What do we mean by NIL Income Tax Return?
A person is required to file the Income Tax Return (ITR) with the income tax department for the income earned and tax paid on the earned income. But when the total income is less than the exemption limit (i.e., less than Rs. 2.5Lakhs), then it is optional to file the nil return or zero return. The procedure to file a nil return is same as the procedure to file a normal return. Nil return is generally filed to declare that the income earned during the financial year is less than the exemption limit.
Benefits of Nil Return
The filing of nil return is beneficial in the following ways:
- Nil return is a proof of income.
- If a person wants to claim a refund from the income tax department then, it is compulsory to file an ITR.
- A zero return can act as a legal document for the approval of loans.
- If any person wants to carry forward the losses of previous year then also it is mandatory to file a return.
It is mandatory to file a return if the total income is more than the exemption limit, but it is not compulsory to file a nil return except in some cases like in case of refund or carry forward of losses, etc., it is recommended to file a return even if your income is less than the exemption limit.
Procedure to file a Nil Return
You need to follow the below mentioned procedure to file your Nil Return but before that you need to check some documents such as PAN, Bank account details, Aadhaar, investment details etc.:
- Visit the income tax department website and login by using your ID and password.
- Click on ‘e-filing’ option.
- Enter your details and deduction and your tax liability will be automatically calculated as nil.
- Submit your return and e-verify your return by using your registered DSC or by using electronic verification code method to complete the process.
- Keep the acknowledgement and copy of ITR safe for your records or you can download it from the Income tax portal for last 7 years.
Disclaimer: The above-mentioned cases are illustrative and not exhaustive. This article is only for discussing general issues and hereby we do not express any opinion or give any consultation in whatsoever manner understood. The cases may differ from assessee to assessee. We recommend you to take expert advice depending upon your particular case.