How To File Zero/Nil Income Tax Return

Posted by CA Pankaj Kumar Vats
On 26 Apr 2024

Contents Covered

  • What is a Nil Return?
  • How to file Tax Return zero
  • Conclusion

1. What is a Nil Return?

Nil Tax return means that Tax liability zero:

  • It simply means that Tax filing will be done but there will be no Tax liability.
  • Let us understand the situation when the Tax liability is zero but the Tax filing should be done.

Where the total income is higher than the threshold but it is exempt :

  1. In case of share sale purchase one must should ITR even there is not profit.
  2. Sale purchase of property.
  3. Foreign travel.
  4. Credit card bills above 10 lakhs.
  5. Business loss.

2. How to file Tax Return zero:

  1. Gather Necessary Documents & Information
    Even if you have zero Tax, you may still need certain documents to file your return, such as
    1. Bank statements.
    2. Income Tax portal Log in ID password.
    3. Details of income.
    4. Analysis of 26AS.
    5. Analysis of AIS & TIS.
  2. Choose Your Filing Method
    1. Online at portal.
    2. Uploading JSON file.
  3. Use the Correct Tax Form
    If you have no Taxable income and want to file a Nil return, you would typically use form ITR-1 or form ITR-4, depending on your source of income. These forms are used for individuals with Income form salary, pension, one house property or other source like Interest income or income from other source.
  4. Fill Out the Form
    Even though you have no income, you still need to fill out certain sections of the tax form. Make sure to accurately provide your personal information, such as your name, address, Income details.
  5. Claim Exemptions and Deductions
    Depending on your situation, you may be eligible for certain exemptions or deductions, such as the standard deduction or deductions for dependents. Even if you have no income, claiming these deductions can potentially reduce your tax liability in future years.
  6. Check for Tax Credits
    While you may not have taxable income, there might be certain tax credits you’re eligible for, such as the TDS / TCS. These credits can sometimes result in a refund even if you had no income.
  7. Review and Submit Your Return
    Double-check all the information you’ve entered on your tax return to ensure accuracy. Once you’re satisfied, submit your return either electronically.
  8. Keep a Copy for Your Records
    It’s always a good idea to keep a copy of your tax return and any supporting documents for your records.
  9. Follow Up if Necessary
    If you filed electronically, you can track the status of your return through the Income Tax portal.

3. Conclusion:

Filing a zero income tax return means reporting to the tax authorities that you had no Tax to pay for that tax year. This could be due to various reasons such as not meeting the minimum income threshold, having tax-exempt income, or qualifying for deductions and credits that reduce your taxable income to zero. The conclusion of filing a zero income tax return is typically that your owe no taxes for that year. However, it’s important to ensure that all necessary forms and documentation are accurately filled out and submitted to comply with tax regulations.

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