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Can a person with zero income file ITR?

File ITR_Raag Consultants

Yes, a person with zero income can also file Income Tax Return (ITR) in India. In fact, it is advisable for such individuals to file ITR as it can help them in various ways such as: Carry forward of losses: Even if an individual has no income or has incurred losses during the financial year, filing ITR can help them carry forward the losses to future years. These losses can be set off against future gains to reduce the tax liability. Tax refunds: Even if a person has no taxable income, they may still be eligible for a tax refund if they have paid excess tax during the year. Filing ITR is necessary to claim the refund. Proof of income: ITR serves as proof of income for various purposes such as applying for loans, visas, and other government schemes. Compliance: Filing ITR is mandatory for all individuals whose income exceeds the basic exemption limit, regardless of whether they have to pay tax or not. By filing ITR, individuals comply with the tax laws of the country. The Income Tax Department has also introduced a special provision for individuals with zero income or income below the taxable limit to file a simplified ITR form called ITR-1 Sahaj. This form can be used by individuals who have an income of up to Rs. 50 lakh and earn income from salary, pension, or interest. This form does not require extensive documentation and can be easily filed by individuals with no professional help. Therefore, it is always advisable for individuals with zero income to file ITR within the due date or even after the due date (by filing a belated return) to avail the benefits mentioned above and to comply with the tax laws of the country. In addition to the benefits mentioned above, filing ITR can also help individuals with zero income to establish their financial credibility. By filing ITR, individuals can show their willingness to comply with the tax laws and can establish their financial history with the Income Tax Department. Furthermore, if a person has filed ITR for a few consecutive years, it can help them establish their creditworthiness and improve their chances of obtaining loans or credit cards. Banks and other financial institutions often consider ITR filings as proof of income and financial stability while processing loan or credit card applications. Filing ITR can also help individuals with zero income to avoid legal complications. Although the Income Tax Department does not impose any penalty for not filing ITR if the income is below the taxable limit, it is still mandatory to file ITR if the income exceeds the basic exemption limit. Failing to file ITR can result in legal complications, as mentioned earlier. It is also important to note that individuals with zero income may be required to file ITR in some cases, even if they do not earn any income during the year. For example, if an individual has held an asset outside India or has invested in foreign companies or has earned capital gains, they may still be required to file ITR, even if they have no taxable income. In conclusion, individuals with zero income can and should file ITR to avail the various benefits and to comply with the tax laws of the country. It is always advisable to seek the help of tax experts if one has any doubts or queries regarding the filing of ITR.


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