“A Nil ITR is a tax return filed by individuals where no tax is payable. This can occur in two scenarios: either the individual’s taxable income is below the basic exemption threshold limit set by the law, or their income exceeds the threshold limit, but no tax is payable due to deductions or rebate under section 87A,” says chartered accountant Ankit Jain, Partner, Ved Jain & Associates.
If you file an Income Tax Return (ITR) when it’s not required by law, or if you file an ITR to claim an income tax rebate under section 87A, it’s called a ‘Nil ITR.’ This kind of ITR is called ‘Nil ITR’ as filing it doesn’t result in any tax liability. The basic exemption limit under the old tax regime is Rs 2.5 lakh, while for the new tax regime, it is Rs 3 lakh for individuals below 60 years of age for FY 2023-24 (AY 2024-25).
The due date for filing ITR for FY 2023-24 (AY 2024-25) is July 31, 2024, for individuals not liable for income tax audit. If your total income does not exceed the basic exemption limit, the income tax department charges no penalty or late filing fees.
How filing ITR can help in travel visa, loan and other areas
Experts say that you should consider filing an ITR even if you are not required to file as per the law. There are multiple benefits of filing an ITR including a nil ITR. Here is a look at some of the benefits of filing ITR.Getting a travel Visa is easier: “Filing an ITR can significantly help an individual secure a travel visa. ITR provides proof of income and hence many embassies ask for the last three years’ ITR to evaluate applicant’s financial stability and history. At the same time, a consistent ITR filing record strongly indicates ongoing financial responsibilities and ties to India, suggesting a lower risk of the applicant overstaying their visa. At times, embassies also use ITR as a strong indicator of the applicant being a law-abiding citizen thus enhancing overall credibility of the applicant and increasing approval chances,” says Swapnil Bhaskar, Chief of Strategy, Niyo.
Getting scholarships is easier: In some scholarship cases, the applicant needs to prove that the family’s total income is below the defined threshold. So, if the student and his family file their ITRs even if their income is below the basic exemption, it would help their son/ daughter’s scholarship application.
For instance, West Bengal government’s girl education scholarship scheme, Kanyashree Prakalpa, mentions that to be eligible for this scholarship, the student’s family income should be less than or equal to Rs 1.2 lakh (1,20,000) per annum. Apart from this scholarship, there are other central and state government scholarships that include an eligibility criterion based on the student’s family income.
“ITRs serve as a proof of your income in a year which can help you apply for the scholarships,” says Alay Razvi, Partner, Accord Juris, a law firm.
Losses can be carried forward: A significant advantage of filing an ITR is the ability to carry forward certain losses to offset future income. “Filing an ITR, even a nil one, allows individuals to benefit from this provision. For example, capital losses can be carried forward for up to eight years to be set off against future capital gains, which can be a valuable tax planning tool,” says Jain. This offsetting allows you to bring down your income or gains in future, thereby reducing your future tax liability.
Explanation for gifts received, including properties: An ITR is official proof of record for the income or asset earned by the person who filed it in that particular year.
“Some income like gifts from relatives is exempt from the income tax but needs to be declared in the ITR to avoid future disputes related to the transaction taking place in a bank statement in case of bank transfer or recorded at a Sub-Registrar Office in case of a property transfer and so on,” says Advocate Razvi.
Helps in securing loan with ease: “For salaried individuals, banks usually ask for salary slips and employer certificates, however, if the ticket size of loans is large e.g. home loans, banks require detailed income verification, where multiple years of filed ITRs play a critical role in the assessment. Regularly filed ITRs indicate stable income and financial discipline, which banks consider crucial for lending decisions. For self-employed individuals, ITRs are often one of the primary documents used to assess income. Since ITRs are government-verified documents, they provide a reliable and authentic source of information compared to self-declared income proofs,” says Bhaskar.
