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Business News/ Money / Personal Finance/  Income tax return: Should you file nil ITR even if you earn below 2.5 lakh?

Income tax return: Should you file nil ITR even if you earn below ₹2.5 lakh?

  • ITR filing: To claim refund on TDS deduction, one needs to file income tax return even when one's annul income is below 2.50 lakh

Income tax return: If one incurs the expenses aggregating 1 lakh or more towards consumption of electricity, ITR should be filed.

ITR filing for AY 2022-23: Due date for income tax return (ITR) filing for the Assessment Year 2022-23 or Financial Year 2021-22 is 31st July 2022. So, an earning individual is advised to file its ITR by the given deadline. It is advisable for those earning individuals too, whose annual income is below the threshold income tax limit of 2.50 lakh. It would enable earning individual to avoid automated income tax notices asking for why tax return hasn't been filed.

According to tax and investment experts, one can't claim ITR refund on TDS deduction if he or she hasn't filed income tax return. So, those who have TDS deduction, then they are required to file income tax return even when their annual income is below the threshold of income tax limit i.e. 2.5 lakh per annum.

On why it's prudent to file ITR even when your annual income is below threshold income tax limit, Aarti Raote, Partner at Deloitte India said, "It is advisable to file a nil income tax return even when for a couple of tax years the income is below the minimal income threshold that mandates tax return filing to ensure that there is no gap in the tax filings records. At times when one applies for passport renewal or some visa then the tax acknowledgement for the past years is necessary. Also at times there are automated notices sent by the tax department asking for reasons why tax return is not filed. Hence filing a return will avert these."

Benefits of nil ITR

On benefits of filing ITR even when one's annual income is below 2.5 lakh, Sujit Bangar, Founder at Taxbuddy.com said, "One can't claim ITR refund against the TDS deducted by its employer or by any other paymaster. So, if your income is below basic exemption limit, then also it’s beneficial to file income tax return in certain situations."

The Taxbuddy.com founder went on to add that in case you intend to apply for any loan, may it be a housing loan or consumer loan or personal loans, the lending bank or institution asks for I-T Return and you submitting the I-T Returns gives much-needed confidence to the lender to sanction loan to you.

When your should file nil ITR

Sujit Bangar of Taxbuddy.com listed out the following cases when one should file ITR even when one's annual income is below 2.50 lakh:

1] If ‘total taxable income’ is less than basic exemption limit and 'gross total income' is more than basic exemption limit, then ITR needs to be filed.

2] If TDS is already done, to get refund of the same, ITR needs to be filed;

3] To apply for loan, visa etc., ITR is required;

4] If one incurs the expenses aggregating 1 lakh or more towards consumption of electricity, return should be filed;

5] If one has spent 2 lakh or more on foreign travel for himself or any other person, ITR needs to be filed;

6] If one holds any asset outside India, please get your ITR filed;

7] If one is beneficiary of any asset outside in India, please file your ITR; and

8] If one has claimed relief under tax treaty like DTAA, go ahead and file ITR.

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Asit Manohar

Chief Content Producer at Live Mint Digital Team
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