Why You May Still Have to File ITR Despite Nil Tax Liability:

The Form 16 is starting to get distributed among many salaried individuals for this fiscal year. Some individuals would find that the form states that they do not owe anything in taxes.

This does not necessarily mean that you do not need to file your Income Tax Return (ITR).

Although your company did not take out any deductions from your salary due to being eligible for the Section 87A rebate, you might still have to file your return.

At present, the tax rebate is available for income up to Rs 7 lakh under the old tax regime and up to Rs 12 lakh under the new tax regime. For salaried employees choosing the new tax regime, the standard deduction increases the effective tax-free income to Rs 12.75 lakh.

But the rebate will merely make you tax-liable to nil. This does not imply that you get an exemption from filing your Income Tax Return (ITR).

As per experts, whether or not you should file an Income Tax Return (ITR) is not simply dependent on your tax payable amount.

There could be situations wherein even with a nil tax payable amount, you might be required to file your ITR because of various other factors, including but not limited to your income, possession of any foreign assets, power to conduct operations in a foreign bank account, and so forth.

When You Still Need to File an ITR

In cases where even when your Form 16 indicates zero tax, or you earn less than the taxable limit, there may be circumstances under which you need to file an ITR if you are

• Depositing more than Rs 1 crore into one or more of your current bank accounts.

• Depositing more than Rs 50 lakhs into your savings bank account.

• Spending more than Rs 2 lakhs on foreign travel for yourself or anyone else.

• Electricity bills exceeding Rs 1 lakh in one fiscal year.

• Running your business with an annual turnover of more than Rs 60 lakhs.

• Having a professional income exceeding Rs 10 lakhs per annum.

• TDS/TCS exceeding Rs 25,000 or more per year (for senior citizens, Rs 50,000).

• Holding foreign assets is beneficial to you, or you are an authorised foreign signer for a foreign bank account.

  Filing of ITR Is Important Anyway

Despite not being mandatory, filing an ITR is a smart move to make anyway.

An ITR can act as evidence of your earnings when applying for a visa or seeking a loan for a house, among others. Additionally, it will enable you to claim a refund of any excess deductions on TDS or TCS.

Experts also say that filing an ITR confirms the income shown in your Form 16 and can help avoid notices if your Annual Information Statement (AIS) includes reportable transactions.

Experts also point out that filing an ITR is important if you want to carry forward eligible business or capital losses and use them to reduce your tax liability in future years.

Do Not Neglect High-Value Transactions

Although high-value credit card transactions alone do not require filing of an ITR, foreign travel, foreign exchange transactions, remittances abroad, and other high-value transactions are likely to reflect in your AIS.

Prior to filing your ITR, ensure that all the information mentioned in your AIS and Form 26 AS matches your income records.

Failure to file your ITR despite being liable to do so could result in penalties. Failure to report foreign holdings can bring more serious consequences for you under the provisions of the Black Money Act.

Zero tax liability does not mean that you are exempt from filing an ITR. Make sure whether or not you have met any ITR filing obligations, sought a tax refund, or are carrying forward your losses. It will also be helpful in securing loans or visas in the future.