Know the Meaning of Nil Tax Return and when One can File it


According to the e-filing website of the Income Tax Department of India, registered taxpayers grew by 15% to around 8.45 crore on 31st March 2019. This indicates a steady rise among individuals who are willing to file their income tax return at the end of a financial year. 

If your annual income is less than Rs.2.5 lakh per annum, you are not liable to file income tax returns. However, you can still opt to file a return, for the sake of creating salary receipts, known as a nil tax return.

What is a nil tax return?

A tax return that is filed by individuals who are not required to pay taxes, as their annual income is below the income tax slab, is referred to as a nil tax return. Individuals who file nil tax returns are declaring to the Income Tax Department that they have earned nil or low income for the respective financial year. It is not mandatory to file a nil income tax return; however, it helps primarily in maintain financial records even though your annual income is not taxable. 

When should anyone file a nil income tax return?  

There are several situations for which filing nil income tax returns is beneficial for an individual.

These are –

  • Proof of income

During your home loan application process, you need to provide a proof income besides your salary slip in order to meet the demands of the eligibility criteria set by your lender. In such cases, if you have an annual income which is not taxable, you can opt for a nil income tax return, which will act as an official proof of income document. This proof of income also comes in handy during application of a passport or visa. 

  • Claim refunds

Taxpayers need to file an income tax return to claim a refund if they paid more taxes than the required amount. This generally happens when financial institutions deduct tax at source even if the annual interest or principal income is below the income tax slabs as set by the Income Tax Department. In such cases, you are eligible for a refund, which can be claimed easily with the help of nil tax returns.

How to file a nil tax return?

Just like regular filing of income tax return, you can file a nil tax return through an easy online application process. 

This application process consists of the following steps –

  1. Visit the official e-filing income tax website and log in with your PAN details and registered password. 
  2. Navigate to the ‘E-filing’ option and click the same. Enter all details as necessary, and your income tax will be calculated automatically.
  3. Since you are filing a nil income tax return, there will be no tax dues. 
  4. Click on ‘Submit’ to end the online nil tax return filing process.

However, if you have an annual income above the income tax threshold, as a homebuyer, you can avail tax benefits on your loan EMIs. So, before availing a housing loan, you need to know everything about saving tax. 

As per Section 80C, you can claim deductions of up to Rs.1.5 lakh on the principal portion of your home loan EMIs. Under Section 24(b), you can receive income tax exemptions of up to Rs.2 lakh on the annual interest component. Moreover, homebuyers can also avail home loan tax benefits for under-construction property. 

First-time homebuyers can also avail additional tax benefits under Section 80EEA with PMAY home loans. HFCs such as Bajaj Housing Finance Limited offer such loan with attractive features. 

This HFC also brings forth pre-approved offers that make the process of availing loans hassle-free. Check your pre-approved offer by providing your name and phone number.

So, from the above discussion, you get to know about the basics of a nil income tax return and why it is beneficial for individuals who have an annual income lower than the income tax threshold.