Filing zero income tax return or ‘Nil’ return is a process where people inform the Income Tax Department of their income even though it is less than the tax threshold. Although it is not compulsory for individuals with income under the level of basic exemption, filing a Nil return can prove to be useful in numerous ways, such as maintaining a good track record of income, making it easier for loans or visa to be approved, and being tax compliant. The article gives a step-by-step guide on how to file Nil income tax return online in India, making it an easy task.
Understanding Zero Income Tax Return
Nil return is filed by taxpayers who have a tax payable of less than the basic exemption amount, indicating no tax liability for the financial year. A Nil return is used by taxpayers to formally inform the Income Tax Department that they are not taxable, and this can be beneficial for various financial and legal purposes.
Benefits of Filing Zero Income Tax Return
- Record Keeping: Filing a Nil return enables the keeping of a permanent record of income, which can be useful in the event of future financial dealings or valuations.
- Loan and Credit Applications: Banks can request income tax returns, e.g., a Nil return, as evidence of income when applying for a loan or credit.
- Visa Applications: Some countries require evidence of tax compliance for visa grants. Nil return is evidence of your tax compliance and financial status.
- Carry Forward Losses: Filing returns even if there is no income assists one in carrying forward losses to be adjusted against future profits.
Step-by-Step Guide to Filing Nil Income Tax Return Online
- Gather Necessary Documents: Even though you may not have taxable income, it is advisable to gather documents like PAN (Permanent Account Number), Aadhaar card, bank statements, and other allied financial documents.
Register/Login to Income Tax e-Filing Portal:
- Visit the official Income Tax e-Filing portal
- If you are a new user, select ‘Register’ and go through the registration procedure as per your PAN. The registered users may directly login with their credentials.
Go to ‘e-File’ and Select ‘Income Tax Return’:
- Log in and go to the ‘e-File’ menu and select ‘Income Tax Return.
Enter the Compulsory Details:
- Assessment Year: Choose the right assessment year. For instance, if you are filing for the year 2023-24, the assessment year will be 2024-25.
- ITR Form Number: Select the right ITR form. In general, taxpayers with income from salary or no income can file ITR-1 (SAHAJ).
- Filing Type: Check ‘Original/Revised Return.
- Submission Mode: Select ‘Prepare and Submit Online.
Complete the ITR Form:
The structure is divided into sections like personal information, income information, tax information, and verification. Since you are filing a Nil return, ensure the ‘Income Details’ section shows zero or income below the taxable limit.
- Verify and Submit
- Fill all the details requested and ensure that they are correct.
- Choose ‘Preview and Submit’ to validate all entries.
- Submit to return.
E-Verify the Return:
After submission, it is advisable to verify your return. The e-filing portal facilitates various means of verification:
- Aadhaar OTP: One-time password is received on your registered mobile number tied with Aadhaar.
- Net Banking: Use your net banking account and proceed to the e-filing portal for verification.
- Bank Account Number: An EVC (Electronic Verification Code) is sent to your registered mobile number.
- Physical Verification: If electronic mode is not feasible, you may mail a signed physical acknowledgement copy of the ITR-V to the Centralized Processing Center (CPC) in Bengaluru within 120 days from the date of filing.
Conclusion
Electronic filing of a Nil tax return of income is a quick procedure with lots of benefits, from being money conscious to quick applications. By the aforementioned process, it is guaranteed one will be meeting the law with respect to tax and preparing himself well for the future in money making business.
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