Nil ITR Filing for AY 2023-24: While the Income Tax rules do not mandate individuals to file Income Tax Return (ITR) if their income is less than the basic exemption limit of Rs 2.5 lakh (Rs 3 lakh in the case of senior citizens for AY 2023-24), experts say you should file a Nil ITR even when your income is below the taxable threshold as there are several benefits of doing so.

“Section 139(1) of the Income Tax Act does not mandate individuals with income not exceeding the basic exemption limit of Rs. 2.5 lakhs (Rs 3,00,000 or Rs. 5,00,000 as applicable in case of senior citizens and super senior citizens respectively) to file their tax return,” says Dr Suresh Surana, Founder of RSM India, a tax consultancy firm.

However, taxpayers are required to file ITR if they have undertaken the following transactions during the relevant financial year.

  • Deposited an amount or aggregate of the amounts exceeding Rs 1 crore in one or more current accounts maintained with a banking company or a co-operative bank.
  • Incurred expenditure of an amount or aggregate of the amounts exceeding Rs 2 lakh for himself or any other person for travel to a foreign country.
  • Incurred expenditure of an amount or aggregate of the amounts exceeding Rs 1 lakh towards consumption of electricity.

According to Dr Surana, taxpayers not fulfilling the above-mentioned conditions may voluntarily furnish tax returns even if the same constitutes a Nil return i.e. ITR filed when income is less than the basic exemption limit.

Also Read: Why is the number of ITRs filed increasing? FM Nirmala Sitharaman shares reasons

“Even if an individual has no income or their total income is below the taxable threshold, they may still need to file a Nil Income Tax Return (ITR) in certain circumstances,” says Saakar S Yadav, Director and Founder of myITreturn.com.

Benfits of Nil ITR filing

There are several benefits of filing a Nil ITR when your income is less than the tax exemption limit, according to experts.

  • Income tax returns serve as an authenticated document of income proof submitted to the Indian Government authorities
  • Submission of ITR returns to the lending banks and/or other similar institutions can ease the process of sanctioning of loans
  • In cases of travel abroad, the visa authorities generally require furnished tax returns of recent few years.
  • Students applying for availing scholarships may require to submit their tax return proofs.
  • In order to claim the benefit of carrying forward of loss, return of income should be mandatorily filed.
  • Refunds pertaining to TDS/ TCS and rebates can be claimed only on filing of income tax returns

When should you file a Nil ITR?

According to Yadav, one should file a Nil ITR in the following situations:

  • Deposited amount or aggregate of amounts exceeding Rs 1 crore in one or more current accounts during the previous year.
  • Incurred expenditure of an amount or aggregate of amount exceeding Rs 2 lakh for travel to a foreign country for yourself or for any other person
  • Individuals with assets located outside India.
  • Individuals who hold signing authority in foreign accounts.
  • Individuals claiming a tax refund for TDS (Tax Deducted at Source) deducted on their income, even if the income is below the taxable limit.
  • If an individual incurs a loss in a financial year (e.g., capital loss, business loss, house property loss), they may need to file a Nil ITR to carry forward the losses for future set-off against profits.

According to the Finance Ministry, the number of taxpayers filing zero-tax ITR or Nil ITR has increased from 2.9 crore in FY 2019-20 to 5.16 crore in FY 2022-23.

The due date to file the Income Tax Return, including Nil ITR, for AY 2023-24 is July 31 for taxpayers whose accounts don’t need to be audited. If you haven’t filed yet, do it now instead of waiting for an extension.