When your taxable income is below the maximum amount not chargeable to tax i.e Rs.2,50,000, your tax liability comes to zero and therefore you pay no taxes. Therefore, income tax return having tax liability as “Zero or nil” is called a nil return. Here, many a times people get confused whether in such cases, are they required to file their income tax return? The answer is “Yes”. You should file a nil return in the following cases:
It may happen that you are a regular return filer but this year, your income is below the taxable limit. You should definitely file income tax return, as you will have a proper year to year record of returns filed. Even if you are a first time return filer, then too start this practice of at least filing the income tax return. It’s not only for record purpose but nowadays income tax returns are mandatory for applying for visa or passport. Also, it becomes very important if you want to apply for any loan.You never know, when you might require to take a loan, its always better to be ready with all the documents and proper compliance.
Holding Foreign assets
Apart from this, if any resident individual is holding any foreign asset or a signing authority in any foreign account , he also has to mandatorily file income tax returns even if his income is below Rs.2,50,000.
Claiming refund and set off losses
It might happen that on your total income you paid more in taxes than you needed to, you must file an income tax return to claim a refund. Also, if this year you are not having income exceeding Rs.2,50,000 , still by filing return , you can set off previous year losses which is not possible if you skip filing your income tax return.
How to file a Nil return?
Login to myITreturn. Select proper Assessment Year and enter all income details. After that, enter all deductions. Finally, your income tax computed will be nil . Lastly, file your return and e-verify it.
Even if you, as a resident are not required to file income tax return, we suggest you to file the same as it is always better .