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Why Filing ITR with No Income is Smart

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Why Filing ITR with No Income is Smart?


Every year, more than 5 crore people file income tax returns that have no tax liability.

So why are people who don’t need to file ITR spending time filing income tax returns when they can relax on their sofa and watch Netflix? 

If you are a salaried individual with no tax liability, you don’t need to file an ITR, but if that’s the case, why are 15-20% of all ITRs are Nil ITRs? Whenever we talk about filing income tax returns, the first vision that comes to everyone’s mind is a lot of documents, complex calculations and a lot of confusion; that’s why the general public gets a bit baffled when it comes to ITR filing.

Who needs to file ITR in India?

Should I file ITR even if I have no income?

The first question that comes to everyone’s mind is who should file an ITR. Don’t worry. Here’s a breakdown of who needs to file ITR:

Mandatory Filing: The Government has set Mandatory income tax filing for individuals that exceed the basic exemption limit. The exemption limits can vary on the basis of age and residential status of the individual. Here are the basic exemption limits for the financial year 2023-24 (Assessment Year 2024-25):

  • Individuals below 60 years: Rs 2.5 Lakh
  • Senior citizens (60 years to below 80 years): Rs 3 Lakh
  • Super senior citizens (80 years and above): Rs 5 Lakh

Residents with Foreign Assets or Income: Individuals who are residents of India and have assets or income outside India need to file an ITR.

Claiming Tax Refunds:  Individuals who have paid taxes through TDS ( Tax Deducted at Source) or incurred medical expenses can claim their tax refund by filing an ITR.

Mandatory Filing for Specific Transactions: Individuals who have entered into certain high-value transactions, such as buying or selling immovable property, shares, mutual funds, etc., may be required to file an ITR, regardless of their income level.

There are various other conditions in which individuals must file income tax returns.

But should you spend your time and energy filing ITR despite having no Tax Liability? YES. You must be wondering why or how do I file income tax if I have no income. Filing an online income tax return, even if you have no income, has a lot of benefits. In the long run, it can greatly benefit you and help you save money. 


Is there any benefit of filing ITR?

Here are the benefits of filing an income tax return even if you have no income:

1. Build a Strong Credit History

At one time, we all need a loan, whether it is for a home or any other necessity. To get a loan from the bank, you need a lot of documents to show that you have a solid and clear credit history. ITR is a document that comes in really handy when applying for a loan or visa. 

When you apply for a loan, the bank wants to see the past few years of your ITR history for positive credit proof, and if you make ITR filing a habit, you will always have complete documentation. 

2. Claim Tax Refunds 

If you have incurred expenses such as medical expenses or education loan repayments throughout the year, you can claim these deductions against future income and get tax refunds. 

To claim any refunds on tax filing, ITR is mandatory.

For instance, you’re a freelancer who didn’t work this year but had medical expenses of Rs. 50,000. If you file an ITR, you get to claim the deduction. In future years, when you have income, you can use this deduction to reduce your tax liability. 

Basically, you’re paying in advance for future tax savings!

3. Carry Forward Losses

Life is full of ups and downs, and not every day is a good day. If you have incurred losses in business filing ITR could be a masterstroke. You can use these losses to your benefit with the help of online income tax filing. By filing an ITR, you carry forward these losses and use them against future profits to reduce tax liability. 

A lot of businesses face losses in the initial days before achieving profitability, and filing income tax returns can help them sustain longer.

4. Claim tax benefits on Investments 

With the increase in financial awareness, a lot of people invest in tax saving investments like Equity Linked Saving Scheme (ELSS) Funds and Public Provident Funds (PPF). By filing an online income tax return in India, you can claim the deductions associated with funds. It also helps you in tracking the investments and their benefits.

If you want to save more taxes here are 21 ways to save tax from salary

Tip- Start filing ITR early as it allows you to get maximum tax savings in upcoming years. 


5. Establish Financial Discipline

Discipline is a key to financial success, and most of India is lacking it as we all wait for extended days to file ITR. Filing ITR even when we have no tax liability will help us be more disciplined, organise documents and keep up with the latest government regulations.

Having this financial responsibility at an early age will help you excel in financial awareness and financial planning.

6. Future Loan Applications

Every 3 out of 10 households in India have at least one active loan. This clearly shows that getting loans from banks and financial institutions is a big part of every Indian’s life. Every bank and financial institution asks for your previous years of filed ITRs. 

With a consistent record of online income tax return history, your loan application will look more promising and improve your loan eligibility. 

7. Track Your Financial Progress

We all want to track our financial progress and see improvements throughout the year to improve our financial decision-making. Income tax return filing helps us systematically record our financial journey. 


On the surface, filing ITRs might seem like an unnecessary process, especially when you have no income, but it has multiple hidden benefits that you got to know with the above tips. Filing ITR will help you make better financial decisions in the upcoming years. 

If you can’t file ITR independently, don’t hesitate to hire a reliable tax consultant. Tax consultants can help you file corporate tax, income tax, and much more. 

Have a safe and seamless financial journey!



Frequently Asked Questions:

1. Why would I need to file an income tax return if I have no income?


Filing an income tax return, even with no income, can be beneficial for various reasons. It helps maintain a clean tax record, facilitates potential refunds, and fulfills legal obligations.


2. Is it mandatory to file an income tax return if I have no income?


Depending on the tax laws of your country, you may or may not be required to file a return if you have no income. However, voluntary filing can still offer advantages, such as eligibility for certain government programs or credits.


3. What are the benefits of filing an income tax return with no income?


Filing a return with no income can establish a record of compliance with tax laws, which may be necessary for various purposes such as applying for loans, visas, or government benefits. It also ensures that you're in good standing with tax authorities.


4. Will filing an income tax return with no income affect my future tax liabilities?


Filing a return, even with no income, can sometimes impact your future tax liabilities positively. It helps maintain continuity in your tax history, which might be relevant for future tax deductions, credits, or adjustments.


5. How do I file an income tax return with no income?


The process for filing a return with no income varies depending on your jurisdiction's tax regulations. Typically, you would need to complete the relevant tax forms and declare your income as zero or below the taxable threshold.


6. Can filing an income tax return with no income trigger an audit?


Generally, filing a return with no income is less likely to trigger an audit compared to returns with substantial income. However, it's essential to ensure accuracy and honesty in your filing to avoid any potential scrutiny.


7. Are there any penalties for not filing an income tax return with no income?


Penalties for not filing a return with no income depend on the tax laws of your country. In some jurisdictions, there may be penalties for non-compliance, while in others, there may not be any if you meet specific criteria.


8. Can I claim deductions or credits when filing an income tax return with no income?


Depending on your circumstances and the tax laws in your jurisdiction, you may still be eligible to claim certain deductions or credits, such as those related to education expenses, healthcare costs, or charitable contributions.


9. Should I seek professional assistance when filing an income tax return with no income?


While filing a return with no income may seem straightforward, seeking professional assistance can ensure accuracy and compliance with tax laws. A tax professional can also provide guidance on potential benefits or credits you may be eligible for.


10. Where can I find more information about filing an income tax return with no income?


For specific guidance tailored to your situation, it's recommended to consult official tax resources provided by your country's tax authority or seek advice from a qualified tax professional.

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Uttam Bisht

Mr. Uttam Bisht is a partner with the Delhi Branch of the firm. He has more than 8 years of experience and specializes in Statutory Audit. Expertise in Tax audit of various enterprises. Extpertise internal audit of Private enterprises. Audit planning through business understanding, preliminary analytical procedures, determining materiality levels, and preparation of audit program and pre-audit checklist . He is well conversant with the auditing standards issued by ICAI. .

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