{"id":27213,"date":"2021-03-11T12:38:16","date_gmt":"2021-03-11T07:08:16","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=27213"},"modified":"2024-12-27T18:44:36","modified_gmt":"2024-12-27T13:14:36","slug":"what-is-filing-procedure-and-penalties-associated-with-nil-income-tax","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/what-is-filing-procedure-and-penalties-associated-with-nil-income-tax\/","title":{"rendered":"What is Filing Procedure and Penalties Associated with NIL Income Tax?"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Any person whose taxable\nincome falls below the basic exemption limit or the income tax slab has to file\nan income tax called as NIL income tax. As a result, he is not obligated to pay\nany taxes. He can choose to file nil income tax return as it is important to file\nan ITR irrespective of low income.<\/p>\n\n\n\n<p>Filing under nil income tax is a kind of declaration to the <strong>Income Tax Department<\/strong> that the person has earned nil or low income throughout that assessment year. So, it is useful to file a nil income tax return for the sake of creating records.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/what-is-filing-procedure-and-penalties-associated-with-nil-income-tax\/#Why_to_File_Nil_Income_Tax_Return\" >Why to File\nNil Income Tax Return?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/what-is-filing-procedure-and-penalties-associated-with-nil-income-tax\/#How_to_File_Nil_Income_Tax_Returns\" >How to File Nil Income Tax\nReturns?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/what-is-filing-procedure-and-penalties-associated-with-nil-income-tax\/#Who_all_can_File_Nil_Income_Tax_Return\" >Who all can File Nil Income Tax Return?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/what-is-filing-procedure-and-penalties-associated-with-nil-income-tax\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why_to_File_Nil_Income_Tax_Return\"><\/span>Why to File\nNil Income Tax Return? <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p> The benefits of filing Nil Income Tax Return are:- <\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" width=\"1000\" height=\"375\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/03\/Authentic-Proof-of-Income.png\" alt=\"benefits of filing Nil Income Tax Return\" class=\"wp-image-27241\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/03\/Authentic-Proof-of-Income.png 1000w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/03\/Authentic-Proof-of-Income-300x113.png 300w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/03\/Authentic-Proof-of-Income-768x288.png 768w\" sizes=\"(max-width: 1000px) 100vw, 1000px\" \/><\/figure><\/div>\n\n\n<h3 class=\"wp-block-heading\">Serves as Authentic Proof of the Income<\/h3>\n\n\n\n<p>While\napplying for loan or passport there is a requirement to give a proof of the\nsalary slip also while applying for visa. If the nil income tax has been filed\nby the person then he will have an official record of proof of his income.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">To Claim a Refund<\/h3>\n\n\n\n<p>Even though the person is not under the taxable limit but some of the times when tax is deducted at source where the banks deducts <strong><a href=\"https:\/\/corpbiz.io\/tds-return-filing\" title=\"TDS Return Filing\">TDS<\/a><\/strong> over interest income above Rs 10,000. In such cases the person is qualified to receive a refund and hence filing a nil return is the best manner to get the refund.<\/p>\n\n\n\n<p>In fact, when the person is mistakenly\ntaxed he is eligible to receive 0.5% interest for every month on the extra sum\nthat has been paid i.e. he will receive interest on the amount. Nonetheless, applicability\nof this benefit shall only be availed if the person files his returns by the particular\ndue date as has been mentioned by the Income Tax Department. But in case of\nfiling returns after the due date, the interest shall be foregone.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Carry Forward Losses<\/h3>\n\n\n\n<p>The\nmechanism of\ncarrying forward of loses where if theperson is investing in the stock markets, he can counterbalance\nhis capital losses against capital gains at some other date. Though, this is possible\nif the person is filing the tax returns yearly to continue the chronology of accounts.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_to_File_Nil_Income_Tax_Returns\"><\/span>How to File Nil Income Tax\nReturns?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p> Filing of nil income tax returns is same as the filing of regular income tax returns. A person can electronically file his returns online in just a few simple steps.<\/p>\n\n\n\n<ul>\n<li>Keeping all the mandatory containing personal information like Aadhar card, PAN card, Form 16, Bank account details, and details of all the investments.<\/li>\n\n\n\n<li>Then login to an e-filing facilitator online portal with the mentioned mandatory documents. Enter your salary details and deduction.<\/li>\n\n\n\n<li>Then Income tax will be computed at that stage and it will show that the person have no taxes due to be paid.<\/li>\n\n\n\n<li>The investments details should be entered to claim the deductions.<\/li>\n\n\n\n<li>The income tax return shall be submitted to the Income Tax Department.<\/li>\n\n\n\n<li>Then send to ITR-V to CPC which is in Bangalore to complete the whole process of e-filing.