A Nil Income-tax Return, commonly called a Nil Return, is an Income-tax Return in which the taxpayer’s final tax payable is zero.

A Nil Return does not necessarily mean that the taxpayer earned no income. The tax payable may become zero because:

• The income is below the applicable basic exemption limit.
• The taxpayer is eligible for a rebate under section 87A.
• Permitted deductions or exemptions reduce taxable income.
• TDS, TCS or advance tax already paid covers the entire tax liability.
• The return results in a tax refund instead of an amount payable.

Is filing a Nil Return compulsory?

Filing may be either compulsory or voluntary. Having zero tax payable does not automatically remove the requirement to file an ITR.

When must you file a Nil Return?

1. Your income exceeds the basic exemption limit

An individual or HUF is generally required to file an ITR if total income, calculated before specified deductions and exemptions, exceeds the maximum amount not chargeable to tax.

For Assessment Year 2026-27:

The ₹12,00,000 rebate threshold under the new tax regime is not the ITR filing threshold. It determines eligibility for rebate, subject to applicable conditions.

2. You satisfy specified high-value transaction conditions

Return filing may be compulsory even when income is below the basic exemption limit if any of the following conditions are met during the year:

• Deposits exceeding ₹1 crore in one or more current bank accounts.
• Expenditure exceeding ₹2 lakh on foreign travel for yourself or another person.
• Expenditure exceeding ₹1 lakh on electricity consumption.
• Business turnover, sales or gross receipts exceeding ₹60 lakh.
• Professional gross receipts exceeding ₹10 lakh.
• Aggregate TDS and TCS of ₹25,000 or more.
• For a resident individual aged 60 years or more, aggregate TDS and TCS of ₹50,000 or more.
• Aggregate deposits of ₹50 lakh or more in one or more savings bank accounts.

3. You hold foreign assets or foreign signing authority

A resident and ordinarily resident individual must generally file an ITR if the person:

• Holds a foreign asset or financial interest as a beneficial owner or otherwise;
• Has signing authority in an account located outside India; or
• Is a beneficiary of a foreign asset, subject to the specified exception.

This requirement may apply even where the person’s Indian income is below the exemption limit.

4. You are filing for a company, partnership firm or LLP

A company, partnership firm or LLP is generally required to file its return irrespective of whether it:

• Earned a profit;
• Had no business activity;
• Had zero taxable income; or
• Incurred a loss.

5. You want to carry forward eligible losses

A return should be filed within the applicable due date to carry forward eligible losses under the heads:

• Profits and gains from business or profession;
• Capital gains;
• Speculation business; or
• Income from owning and maintaining racehorses.

Merely having a loss does not mean that no return is required. Delayed filing can result in the loss becoming ineligible for carry-forward, subject to the provisions applicable to that type of loss.

When is voluntary filing advisable?

Even when filing is not compulsory, filing a Nil Return may be useful in the following situations:

• Claiming a tax refund: TDS may have been deducted even though your final tax liability is zero.
• Maintaining income records: An ITR acknowledgement can serve as a recognised record of declared income.
• Applying for a loan or visa: Banks, financial institutions or consulates may request previous ITR acknowledgements.
• Reporting income correctly: Interest, dividends, capital gains and other income appearing in AIS or Form 26AS should be reviewed and reported where applicable.
• Maintaining filing continuity: Regular filing creates an organised compliance history.

Examples of Nil Return situations

How to file a Nil Return through myITreturn

1. Sign in to your myITreturn account.
2. Start a new Income-tax Return filing.
3. Import or enter your income, TDS, tax payment and deduction details.
4. Review income reflected in Form 26AS, AIS and other available records.
5. Select the applicable tax regime and correct ITR form.
6. Review the tax computation and confirm that no tax remains payable.
7. Submit the return after completing all validations.
8. E-verify the return using an available verification method.

Common mistakes while filing a Nil Return

• Assuming that income up to ₹12 lakh automatically removes the filing requirement.
• Reporting zero income without checking AIS, Form 26AS or bank interest.
• Ignoring income from dividends, investments, rent or capital gains.
• Choosing the wrong ITR form.
• Assuming that all income is eligible for the section 87A rebate.
• Failing to report foreign assets or foreign accounts.
• Missing the due date for carrying forward eligible losses.
• Submitting the return but not completing e-verification.

Income-tax Act, 1961 and Income-tax Act, 2025

The return for income earned during Financial Year 2025-26 must be filed for Assessment Year 2026-27 under the Income-tax Act, 1961. Income earned from 1 April 2026 falls under the Income-tax Act, 2025 and will be reported for Tax Year 2026-27.

Conclusion

A Nil Return records that no final tax is payable, but it does not always mean that filing is optional. You may still be required to file because of your income level, foreign assets, taxpayer category, losses or specified financial transactions.

Before deciding not to file, review all income sources, Form 26AS, AIS, TDS credits, bank deposits and the filing conditions applicable to you.

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