Check if you need to File Tax Return Even If you do not have Taxable Income

 

It seems obvious that if you don't have any taxable income, there is no need to file a tax return. But in some situations return filing may be necessary or even mandatory, irrespective of whether you have taxable income or not. Do file your income tax return if any of these apply to you –

You need a tax refund:

Your income is below taxable limit but your bank has deducted TDS on interest on fixed deposit. You are a freelancer and your income does not exceed Rs 2.5lakhs but a client deducted TDS before paying you. This is a common scenario especially for small freelancers, such as designers or parlors or boutiques, usually they run their business from home and don't have income above the exemption limit. But sometimes TDS gets deducted on their income. If this is true for you, file your tax return and claim a refund.

You are an NRI with rental income in India:

If you are a NRI but own a house in India which gives you rental income, you should file your taxes. NRIs must report income from India if it exceeds Rs 2.5lakhs per annum. You are allowed to deduct municipal taxes of the property which are paid by you from its rental income. You can also claim 30% standard deduction towards maintenance costs of the property. This is especially important if TDS has been deducted on rent paid to you. By filing a return, you may be eligible for a refund of TDS.

You are resident in India and own foreign assets:

If you are resident in India but lived abroad at some point in time. And continue to hold a foreign bank account, or retirement accounts, or properties, or any financial interest in an entity outside India (ESOPs), you must file a tax return and report it.

You want to carry forward losses:

If you have short term losses from shares or loss from carrying on a business or profession, you must file a return. Even though there is no taxable income, filing a return for losses allows you to carry them to future years. In subsequent years these can be adjusted from taxable income.

You are a company:

 If you have recently incorporated a company, remember that tax filing is mandatory for a company. This is irrespective of whether you have profits or losses.

 

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