Income Tax Return: If your income is below the taxable limit, you might be wondering what is the need to file a tax return? But financial experts say that this is a wise step. Nil ITR means even when you do not pay any tax, filing a return can be in your favor.
ITR Filing news: As soon as the time comes to file Income Tax Return (ITR), people start filling the form in a hurry. It is necessary for those who pay tax, but there is also a large section whose income does not come under the tax purview. So should they also file ITR?
There is salary, but the income is low. No tax has to be paid. Then why is there a need to file ITR? In simple words, even if you do not have to pay tax, filing ITR can be a profitable deal for you. This is called ‘Nil ITR’ and it has many benefits.
What is Nil ITR?
If your annual income is so low that tax is not payable on it, then you can file Nil ITR. Meaning, a return in which it is shown that no tax is payable. This is not legally mandatory, but you can get many benefits from it. Especially when you take a big financial decision in the future like taking a loan, applying for a visa or want to get a tax refund.
There are 6 big benefits of filing Nil ITR:
1. You can get a refund:
Many times tax has already been deducted (TDS) on bank interest or freelance payment. If you do not fill ITR, then that money will not be refunded. If you file ITR, then you can claim a refund.
2. Financial record is strengthened:
ITR becomes a kind of ‘scorecard’ of your financial behavior. When you apply for a loan or visa, banks and embassies look at this.
3. Compensation for future losses:
If you have suffered a loss in shares, property or business in any year, then record it in ITR. This will reduce the tax you will have to pay in future when you make a profit, by deducting that loss.
4. It is a proof of income:
Many times, income documents are required for any financial work (such as taking a loan, availing government schemes). ITR is a solid proof of your income at that time.
5. You are legally protected:
Even if you are not in the tax net, by filing ITR, the government gets to know about it officially. This can protect you from any letters, notices or audits.
6. There will be no fine even on late filing:
If you are filing a nil ITR and no tax is due, then there will be no penalty on late filing. But it is always better to file on time so that you get refund or other facilities quickly.
How much of your income is not taxed?
When you talk about filing Income Tax Return (ITR), it is important to first know whether your income comes under the tax net or not. For this, the government has set a basic exemption limit, which means if your annual income is less than this limit, then you do not need to pay tax. This limit depends on your age and the system you have chosen for paying tax – Old Regime or New Regime.
If you have chosen the old tax system, then people below 60 years of age do not have to pay tax on income up to ₹ 2.5 lakh. At the same time, people between 60 and 79 years of age do not have to pay any tax on income up to ₹ 3 lakh and those above 80 years of age do not have to pay any tax on income up to ₹ 5 lakh.
On the other hand, if you have chosen the new tax system, then no matter what the age, everyone gets tax exemption on income up to ₹ 3 lakh. Sometimes it also happens that your income is a little more than these limits, but still tax is not due to getting some exemption or tax rebate.
So even if you don’t have to pay taxes, filing ITR is still a wise move as it helps in claiming refunds, maintaining financial records and getting things like loans or visas.
