The IT department recommends that every individual earning any kind of income should compulsorily file tax returns. Moreover, filing tax returns, even if you are in the 0% tax slab, could bring in a host of financial benefits.
For instance, you can file tax returns for claiming TDS refund or carry forward losses. Moreover, the returns also work as the most effective proof of income in case if you are planning to take a loan.
So, what can you do if your income is below the taxable limit? You can file ‘NIL’ tax returns. Take a look at what it is and how you can file it.
What is NIL Tax Return?As mentioned above, you file NIL tax returns if your income in the financial year falls in the 0% income tax slab. By filing NIL returns, you declare to the IT department that your income for the year is below the minimum income tax level, and you are not liable to pay any income tax for the year.
Apart from individual taxpayers, even companies, proprietorships, and LLPs are required to file NIL returns if there are no profits or business activities.
How to File NIL Tax Returns?There is no particular form for filing NIL returns. It can be filed with the help of the same returns filing procedure that is followed by other taxpayers. Here are the steps you should follow-
- Collect copies of documents like PAN card, Aadhar, Form 16, bank account details, and details of your investments and deductions
- Visit www.incometaxindiaefiling.gov.in and login to your account with your credentials
- Select the right ITR form and provide personal information and details regarding your income and deductions
- Based on the provided details, your income tax liability will be automatically computed
- If your income for the year is below the minimum tax limit, the outstanding tax dues will be NIL
- Provide details of your investments and attach documents if required
- Submit the ITR to the tax department
- You will now have to get your ITR verified either online through OTP or by mailing the ITR to CPC in Bengaluru
Is There a Penalty for Not Filing NIL Tax Returns?Yes, if you fail to file NIL returns before 31st July, you might have to pay as much as Rs. 5,000 as a penalty to the IT department.
This would be increased to Rs. 10,000 if you do not file NIL returns until the 31st December deadline.
Filing NIL ReturnsWith an income below taxable limit, filing NIL returns might look like a burden that you’d want to avoid. But filing NIL returns has its benefits, and non-filing might also require you to pay a penalty to the IT department.
So, even if you belong to the 0% tax slab, file NIL returns every year as long as your income is below the minimum limit as it can protect you from the penalties and also provide you many benefits.
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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