It's prudent to file nil ITR even if your income is below Rs 2.5 lakh

Filing income tax return will prove handy while applying for a loan, insurance cover, or a visa

Even if your taxable income falls below the threshold level from which income tax is levied, you should still file a return. Such a return is called nil income-tax return (ITR). Filing it conveys to the Income-Tax (I-T) Department that you did not pay tax that year as your income was low.

In the case of an individual or a Hindu Undivided Family (HUF), filing a return is not mandatory if the taxable income is below Rs 2.50 lakh.

Naveen Wadhwa, deputy general manager, Taxmann, says, “While filing a nil ITR is not mandatory, doing so voluntarily carries numerous benefits.”