New Delhi, April 14: In the financial year 2025-26 (from April 1, 2025, to March 31, 2026), many taxpayers may find their income falls below the taxable threshold. This could be due to exemptions under Section 87A, deductions, or low earnings from part-time jobs, freelancing, and dividends.
A common question arises: Is it necessary to file an Income Tax Return (ITR) when the tax liability is zero? The answer is yes. In many cases, filing a ‘nil ITR’ is a wise and beneficial move.
Experts suggest that filing an ITR is not limited to tax payments; it serves as an official record of your annual income, maintained by the income tax department. Even if your tax liability is zero, filing an ITR keeps your financial history clear and organized, aiding in various future endeavors.
In today’s digital age, the income tax department tracks your banking, investments, interest, TDS, and significant transactions through tools like the Annual Information Statement (AIS) and Taxpayer Information Summary (TIS). Filing an ITR ensures your records are accurate and legally updated, reducing the chances of discrepancies, notices, or audits.
According to experts, even if you do not owe tax, TDS may still be deducted from sources like bank interest, fixed deposits, freelancing, or dividends. Filing an ITR allows you to easily claim a refund for this deducted tax, which is the only legitimate way to do so.
Additionally, banks and financial institutions often require ITRs as proof of income when granting loans or credit cards. Therefore, even with a low income, regularly filing ITRs enhances your credibility and increases the likelihood of loan approval.
When applying for visas for foreign travel or education, ITR records from the past 3 to 5 years are often requested to assess your financial status. Thus, filing a nil ITR becomes crucial for future plans.
Experts also note that if you incur losses in the stock market, mutual funds, or business in any given year, filing an ITR allows you to carry those losses forward to offset future gains, providing tax-saving benefits.
Consistently filing nil ITRs helps maintain a clean and robust tax record. This reduces the likelihood of audits or notices in the future and preserves your financial credibility.
My name is Himanshu Tiwari. I am an experienced content writer with several years of expertise in the field. Currently, I contribute to Daily Kiran, creating engaging and informative content across a variety of categories including TECHNOLOGY, health, travel, education, and automobiles. My goal is to deliver accurate, insightful, and captivating information through my words to help readers stay informed and empowered.
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