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Should You File ITR Even Without Taxable Income?

Income Tax Return (ITR) is a form that requires details of your annual income and expenses. Any individual having regular income must file ITR irrespective of the tax liability.

  • 2,574 Views | Updated on: Mar 21, 2024

Updated On: 28th July, 2023

According to the Indian Tax Regime, any Indian Citizen earning more than ₹2,50,000 annually is required to file an Income Tax Return (ITR). It is a form that requires information about your income to evaluate tax liability. As per the law, the ITR must be filed by the individual or business earning income during the financial year.

    Key Takeaways

  • Any Indian Citizen earning more than ₹2,50,000 annually is required to file an Income Tax Return (ITR).
  • If you file ITR even after earning less than ₹2,50,000 in a fiscal year, then it is termed as NIL Return.
  • For the financial year 2022-23, the last date for filing the ITR is 31st July 2023.
  • In order to claim a tax refund or set off losses, you must compulsorily file ITR.
  • ITR works as identity and income proof in India.

However, there is a misconception among salaried employees about not filing the ITR if their income does not fall within the tax liability. This assumption is wrong, as the tax law makes ITR filing mandatory if the total annual income exceeds the basic exemption limit.

What is Meant by NIL Income Tax Return?

If you have an annual income below ₹2,50,000, you have zero tax liability. You have no compulsion to file an ITR by the end of the financial year. However, if you file ITR even after earning less than ₹2,50,000 in a fiscal year, then it is termed NIL Return. Although it is not mandatory to file NIL Return people do so because of the following benefits of filing a NIL income tax return:

Legal Document

An ITR acts as legal proof in the following two ways as it is recorded with the government of India.

Identity Proof

An ITR works as identity proof in several cases involving the application of an Aadhaar card or any other government documents. It also works as an address proof.

Income Proof

ITR contains all the required details of your income and expenses. Thus, it works as income proof in transactions like the purchase of property, which requires you to show proof of income.

Applying for Loans

The biggest benefit of filing an ITR is that it helps while applying for loans, including home loans, car loans, etc. Most lenders and banks seek proof of tax returns up to the previous three years. It is done to evaluate your past and current financial position.

Claim Deduction

While filing the ITR, you have the option to claim deductions on certain investments, including premiums paid towards health policy, investments made in government schemes, etc. With relevant deductions, you can reduce your taxable income up to a certain limit.

Plans to Go Abroad

The ITR form is one among the list of documents required by the countries that you want to visit. In case you do not file ITR, then you might face issues in going abroad. An ITR may improve your chances of visa approval.

Tax Refund

In order to claim a tax refund or set off losses, you must compulsorily file ITR. In case you have suffered losses, for instance, from a stock transaction and you wish to carry it to the next year, you must file an ITR even if your income is below the taxable limit.

Do You Know?

Under the new tax regime for FY 2023-24, salaried individuals and pensioners do not require to pay taxes up to the annual income of ₹7,50,000.

Due Date to File ITR of Financial Year 2023

If you have a source of income, then you must file an ITR regularly to get the above-mentioned benefits. For the financial year 2022-23, the last date for filing the ITR is 31st July 2023. The deadline is the same for filing regular as well as NIL ITR. Hence, you must file it before the deadline given by the government.

Parting Words

Regular filing of ITR is a good financial practice. You must file it irrespective of the tax liability. This will not only help you in legal documentation but also make you a responsible citizen. Moreover, you can easily get a tax refund in case your income does not fall under the taxable limit.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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