What Is Nil Return And When Can You File It

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What Is Nil Return And When Can You File It

When a person's annual income falls below ₹2.5 lakhs, they are not required to pay any income tax, resulting in a zero tax liability.

Therefore, these individuals are exempt from filing an income tax return as they do not fall within the taxable income bracket.

However, if individuals choose to file Income Tax Returns (ITRs) even when their income is below ₹2.5 lakhs, it is referred to as a 'Nil Return.' Although filing nil returns is not obligatory, several advantages are associated with doing so.

This includes potential benefits and opportunities individuals may gain by voluntarily submitting a nil return. This section ahead will tell you more about nil return, their benefits, and the easy filing steps.

What is a nil return?

Submitting a GST nil return declares to the Income Tax Department that your income is below the taxable threshold, indicating that you paid no taxes in the given financial year. This specialised GST nil return filing explicitly communicates to the authorities that no tax liabilities have been incurred during the financial year.

Nil returns are applicable when income falls below the exemption limit of ₹2.5 lakhs or when eligible rebates bring the tax liability down to zero. According to the Income Tax Act, individuals earning less than ₹2.5 lakhs are obligated to file ITR. Therefore, individuals who file nil income tax returns do so in their best interest, ensuring compliance with the Income Tax regulations.

When Can I File a Nil Income Return?

Filing a nil income tax return serves as a means to provide evidence of income when required.

You can submit a nil return if you have recently entered the earning stage and your income remains below the taxable threshold. This allows you to document your earnings even without tax liability.

If you have a history of filing income tax returns in prior years, and your income has fallen below the taxable limit for the current assessment year, you can submit a nil return. This practice aids in keeping your tax records intact and may serve as a preventive measure against potential scrutiny from income tax authorities.

Even if your income is high before considering deductions, once you consider those deductions, it might be less than ₹2,50,000. If you have paid more in taxes than you should have, filing an income tax return is important to get some money back.

What are the Benefits of Nil Return Filing?

Here are some benefits of filing nil returns:

  • Nil return documents serve as evidence of your income, and having proof of income can be beneficial when applying for a visa.

  • When desiring a loan, the bank may request several years of Income Tax Returns. Filing a nil return can be helpful in such situations.

  • If your bank withholds TDS on interest from your deposits, you can file a nil income tax return to claim a tax refund.

  • Owning any foreign asset makes filing an Income Tax Return mandatory, irrespective of income group.

  • By filing a nil income tax return when your income falls below the ₹2.5 lakhs threshold, you can carry forward losses incurred in the stock market.

  • Consultants or Freelancers, even if not within any tax bracket, often experience TDS deductions on their payments. Filing a nil income tax return in such cases can lead to a tax refund, providing significant savings.

Steps to File a Nil Income Tax Return

Filing a nil return is like filing a regular income tax return. Ensure your PAN, Aadhar, TDS details, bank account details, salary details, and Form 16 are readily available. Follow the following Steps to file a nil return easily:

Step 1: Visit the income tax department's tax filing webpage

Step 2: Find the income tax portal and register by inputting the required details. Log into the portal using your user ID and password if you are already registered.

Step 3: Once you successfully log in, follow the following **Steps.

Step 4: Choose the appropriate e-filing option (ITR1/ITR2/ITR3).

Step 5: Your income and investment details will be pre-filled if you possess a Form 16 from your employer.

Step 6: TDS deductions will appear on your ITR form, and it is advisable to cross-verify with the Annual Information Statement or 26AS form for validation.

Step 7: When filing a nil return, the system will automatically sum your income tax liability, displaying either no amount due or a ZERO balance.

Step 8: Raise the return

Step 9: After filing your ITR-V, either electronically verify it or mail a signed copy to the central processing centre of the income tax department.

What is GST Nil Return Late Fee?

The nil return filing procedure aligns with the ITR filing process, sharing a common deadline of 31st July each year. Submitting your nil return by this date is crucial to avoid GST late fees for nil return.

Failure to meet the deadline incurs an ₹1,000 late fee. This penalty is capped at ₹1,000 for individuals with income below the taxable threshold of ₹5,00,000, emphasising the importance of adhering to the schedule to mitigate GST nil return filing charges.

To Conclude

Filing a nil return is equivalent to a financial breather. Your income is under a certain limit, so no taxes are knocking on your door. Now, picture having a personal financial guard for your health in the form of medical insurance. It is equivalent to a financial security that saves your day when sudden medical bills fall upon you.

So, just as filing a nil return gives you peace of mind about taxes, having a suitable health insurance plan gives you a financial safety net for unexpected health costs. In the current unpredictable life landscape, having health insurance for senior citizens, couples, and families alike is essential.

If you have not yet invested in a medical insurance policy and are willing to invest, you can explore the multiple choices available at Tata AIG. With us, you can discover and evaluate various options that allow you to tailor a health insurance plan according to your specific needs. You can also avail yourself of the 24*7 available insurance experts if you have doubts or get stuck midway.

Disclaimer / TnC

Your policy is subjected to terms and conditions & inclusions and exclusions mentioned in your policy wording. Please go through the documents carefully.

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Can I submit a GST nil return through SMS?

Can I submit a GST nil return through SMS?


Yes, you can file your GST nil return by SMS, making the process quick and convenient. Follow the specified format and send the required information to the designated GST helpline number to submit your nil return.

Do companies need to file nil income tax returns?


It is mandatory for companies to file nil returns irrespective of profit or loss.

Can I file nil returns after the due date?


Yes, you can file your nil returns after the due date, 31st July of every year. However, you must pay the GST nil return late fee if you miss the due date.

Is it mandatory to file a nil return?


Filing a nil return depends on your earnings. If your annual earnings are below the taxable limit, filing a nil return is not mandatory. However, filing a nil return can be beneficial.

What will happen if I do not file a nil return when needed?


If you fail to file a nil return when needed, you may invite scrutiny or penalties from the tax department.