Income tax return filing: Nil tax liability, but need ITR for a home loan, where to start? | Mint

I have never filed my ITR, as my tax liability has been nil. Now, I am planning to apply for a home loan, so I would need to present ITR to the bank. I want to file my ITR online alone as I cannot afford to pay to CA. I have registered and also downloaded the form to see what information has to be filled. As expected, I have many doubts, such as in other incomes, do I have to show interest income from my savings account, do I need to claim deduction under 80C for PF contribution (though it would not make difference as my tax return is zero). Also, for what years, should I file the tax return, I mean for the previous year 2022-23 (assessment year – 2023-24) or the previous year 2023-24 (assessment year – 2024-25) or as someone advised me, should I file one tax return for 2 – 3 years together (combining the past 2 years’ income as well).

Your understanding that one has to file his Income Tax Return (ITR) only if he has any tax liability is not fully correct. The Income Tax Act of 1956 prescribes various situations under which an individual must file his ITR even if his tax liability is Nil. The one situation which might apply to you is a situation where your gross total income before various deductions under chapter VIA exceeds the basic exemption limit, which is Rs. 2.50 lakhs for all non-senior citizen taxpayers.

Navigating ITR Filing for Home Loan: A Guide for First-Timers

As per the present tax laws, a person can file only ITR for only one year at any given point of time between April and December of the year following the financial year. Since the month of December is over, now you can not even file the ITR for the financial year 23-24 (Assessment Year 24-25). Since you do not have any tax liability, you cannot even file an updated ITR, which one can file within two years from the end of the relevant assessment year.

Yes, you are required to include all the interest, including interest on your savings bank account, in your income. You can claim deductions under Section 80C even if it does not affect your tax liability.

The ITR is required to be filed for income that is taxable during one financial year, and you cannot combine income from more than one year and file the one ITR for such years.

Moreover, due to clubbing of income of more than one year in the ITR of one year, you may have to pay significant income tax, though you are not liable for the same.

As far as submitting documents to the lender is concerned, you just have to prove your earnings, which can be done through a bank statement showing that your salary was credited to a salary slip, etc. The lender is not concerned with whether you have filed your ITR or not.

Read all our personal finance stories here

Balwant Jain is a tax and investment expert and can be reached at jainbalwant@gmail.com and on @jainbalwant on social media platform X (formerly Twitter)

Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.