When should you file a NIL return?

When should you file a NIL return? 

Documentation and record-keeping: Filing a NIL ITR helps in maintaining a documented record of financial transactions and income details, which can be useful for future reference or any potential audit. If you are just starting out and your total income falls below the taxable limit, but would like to keep a record, you must file your NIL Returns, according to 

You were filing your income tax returns for many years and fell into the 'below taxable limit' this year. This is to continue maintaining a record and also preventative measure in the event of a scrutiny from the Income Tax Department. Proof of income: Even if the income is below the taxable limit, a NIL ITR serves as proof of income. It can be helpful when applying for loans, visas, or other financial transactions that require income verification. Also Read: When you have to mandatorily file returns even if income is not taxable.

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Eligibility for filing a Nil ITR is primarily based on the taxpayer's income falling below the tax liability threshold

The benefits of filing a Nil ITR include

Easier Loan Approvals

Income tax returns serve as authenticated income proof, making it easier to obtain loans from lending institutions. "Submitting ITR documents can help establish creditworthiness, which is an important factor in the loan approval process," said Praneet Maheshwari, CA and Chief Operating Officer at Arihant Capital.

Scholarship Applications

Some scholarships may require students to submit income tax return proofs. "Even if the income is below the basic exemption, filing ITR can support the scholarship application process.

Refund of TDS

If a taxpayer failed to submit Form 15G/H to prevent TDS (Tax Deducted at Source) deductions, filing a Nil ITR can enable them to claim a refund of the TDS amount deducted by financial institutions. Visa process Filing of NIL returns help you with visa or credit card applications as it becomes a proof of your income

 Carry forward of losses: "By filing a NIL ITR, individuals can carry forward capital losses, business losses, or any other losses incurred during the financial year. These losses can be set off against future taxable income, reducing the tax liability in subsequent years.