A nil return is an ITR filed specifically to declare to the Income Tax department that no taxes have been paid in the respective financial year. Nil returns can be filed only when the income is below the exemption limit of rs.2.5 lakhs or when a rebate reduces the tax liability to zero
- ITR may be required for applying for a visa.
- Passport applications accept nil ITR as valid proof of address.
- ITR is required for loan applications as supporting evidence to ascertain eligibility.
- Banks may deduct TDS on interest on deposits. The TDS refund can be claimed by filing nil ITR.
- A few organisations may deduct the TDS of people working as consultants or freelancers while disbursing their payment. They need to file nil ITR to claim a TDS refund when they don’t fall in the tax bracket.
- Filing ITR is mandatory for individuals who own a foreign asset even when their income is below the threshold of Rs.2.5 lakhs.
- It is possible to carry forward losses incurred in the stock market by filing nil ITR when the income is below the threshold of Rs.2.5 lakhs.