By buld_online 
A Nil Income Tax Return (ITR) refers to an income tax return where the taxpayer has no tax liability. This typically occurs when an individual’s income does not exceed the basic exemption limit outlined by the tax authorities.
While filing a Nil ITR may seem unnecessary for those below the taxable income threshold, several circumstances necessitate it. For instance, individuals with specific income types, such as capital gains or foreign assets, may still need to file. Moreover, a Nil ITR can be beneficial in various situations, such as claiming tax refunds or supporting visa and loan applications. Filing a Nil ITR helps maintain a record of financial transactions, which can be crucial for future reference and compliance.
The due date for filing a Nil ITR aligns with that of a regular return, generally set for 31st July of the assessment year. However, for the fiscal year 2024-25, the deadline for non-audit cases has been extended to 15th September 2025.
Importantly, filing a Nil ITR after this date results in a belated return, but unlike regular returns, no late fees apply for Nil ITRs. This flexibility provides taxpayers with a slight relief in managing their filing schedules.
Why should you file Nil ITR
Filing a Nil ITR offers multiple advantages. It serves as valid address proof for passport applications and is often required when applying for visas. Additionally, a Nil ITR supports loan applications by providing evidence of income, even when below the taxable threshold. Financial institutions may deduct Tax Deducted at Source (TDS) on interest from deposits, and filing a Nil ITR enables individuals to reclaim any surplus TDS deducted. This process ensures that taxpayers can recover funds that rightfully belong to them.
In cases where TDS has been deducted from freelance or consultancy payments, filing a Nil ITR becomes necessary to reclaim the deducted amount if the individual’s income does not fall within the taxable bracket.
Furthermore, it is mandatory for individuals owning foreign assets to file an ITR, even if their income is below the exemption threshold. This requirement ensures transparency and compliance with tax regulations, safeguarding against potential legal issues.
Basic exemption limits
The basic exemption limits vary depending on tax regimes and age brackets. Under the old tax regime, individuals below 60 are exempt up to Rs 2,50,000, those between 60 and 80 years up to Rs 3,00,000, and individuals above 80 years up to Rs 5,00,000. The new tax regime offers a uniform exemption limit of Rs 3,00,000. Despite varying exemption limits, filing an ITR remains beneficial for several financial transactions and regulatory compliance.
Carrying forward stock market losses is another compelling reason to file a Nil ITR, enabling individuals to offset these against future capital gains. Additionally, individuals who have deposited over one crore rupees in current accounts or incurred significant foreign travel or electricity expenses must file an ITR. This ensures tax compliance and transparency in financial dealings, which is crucial for maintaining a clean financial record.
In the absence of a tax liability due to rebates under different tax regimes, filing a Nil ITR can still be advantageous. Under the old tax structure, a maximum tax rebate of Rs 12,500 is achievable, whereas, under the new regime, it extends up to Rs 25,000. Nonetheless, the obligation to file an ITR persists, underscoring its importance in maintaining tax documentation and compliance.
Conclusively, while a Nil ITR indicates no tax liability, the act of filing these returns extends beyond mere obligation. It facilitates various financial and legal processes, providing individuals with opportunities to engage seamlessly in activities necessitating proof of income or compliance. Understanding these aspects is crucial for both seasoned taxpayers and those new to the filing process.