Kolkata: A lot of people in India will have zero income tax for FY26. Which means, when they are going to file Income Tax Returns, or ITR, they will have no income tax to pay. But it does not men you should not file the ITR. Though it will make no revenue difference to the government, not filing an ITR can deprive you of a lot of benefits. An ITR where no income tax is paid is also known as a Nil ITR. Let’s have a look at how a NIL ITR per se can benefit a citizen, irrespective of not het/she pays any income tax. An ITR establishes an official record of your income and assists in claiming TDS refunds. Also, an ITR serves as a crucial document for loan and visa applications. From these perspectives, an income tax return carries a lot of significance even beyond your income tax liability. The reason is clear: the purpose of ITR is not merely limited to paying taxes. It also serves as an official record of the income of an individual. In the digital environment of today, all financial transactions are tracked. The ITR ensures that regulations are complied with.
Claiming TDS
Now consider this situation. The income tax that a person has to pay is nil, but tax deducted a source can keep happening. TDS can take place in interests paid to an individual by banks, or on freelance or consultancy income, or even dividend payments from stock market investments. If one has an ITR ready, one can quickly claim refund of the TDS by furnishing the ITR. This record is in consistency with the data held by the Income Tax Department and, therefore, there is no apprehension of facing any scrutiny.
Loan and visa application
Loans have been of great significance in society. Whenever one is in financial difficult, one can apply for loans. But banks and NBFCs (non-banking financial institutions) ask for the applicant’s ITR before considering a loan. It serves as a proof of the applicant’s income. Even a Nil ITR is a valuable document for the authorities. Please note that a Nil ITR does not mean zero income. It facilitates the process of obtaining personal loans, home loans, and credit cards. If you need to travel abroad and apply for a visa, ITRs are mandatory requirement. Often ITRs for three to five years are asked for.
Impact on investment loss
If you have incurred any loss in investments in stocks or mutual funds, an ITR becomes essential. If an individual files ITR, it allows him/her to carry forward the losses to subsequent years and he/she gets to save on taxes in future. This benefit is available even if an individual has zero income and this facility helps in long-term planning.
Nil ITR this year
With no income tax for anyone earning up to Rs 12 lakh a year, there will be a surge in Nil ITR number from this year. Significantly, in FY24, more than 5.5 crore taxpayers filed nil ITR which marked about 66.5% of total income tax filers. In 2025, bothered by low consumption growth, the government announced signifcant income tax relief to drive consumption and boost growth prospects.