Should You File ITR in AY 2025-26 if Your Income is Not Taxable? Benefits Explained

As the assessment year 2025-26 approaches, many individuals are unsure whether they should file an Income Tax Return (ITR) if their income falls below the taxable limit. While it may not always be mandatory, filing an ITR can be highly beneficial in several ways.

When Is Filing ITR Mandatory?

Filing an ITR is required if your total income exceeds the basic exemption limit. However, in some cases, even if your income is below the taxable threshold, you may still need to file:

• Specific Incomes: Income from capital gains or foreign assets may require filing an ITR.
• Tax Deducted at Source (TDS): If TDS has been deducted, such as on bank interest, filing an ITR lets you claim a refund for the excess tax paid.

Under the old tax regime, a maximum rebate of ₹12,500 is available, while under the new regime, it can go up to ₹25,000. If your income falls within these limits, your tax liability is reduced to zero, but you are still required to file an ITR.

What Is a NIL Return?

A NIL return is an ITR filed when you have no taxable income or financial activity during the year. It informs the Income Tax Department that no taxes were due for the financial year.

Why Should You File an ITR?

1. Proof of Income

An ITR serves as official income proof, essential for applying for loans, visas, or financial transactions requiring proof of earnings.

2. Claim Refunds and Deductions

If TDS has been deducted, filing an ITR lets you claim a refund. Additionally, deductions under sections like 80C and 80D for investments and expenses can further reduce your taxable income.

3. Simpler Loan Approvals

An ITR is widely accepted as proof of income, simplifying the process of securing loans from banks or financial institutions.

4. Carry Forward Losses

Losses from stock market investments or business operations can be carried forward to offset future income, but only if you file an ITR.

5. Eligibility for Government Benefits

Filing an ITR is a prerequisite for availing of certain government schemes, scholarships, or subsidies, ensuring you remain eligible for such benefits.

6. Visa Applications

Many countries require ITR filings as part of the visa application process. A history of filing ITRs shows financial stability, making you a favourable candidate for visa approval.

Conclusion

Even if your income is not taxable for the assessment year 2025-26, filing an ITR can offer numerous benefits, such as claiming refunds, securing loans, and ensuring compliance with tax laws. It’s a simple step toward better financial management and future opportunities.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.