How to File a Nil Income Tax Return (ITR) - Step-by-Step Guide

Filing an Income Tax Return (ITR) is a crucial responsibility for every taxpayer, even if there is no taxable income. A Nil ITR return is filed by individuals whose taxable income falls below the exemption limit and therefore owe no tax. Filing a Nil ITR return is essential for maintaining a clean financial record and can be beneficial for various financial activities, such as applying for loans. This comprehensive guide will walk you through the process of how to file Nil ITR return efficiently.

Why file a Nil ITR return?

Even if you are not required to pay taxes, filing a Nil ITR return offers several advantages:

• Financial proof: Acts as proof of income for visa applications, loans, and financial transactions.
• Refund claims: Helps claim any tax refunds if taxes were deducted at source.
• Credit history: Builds a good credit history and can be useful when applying for financial products like credit cards and home loans.

Having a clean ITR filing record can significantly improve your chances when applying for major financial products. If you are planning to purchase your dream home, maintaining proper tax documentation will strengthen your loan application with lenders like Bajaj Finserv. Check your home loan eligibility today and discover competitive interest rates starting from 7.99%*  p.a.. You may already be eligible, find out by entering your mobile number and OTP.

Prerequisites for filing Nil ITR

Before diving into how to file a Nil ITR return, ensure you have the following:

• PAN card: Your Permanent Account Number (PAN) is essential for filing ITR.
• Aadhaar card: Linking Aadhaar with PAN is mandatory.
• Bank account details: For refunds or financial transactions.
• Form 16: If you have received Form 16 from your employer.
• Interest certificates: From banks and post offices.

Step-by-step guide on how to file Nil ITR return

• Step 1: Register on the Income Tax Portal
  1. Visit the official website: Go to the Income Tax Department’s official e-filing website.
  2. Register/login: If you are a new user, register using your PAN, which acts as your user ID. Existing users can log in with their credentials.
• Step 2: Navigate to e-File section
  1. Select the e-File tab: Once logged in, navigate to the ‘e-File’ tab.
  2. Select Income Tax Return: Click on ‘Income Tax Return’ from the dropdown menu.
• Step 3: Select the appropriate ITR form
  1. Choose the assessment year: Select the relevant assessment year for which you are filing the return.
  2. Select ITR form: For individuals with no income or income below the taxable limit, ITR-1 (SAHAJ) is generally used.
• Step 4: Fill in the required details
  1. Personal information: Fill in your personal details, including name, address, and contact information.
  2. Income details: Under the income details section, enter '0' or the actual income if it is below the exemption limit.
  3. Deductions and tax paid: Mention any deductions, even if not applicable for Nil return. If you have paid any advance tax or TDS, enter the details accurately.
• Step 5: Validate and generate XML
  1. Validation: Ensure all the details are filled in correctly. Use the ‘Validate’ button to check for errors.
  2. Generate XML: Once validated, generate the XML file of your return.
• Step 6: Upload XML and submit
  1. Upload XML: Return to the e-File section, choose ‘Upload Return,’ and select the generated XML file.
  2. Digital signature: If you have a digital signature, use it for signing. If not, you can skip this step.
  3. Submit: Submit the return after uploading the XML file.
• Step 7: Verify your return
  1. E-verification: After submission, verify your return through electronic methods like Aadhaar OTP, EVC, or through net banking.
  2. ITR-V form: If unable to e-verify, send the signed ITR-V form to the Centralised Processing Centre (CPC) within 120 days.

Once you have successfully filed your Nil ITR, you will have proper income documentation that can support future financial goals like homeownership. Whether you are planning to buy your first home or upgrade to a larger property, having filed ITRs demonstrates financial responsibility to lenders. Check your home loan offers with Bajaj Finserv now with loan amounts up to Rs. 15 crore* and flexible tenure options. You may already be eligible, find out by entering your mobile number and OTP.

Importance of Nil ITR for loan applications

When applying for a home loan, having a record of filing ITRs, even Nil returns, can be advantageous. It acts as proof of your financial discipline and history. For instance, if you are considering applying for a home loan, your ITR records can facilitate a smoother approval process.

Filing a Nil ITR return is a simple yet crucial task for maintaining a good financial record. It not only serves as a proof of income but also supports various financial transactions and loan applications.

By following the steps outlined in this guide, you can efficiently file your Nil ITR return and ensure that you are financially prepared for future needs. Remember, timely and accurate filing is key to avoiding any legal or financial hassles in the future.

Your consistent ITR filing history, combined with meeting basic eligibility criteria, can help you secure attractive home financing options. Bajaj Finserv offers home loans with EMIs starting at just Rs. 722/lakh*, making homeownership more affordable than you might think. Check your loan eligibility with Bajaj Finserv and explore loan amounts up to Rs. 15 crore* with approval in just 48 hours*. You may already be eligible, find out by entering your mobile number and OTP.

Benefits of Filing Nil Returns

Filing a nil Income Tax Return (ITR) can be beneficial, even when your income is below the taxable limit. It acts as valid proof of income and address when applying for a visa or passport. Many banks and financial institutions also ask for ITR documents when processing loan applications, and submitting a nil ITR strengthens your case.

Banks deduct Tax Deducted at Source (TDS) on interest earned from deposits, even if your total income is not taxable. To claim a refund on this deducted TDS, filing a nil ITR becomes necessary. Similarly, freelancers or consultants who have TDS deducted by clients can only claim a refund by submitting a nil return if they are below the taxable income limit.
 

You must file ITR—even with nil income—if you own any foreign assets. Additionally, losses made in the stock market can be carried forward only if an ITR is filed, regardless of your income level.

Filing ITR is also compulsory if:

• You have deposited more than Rs. 1 crore in one or more current accounts.
• You have spent over Rs. 2 lakh on foreign travel.
• You have spent more than Rs. 1 lakh on electricity bills.

Maintaining compliance with ITR filing requirements demonstrates financial discipline that lenders value highly. If you are ready to take the next step towards homeownership, your proper tax filing history can work in your favour when applying for home financing. Explore Bajaj Housing Finance Home Loan options with competitive rates and flexible repayment terms up to 32 years. You may already be eligible, check your offers by entering your mobile number and OTP.

Due Date to File Nil Income Tax Return

The deadline for submitting a nil income tax return is 31st July of the assessment year. This date is the same as for regular ITR filings. If you miss this deadline, you can still file a belated nil return later. However, there will be no penalty or late fees for filing a nil return after the due date since no tax is payable.