<\/li>\n<\/ul>\n\n\n\n<p>So, filing of nil income tax returns has many benefits and if the person is not filing the income tax return thinking that he is within the threshold limit of tax then he must change his mind and avail the advantages of filing nil income tax returns.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_all_can_File_Nil_Income_Tax_Return\"><\/span>Who all can File Nil Income Tax Return?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Below mentioned entities can file the NIL Income\nTax Return, which are as follows:-<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Individual<\/h3>\n\n\n\n<p>A person having more than Rs.2.5 lakhs of the\nincome is obligated to file an&nbsp;income tax return&nbsp;in&nbsp;ITR-1\/ITR-2 form every year under the Income Tax\nAct. For an individual the due date for Income tax return for on or before the\n31st of July.<\/p>\n\n\n\n<p>A penalty of Rs.5000 is attracted on failure to\nfile an income tax return if the return remains due on 31st July and is filed\nbefore 31st December and a penalty of Rs.10, 000 is attracted if the income tax\nreturn is filed after 31st December. <\/p>\n\n\n\n<p>Where the annual income is not exceeding Rs.5 lakhs then the penalty for late <a href=\"https:\/\/corpbiz.io\/income-tax-return-filing\" title=\"Income Tax Return Filing\"><strong>filing income tax return<\/strong><\/a> is fixed at Rs.1000. If an individual\u2019s income becomes less than Rs.2.5 lakhs of the income in a year, then the person is not required to file return but it is always advised the individual should file the NIL income tax return, even if the taxable income is less than Rs.2.5 lakhs i.e. basic exemption limit of Rs.2.5 lakhs.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Proprietorship<\/h3>\n\n\n\n<p>Form&nbsp;ITR-3&nbsp;or ITR-4 is the form of income tax\nreturns for the proprietorship firms. They are required to file income tax\nreturn in Form ITR-4 when the taxpayer has chosen for the presumptive taxation\nscheme.&nbsp;<\/p>\n\n\n\n<p>NIL return should be filed even if there is no\nbusiness activity of the proprietorship firm where the firm has been previously\nfiling the income tax return under ITR-3 or ITR-4. <\/p>\n\n\n\n<p>Even if there is no activity or revenue for\nmost of the proprietorship firms, there will be few incurred expenditure that\nshall be carried forward as a loss. Therefore, in proprietorship firm, NIL income\ntax return must be filed even if there is no activity.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">LLP<\/h3>\n\n\n\n<p>Form ITR-5 in the income tax return is for all\nthe LLPs that are registered in India and they are required to file an income\ntax return every financial year irrespective of their business profit or\nturnover or activity.<\/p>\n\n\n\n<p>The LLPs are required to file the NIL income tax return and the annual MCA return given under Form 8 and Form 11 even if they have not commenced any activity after <strong><a href=\"https:\/\/corpbiz.io\/llp-registration\" title=\"Limited Liability Partnership Registration\">incorporation of LLP<\/a><\/strong>.&nbsp;<\/p>\n\n\n\n<p>The penalty on failure to file NIL income tax\nreturn under the Act for a company would be Rs.5000, if the ITR is filed before\n31st December and if the return is filed after 31st December then a penalty of\nRs.10, 000.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>NIL Income Tax is mandatory for the specified types of business even if there is no activity. In case of individuals, even if their salary is below the income taxable limit they are recommended to file NIL Income tax return if once they have begun filing income tax returns and also to avail various benefits. Therefore, filing NIL Income Tax helps maintain income records and builds a sound financial profile.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/reduce-your-income-tax-liability-to-save-money-for-your-future\/\">Reduce your Income Tax Liability to save money for your future\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Any person whose taxable income falls below the basic exemption limit or the income tax slab has to file an income tax called as NIL income tax. As a result, he is not obligated to pay any taxes. He can choose to file nil income tax return as it is important to file an ITR [&hellip;]<\/p>\n","protected":false},"author":33,"featured_media":27243,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[10],"tags":[1592],"acf":{"service_id":"78"},"authorName":"Kandarp Vanita","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/02\/image_2021_02_01T09_09_44_024Z.png","authorDescription":"Kandarp Vanita has done masters in Corporate and Commercial Law from WB National University of Juridical Sciences. She has 3 yrs of experience in drafting legal documents &amp; dissertations. Being a curious reader, she is also passionately into providing legal backups and comprehensive understandings in every aspect of Law to the firms.","postViews":4676,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/27213"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/33"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=27213"}],"version-history":[{"count":12,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/27213\/revisions"}],"predecessor-version":[{"id":68087,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/27213\/revisions\/68087"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/27243"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=27213"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=27213"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=27213"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}