How to Stop Filing Income Tax Returns in India When You Have No Income
Many individuals in India find themselves in a situation where they are no longer earning any income, leading to questions about whether they need to file an income tax return. Understanding the requirements for filing a tax return is crucial, and this article provides a detailed guide on how to determine and handle such a situation.
Understanding the Requirements for Filing Income Tax Returns in India
According to the Indian Tax laws, individuals are required to file a tax return if their income exceeds the taxable limit. For the financial year 2021-2022, the taxable income threshold for individuals under the age of 60 years (and 75 years for senior citizens) is Rs. 2.5 lakhs. If your income is below this limit and you do not have any other sources of income that can be considered taxable, you are generally exempted from the requirement to file a tax return.
The Procedure for Not Filing Income Tax Returns
There is no specific procedure to stop filing income tax returns if you are not earning any income in India. However, you can avoid being reported for non-filing by checking if your past records (Form 26AS) show any income that may require you to file a return.
Steps to Ensure No Tax Return is Required:
Download your Form 26AS from the National Securities Depository Limited (NSDL) or Central Registry of Securites Accounts (CDS). This form provides a summary of all the transactions and income recorded in your account in the financial year.
Review the information on Form 26AS to ensure that there is no taxable income reported. This includes shares, dividends, interest, capital gains, etc.
If you find that your Form 26AS does not show any taxable income, you can confidently say that you do not need to file a tax return.
In case you receive a query or reminder from the tax department, you can respond to it promptly. Present your Form 26AS and explain that your income is within the tax-free limit.
The Central Board of Direct Taxes (CBDT) often sends reminders through email if they have your registered email address. It is advisable to have a zero-tax expectation and prepare all necessary documentation.
Pitfalls to Avoid
While it is straightforward to avoid filing an income tax return if you have no income, it is essential to be aware of potential pitfalls that could make your situation more complicated:
Lottery Winnings: Winning a lottery can suddenly increase your income and make you liable to file a tax return. Ensure that you do not buy any lotteries if you wish to avoid this situation.
Investments: If you make any investments or earn any interest, such as fixed deposits or shares, you may become liable to file a tax return. Avoid these if you want to keep your tax affairs simple.
Property and Rental Income: Selling property or letting out your house can generate taxable income. Therefore, it is advisable to avoid these activities if you are trying to avoid filing a tax return.
Any non-resident status: If you have any non-resident income, you might still be required to file a tax return depending on the nature of the income and the relationship with India.
Conclusion
In summary, if you are not earning any income in India, there is no prescribed procedure to stop filing income tax returns. However, you can avoid being reported if you maintain all your income within the tax-free limit and have your Form 26AS up to date. It is essential to be cautious about potential sources of income that could trigger tax obligations. If in doubt, consult a professional tax advisor to ensure you are correctly managing your tax obligations.