The last day for individuals to file income tax returns (ITRs) for financial year 2022-23 or the assessment year 2023-24 is July 31. While it is said that ITR is not mandatory for those whose income is below Rs 2.5 lakh in a financial year, wealth planners recommend it to keep a clean tax record. The returns filed by these taxpayers are termed as 'nil returns'

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This shows the income tax department that the assessee is below the taxable threshold.

Filing 'nil return'

Those who have been filing income tax returns for years and have come below the taxable limit this year should file a nil ITR, experts say.

Those who have paid tax deposited at source (TDS) need to file a nil ITR in order to claim a refund. This is because one cannot claim a refund on TDS unless he/she files an income tax return.

Key benefits

For some individuals, the total income without taking deductions into consideration may be above the taxable limit. However, with the deductions, the income may come below the minimum exemption limit of Rs 2.5 lakh. If such individuals have paid more in taxes, they must file income tax returns to claim a refund.

Filing a nil ITR is also beneficial for those planning to apply for loans. At times, banks or other lending institutions ask the individual to produce an ITR to sanction the loan amount.

ITR serves as proof of income while applying for a visa or passport too. Hence, filing an income tax return is important.

How to file a 'nil returns' online

Filing a nil return is similar to filing a regular income tax return. Taxpayers are required to visit the official tax website and enter the details of income and deductions. The income tax will be computed and shown as one without dues.

The individual will also have to verify returns.