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Income Tax Nil Return

Income Tax Nil Return (Must Know Information)

Tax return with a tax liability of “nil or Zero” is referred to as a nil return. People frequently question whether they must file an income tax return in such cases. The response is “Yes.”

Income Tax Nil Return is compulsory to be filed by all taxpayers under the Income Tax Act, 1961. It is estimated that about 22 lakh taxpayers will benefit from the Nil filing system for the monthly GST returns. 

The article below provides more information on income tax nil returns, including its eligibility requirements, benefits, etc.

What Is Nil Return?

If your annual income is below the taxable threshold for current year, you are not required to pay taxes. In order to prove to the Income Tax Department that you are below the taxable threshold and did not pay taxes this year, you will have to file the Nil Income Tax Return for this year.

Who Is Eligible to File Nil Returns?

The general criteria for filing a nil return is that your age should not be more than 60 years and your gross income should be more than 2,50,000 rupees.

Here’s a table to help you understand the zero return for individuals and organizations.

Organization      Income tax forms        Nil Return
1Proprietorship FirmsForm ITR-3 or ITR-4.

If the ITR-3 or ITR-4 has already been completed, a nil return should be filed even if there is no activity or profit.
2Limited Liability Partnerships (LLPs)For ITR-5, regardless of annual income or profits, every year.
If there has been no activity, then a Nil return must be filed along with the annual return through forms 8 and 11 for the MCA.
3IndividualsITR-1 or ITR-2, if the annual income is more than 2,50,000.If you have filed a Nil return in previous years, and this year your annual income is below the taxable limit. A nil return has to be filed to keep a record of the reduction in income by the Income Tax Department.

Benefits of Filing Nil Returns

Filing an Income Tax return is an essential legal process. The Income Tax Department keeps a record of every taxpayer’s earnings. So, it’s important to not give them any reason for scrutiny. There are several other benefits of filing a Nil ITR.

  1. You can claim a tax refund: 

If you paid extra taxes in a year when your annual income was less than your taxable income, you can only claim the TDS in ITR if you filed a Nil ITR.

  1. To show it as proof of your income:

A nil ITR is considered by all financial institutions as proof of income.

  1. VISA Application:

You are required to submit your income proof as a part of your VISA application. So, having a NIL return will work for you.

  1. Application for loans:

Banks frequently request three to five years of income documentation. Nil return will serve this purpose.

  1. Applying for any quota in educational institutions to get financial aid:

You are required to submit proof of income statement that your annual income is less than the taxable limit. Nil return will be accepted in this case as well.

How Do I File a Nil Tax Return?

You can get professional help or file the Nil income tax return yourself through the e-portal. The steps are as follows:

  1. Submission of Nil return  
  2. Click on Login  Enter “16-digit ITDREIN User ID”  
  3. Enter Authorised person PAN  
  4. Enter Password  
  5. Navigate to the tab “e-File”.  Click on upload Form 61B  
  6. Select the “Calendar Year” from the drop-down provided.  
  7. Select the “Type of Filing” from the drop-down provided.
  8. Submit Nil Statement.  
  9. Click on “Validate” to proceed further.  
  10. Upload the “DSC Signature file” generated using the DSC utility.  
  11. Select the radio button “For pre-existing accounts (As defined in Rule 114H(2)(h))”.  
  12. Select the radio button “For New accounts (As defined in Rule 114H(2)(d))”.  
  13. Click on “Submit”.  
  14. A success message is displayed. 

Click here for a tutorial on filing the Income Tax Return.

What Tax Form Do I Use for Zero Income?

If you don’t earn, then you are not obligated to pay any taxes or file any tax returns. However, if you have filed an ITR before, then you must file a nil return for the fiscal year in which you don’t have any earnings.

Is Nil Return Compulsory for Income Tax?

Yes, a Nil return is compulsory if your annual income is more than 2,50,000 lakh. If you previously filed a nil return but your annual income has fallen below the taxable level. Then also, you have to file the nil return to show the same.

What Is the Penalty for Not Filing Nil Returns?

The last date to file the Nil return is July 31 of every year. If this is not done, the taxpayer will be fined 5,000 rupees. The penalty is increased to 10,000 rupees if the Nil return is not filed by December 31st of that year However, if the total income of the taxpayer is not more than 5 lakh per year, the penalty amount will not be more than 1,000 rupees.

FAQ- Income Tax NIL Return

1. Can the unemployed file ITR?

It’s not mandatory for an individual whose annual income is less than RS. 2,50,000 lakh to file a Nil return. But, if you have filed it in previous years, you should file the ITR even if you are unemployed to show the reduction in your income and stay away from any scrutiny from the income tax department.

2. Can I file nil ITR after the due date?

You can file ITR after the due date with a penalty of 5,000 rupees or 10,000 rupees whichever is applicable. Also, if your annual income is not more than 5 lakh the penalty will be only 1,000 rupees.

3. What happens when you file nil returns?

A nil return acts as proof that your income is less than the taxable income for that fiscal year. It’s also required if you want to claim a tax return in the future. The nil return statement is used in various places, like banks for loans, financial institutions, applying for VISA, etc.

4. How can I file nil TDS?

You can file a nil TDS through the online portal or take the help of any professional.


Income Tax Nil return is applicable to taxpayers who earn more than Rs. 2,50,000 lakh in a fiscal year and are under the age of 60. 

However, if you have filed a Nil return in previous years and your earnings have plunged below the said limit. You should file the Nil return to inform the income tax department about the loss in annual income for this fiscal year.

 Income tax Nil return statements have several benefits, and to avail of them, you must file a Nil return through online or offline mode. 

We sincerely hope the information was helpful. Visit Instafiling for more blogs about taxes.

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