consider Filing a Nil ITR?
You should file an ITR even without a tax obligation if you:
- Own foreign assets or earn foreign income.
- Had TDS deducted and want to claim a refund.
- Wish to carry forward losses from the stock market or your business.
- Have made certain high-value transactions, such as:
- Depositing over Rs 1 crore in a current account.
- Spending Rs 2 lakh or more on foreign travel.
- Incurring electricity expenses above Rs 1 lakh.
Understanding Exemption Limits:
Just for your information, here are the basic income exemption limits:
- Old Tax Regime:
- Below 60 years: Up to Rs 2.5 lakh
- 60 to 80 years: Up to Rs 3 lakh
- Above 80 years: Up to Rs 5 lakh
- New Tax Regime:
- A flat Rs 3 lakh for all ages.
Even if your income is slightly above these limits, tax rebates might bring your actual tax payable down to zero. Regardless, filing is still recommended for all the benefits listed above!
No Penalty for Late Nil ITRs, But File on Time!
Good news: if you’re filing a Nil ITR after the due date, there’s no late filing fee. However, filing on time ensures you get your refunds faster, your documentation is smooth, and your financial planning stays on track without any hiccups.
In short, a Nil ITR isn’t just about compliance; it’s a smart investment in your financial future and credibility. Why not take advantage of it?