If an individual’s gross total income in FY 2022-23 (AY 2022-23) is below the basic exemption limit, then they need not file an income tax return (ITR). The basic exemption limit here depends on the income tax regime you have opted for.
If an individual chooses the old tax regime, the basic exemption limit will depend on your age in FY 2022-23. However, if an individual has opted for the new tax regime, then in that case the basic exemption limit is set at Rs 3 lakh, regardless of a person’s age.
One should note that even if it is not mandatory for you to file ITR, it is recommended that every salaried person should file ITR
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What is NIL ITR?
A nil return is an ITR filed particularly to declare to the Income Tax department that no taxes have been paid by an individual in the respective financial year. Nil ITR indicates that there is no tax liability on account of the taxpayer.
Nil returns can be filed only when the taxpayer’s income is below the exemption limit of Rs 2.5 lakhs or when a rebate reduces the tax liability to zero.
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What Are The Five Benefits Of Filing Nil ITR?
Valid proof of income: A nil ITR shows that your yearly income is below Rs 2.50 lakh. This serves as a legal document or an authentic proof of income.
Getting loans is easier: An income tax return is considered an authenticated document of income proof by the government. Thus, submission of ITR to lending banks and financial institutions can ease the process of sanctioning loans.
It is often seen that lending institutions mostly check the creditworthiness of the loan applicant before sanctioning loans. For this, an individual is asked to furnish various documents including financial, banking and other statements and documents, income tax return (if available), etc. So, if you have a legal income proof document like filed ITR, it can help your loan case.
Read More: Underreporting Income Under ITR Can Be Dangerous, May Lead To Fine Or Even Jail: Tax Official
Setting off losses: If a person has incurred losses in the equity market loss in a financial year and decides to carry forward the equities holding to the next financial year, filing a nil return becomes mandatory.
Helpful while applying for a passport or visa: A nil return also is handy for a visa application as income proof is a part of the whole application procedure.
Claiming refund of TDS: Submitting form 15G/H can save you from TDS deduction. However, if you fail to submit this form due to some reason, then you can file nil ITR to claim this TDS amount back as refund.
