ITR Filing: What is ‘NIL’ tax return and when should you file one?

financialexpress.com:

Income Tax Return (ITR) filing deadline is approaching fast and taxpayers are busy arranging various necessary documents, including Form 16 and 26AS, for filing of tax returns. The ITR filing deadline, like in previous years, is July 31. When it comes to filing tax returns, many salaried and non-salaried individuals, especially first-time taxpayers, often get confused about whether or not they are supposed to file income tax returns. Certain individuals are exempt from paying taxes under income tax laws, resulting in zero or nil tax liability for them.

According to income tax provisions, individuals whose income is below the tax exemption limits — currently Rs 3 lakh under the new tax regime and Rs 2.5 lakh under the old tax regime — are exempt from filing tax returns. So technically, they are paying NIL or Zero tax.

Under Section 139(1) of the Income-tax Act, 1961, individuals whose income is below the basic exemption limit are not required to file income tax returns. This exemption is provided to such individuals as they do come under any taxable brackets. But if they still wish to file returns despite being out of the taxable income net, they can file income tax returns called ‘NIL’ returns. While filing nil returns is not mandatory, there are several benefits associated with doing so.

Also read: Income Tax Return: How to choose correct ITR form for tax filing

The basic tax exemption limit depends on the tax regime one chooses, as well as the age of the taxpayer.

Under the old tax regime, basic exemption limit for taxpayers, under different age groups, is as follows:

Under the new tax regime, the central government in Union Budget 2023 raised the basic exemption limit to Rs 3 lakh from Rs 2,50,000 set earlier.

Indivi