ITR Filing Deadline Nears: Taxpayers With Zero Tax Liability Must Also File a Return, Know Why?

There is not even a complete week left before the due date of Income Tax Return (ITR) filing, i.e., September 15, 2025. Several taxpayers have completed filing their returns; however, there are still a large number left to file their returns. The data till September 07, collected from the Income Tax Portal, says more than 4.89 crore taxpayers have successfully filed their income tax returns (ITRs). In the previous year, 2023-24, a total of 7.28 crore ITRs were filed.

The Income Tax Department advises taxpayers to file their ITRs before the due date if they have not filed yet. Some taxpayers have said that they are not required to file ITR as there is zero tax liability on them. However, it is important for these taxpayers to understand that tax liability has no relation to ITR (Income Tax Return) filing.

It is important to file an Income Tax Return (ITR) if you want to stay away from penalties and other legal consequences. Non-filing of Income Tax Return can attract a penalty of up to Rs. 5,000 under Section 234F; the section says Rs. 1,000 is imposed if your income is less than or equal to Rs. 5 lakhs, and a Rs. 5,000 penalty is imposed when your income is more than 5 lakhs. Additionally, a penalty of up to Rs. 10,000 can be imposed on foreign assets/income under the Black Money Act. Therefore, even if there is no liability for tax paying, filing a return becomes a mandatory task. One should file his/her return because it not only avoids penalties but also provides several additional benefits like easy loan approval, quick visa processing, claiming tax refunds, avoiding penalties and carrying forward their losses, etc.

The following are the key benefits of filing the Income Tax Return (ITR):

1. Easy Loan Approval

Most of the Banks and financial institutions in India ask borrowers to submit past years’ income tax returns (ITR) as proof of income (atleast three years), if he/she is a taxpayer, to check their creditworthiness. This helps financial institutions make sure the borrower has a stable income and is capable of paying back the loan amount promptly.

2. Quick Visa Processing

Individuals are asked to prove their financial stability while applying for foreign country visas, especially for countries including the USA, the UK, and Canada. At the time of applying for a visa for such countries, you may be asked to demonstrate your Income Tax Return (ITR) for the past few years. A visa is a document mandatorily required if you are travelling to a country other than your own. However, not all countries ask for a visa.

3. Claim Tax Refund

Claiming a tax refund is another big benefit of filing an income tax return (ITR). By filing a return, you can claim a refund if you have paid a higher amount of tax than your actual dues. The Income Tax Department first verifies your refund amount and then sends it directly to your bank account. This tax can be deducted from your interest on fixed deposits, rental income, consultancy income, or salary income.

4. Avoid Penalties

As discussed, escaping ITR filing can attract upto Rs. 5000 penalty under Section 234F (Rs. 1,000 if income < Rs. 5 lakh and Rs. 5,000 if income ≥ 5 lakh). By filing ITR every financial year before the due date, one can avoid these penalties and many other adverse consequences.

5. For Insurance Claims

To evaluate the compensation amount for the loss of income held due to a car accident, it is important to determine the income of a taxpayer and an income tax return (ITR) is the key document used to determine a taxpayer’s income.