TDS refund: TDS is deducted from many transactions like interest from bank FD above a certain limit, receiving monthly house rent above Rs 50,000, etc. Whatever the reason behind deduction of TDS, you need to file an ITR to get this refunded back, if eligible.
rewrite this title Filing a nil ITR: 6 unexpected benefits from getting a travel Visa, loan, scholarship and more
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“A Nil ITR is a tax return filed by individuals where no tax is payable. This can occur in two scenarios: either the individual’s taxable income is below the basic exemption threshold limit set by the law, or their income exceeds the threshold limit, but no tax is payable due to deductions or rebate under section 87A,” says chartered accountant Ankit Jain, Partner, Ved Jain & Associates.
If you file an Income Tax Return (ITR) when it’s not required by law, or if you file an ITR to claim an income tax rebate under section 87A, it’s called a ‘Nil ITR.’ This kind of ITR is called ‘Nil ITR’ as filing it doesn’t result in any tax liability. The basic exemption limit under the old tax regime is Rs 2.5 lakh, while for the new tax regime, it is Rs 3 lakh for individuals below 60 years of age for FY 2023-24 (AY 2024-25).
The due date for filing ITR for FY 2023-24 (AY 2024-25) is July 31, 2024, for individuals not liable for income tax audit. If your total income does not exceed the basic exemption limit, the income tax department charges no penalty or late filing fees.
How filing ITR can help in travel visa, loan and other areas
Experts say that you should consider filing an ITR even if you are not required to file as per the law. There are multiple benefits of filing an ITR including a nil ITR. Here is a look at some of the benefits of filing ITR.Getting a travel Visa is easier: “Filing an ITR can significantly help an individual secure a travel visa. ITR provides proof of income and hence many embassies ask for the last three years’ ITR to evaluate applicant’s financial stability and history. At the same time, a consistent ITR filing record strongly indicates ongoing financial responsibilities and ties to India, suggesting a lower risk of the applicant overstaying their visa. At times, embassies also use ITR as a strong indicator of the applicant being a law-abiding citizen thus enhancing overall credibility of the applicant and increasing approval chances,” says Swapnil Bhaskar, Chief of Strategy, Niyo.
Getting scholarships is easier: In some scholarship cases, the applicant needs to prove that the family’s total income is below the defined threshold. So, if the student and his family file their ITRs even if their income is below the basic exemption, it would help their son/ daughter’s scholarship application.
For instance, West Bengal government’s girl education scholarship scheme, Kanyashree Prakalpa, mentions that to be eligible for this scholarship, the student’s family income should be less than or equal to Rs 1.2 lakh (1,20,000) per annum. Apart from this scholarship, there are other central and state government scholarships that include an eligibility criterion based on the student’s family income.
“ITRs serve as a proof of your income in a year which can help you apply for the scholarships,” says Alay Razvi, Partner, Accord Juris, a law firm.
Losses can be carried forward: A significant advantage of filing an ITR is the ability to carry forward certain losses to offset future income. “Filing an ITR, even a nil one, allows individuals to benefit from this provision. For example, capital losses can be carried forward for up to eight years to be set off against future capital gains, which can be a valuable tax planning tool,” says Jain. This offsetting allows you to bring down your income or gains in future, thereby reducing your future tax liability.
Explanation for gifts received, including properties: An ITR is official proof of record for the income or asset earned by the person who filed it in that particular year.
“Some income like gifts from relatives is exempt from the income tax but needs to be declared in the ITR to avoid future disputes related to the transaction taking place in a bank statement in case of bank transfer or recorded at a Sub-Registrar Office in case of a property transfer and so on,” says Advocate Razvi.
Helps in securing loan with ease: “For salaried individuals, banks usually ask for salary slips and employer certificates, however, if the ticket size of loans is large e.g. home loans, banks require detailed income verification, where multiple years of filed ITRs play a critical role in the assessment. Regularly filed ITRs indicate stable income and financial discipline, which banks consider crucial for lending decisions. For self-employed individuals, ITRs are often one of the primary documents used to assess income. Since ITRs are government-verified documents, they provide a reliable and authentic source of information compared to self-declared income proofs,” says Bhaskar.
TDS refund: TDS is deducted from many transactions like interest from bank FD above a certain limit, receiving monthly house rent above Rs 50,000, etc. Whatever the reason behind deduction of TDS, you need to file an ITR to get this refunded back, if eligible.
