What is NIL Income Tax Return?
NIL Income Tax Return (ITR) is filed only by an assessee to disclose his total income earned during a financial year. However, on such income no tax is payable which can be due to the reason that his total income falls under the basic exemption limit on which tax is not payable or after claiming certain deductions / exemptions ultimately no tax is payable. As there is no tax liability therefore, these kinds of returns are known as Nil Return.
Any assessee who earns income during the year on which tax is not payable can file NIL Returns. Assessee like Individuals, Companies or LLPs etc. can file NIL Returns if they have not earned any profit during a financial year.
Is it mandatory to file NIL ITR?
Filing of NIL Income Tax Return is mandatory or not depends on who the assessee and how much his total income is. Like in case of individual whose total income is Rs 2,50,000/- or less, it is not mandatory for him to file an ITR. However, if his total income is Rs 5,00,000/- or less but greater than Rs 2,50,000/-, in such case his tax liability would be NIL because he gets rebate under section 87A of the Income tax Act, 1961, in this case though he would file NIL return of income but it is mandatory for him to file his return.
Similarly, corporate entities like Companies, LLPs & others do not have option of not filing income tax return even if they don’t earn any income or don’t have to pay any taxes.
So, mandate of filing of NIL ITR depends on case to case and we can’t generalize the answer this question in YES or NO.
Consequences of not filing NIL Return
As we have already discussed that this depends on case-to-case basis whether it was mandatory for file NIL ITR or not. Similarly, consequences of not filing of NIL Income Tax Return also depend on case-to-case basis.
Like in case of a person whose total income does not exceed Rs 5 lakh then the maximum penalty payable by him would be Rs 1,000/- if the ITR is file dany time after the expiry of the deadline but before March of the respective assessment year.
In case of companies who fail to file NIL return of income, it would be liable to pay penalty of Rs. 5000/-, if there turn is filed after due date but before 31st December.
And a penalty of Rs. 10,000/- if there turn is filed after 31st December but up to March of the respective assessment year.
Benefits of filing NIL ITR
1. Income Proof
Income Proof is required for getting certain official documents like passport or to get loan. A person can use Income Tax Return as a proof of income so, we can say that it is important to file ITR even if tax liability on income is NIL.
ITR is one of the mandatory documents to apply for VISA of various countries. Thus, in case of an individual filing NIL return will also helps to get VISA to travel to certain foreign countries.
3. Record of Income
Many people earn less than taxable income at the early stage of career. So they are not required to pay any taxes but they can keep a record of income by filing NIL Return every Year.
In many cases certain institutes deduct tax at source on income of assessee even when total income earned earned by assessee is below taxable limit. Such as bank deduts tax at source on interest income if aggregate interest for the year is Rs 40000/- / 50,000/- or more. In such cases a person is required to file ITR to claim such TDS.
5. Carry Forward Losses
Filing a NIL Income Tax Return is mandatory when a person wants to carry forward the losses to the subsequent year.
Due-Dates for filing NIL ITR
(Individuals, Partnership Firm)
How to File NIL ITR?
Now the question is how to file nil return in income tax. As discussed above, NIL Income Tax Return is same as other Income Tax Return. Thus, the process of filing NIL Return online is the same as filing regular Income Tax Returns Online.
One can easily file his Income Tax Return Online by following under-mentioned steps-
1. Open the E-filling Portal
The first step is to open the e-filing portal of Income Tax that is https://www.incometaxindiaefiling.gov.in/home.
In case of first time users, create the login.
Click on new user and fill the required details to become a registered user. It will require following details and documents for registration-
- PAN Card
- Aadhar Card
- Bank Account details
- Form 16 details
2. Thereafter, sign in on the portal to proceed with further steps.
3. Next, fill your personal details like your Name, Age, Father Name etc.
4. Subsequently, Enter your income details and deductions details (if applicable)
5. Now, the income tax on the total income would be calculated and since the income is below the taxable income therefore, it will show that no taxes are due.
6. You can enter the details of investments in order to claim deductions (if applicable).
7. Lastly, you are required to submit the Return to the Income Tax Department.
8. Once the ITR is submitted then the person has to send the ITR-V to CPC in Bangalore in order to complete the e-filling process.
This process might seem easy but it is not this much easy practically as the user might not know which ITR is applicable on him or what are the deductions and exemptions available. Hence, it is always suggested to seek assistance from Experts for ITR Filing in time with utmost accuracy.
If you are also looking for professionals’ help then Manthan Experts is the right platform.