No Taxable income? File Nil ITR for these benefits

This is the season of filing income tax returns.  Often there is confusion in the minds of people about if filing return is necessary if their income is below the taxable limits. If your income does not come under the purview of tax, then it is not necessary for you to fill ITR. However, there is no harm in filing ITR.

In a financial year, say FY 2022-23, if your income is less than the Basic Exemption Limit, then it is not mandatory for you to file income tax return. The basic exemption limit depends on the income tax regime chosen by the individual. In the Old Tax Regime, the basic exemption limit for a person below 60 years is Rs 2.5 lakh. This limit is Rs 3 lakh for senior citizens and Rs 5 lakh for super senior citizens.

Talking about the New Tax Regime, in the financial year 2022-23, the basic exemption limit i.e. income tax exemption limit is Rs 2.5 lakh. From the financial year 2023-24, this limit has been increased to three lakh rupees.

What is Nil or Zero Return?
Nil or Zero Income Tax Return is filed with the Income Tax Department to show that your income is not taxable and hence no tax has been deposited during the year. Nil return is filed when your income is less than the basic exemption limit of Rs 2.5 lakh or when the tax liability due to rebate becomes zero. The return filed in such cases will be treated as Nil ITR.

Benefits of Nil ITR?
Under the Income Tax Act, it is necessary to fill ITR if the income is above Rs 2.5 lakh. If the income is less than this, it is not necessary to file the return, but it is sensible because it has many benefits.

1) Income tax return is the official proof of your income. If you get salary in cash, then you may not have proof of it. In such a situation, you can show government proof of income by filling your income tax return.

2) ITR is useful for many things. For taking loan, home, personal or car, everywhere banks ask for ITR of at least two years from you. In case of credit card, ITR has to be given as income proof along with salary slip.

3) You can file nil return to claim tax refund. If the bank or employer has deducted any kind of TDS from you and your income is less than the basic exemption limit, then refund can be taken by filing Nil return.

4) Returns are useful even while travelling abroad. If you have to go to Canada, America or any other country, then you have to apply for a visa. At that time visa officers ask for ITR to ascertain your income or net worth.