ITR 2025: 5 Reasons Why Filing Income Tax Return Is Needed Despite No Tax Liability

Every financial year, there is the same familiar hussle for the taxpayers - gathering salary slips, checking deductions (for some), and ensuring that you are on top of finances to file their income tax return (ITR). However, many Indians believe that if they earn below the tax threshold or are exempt from paying tax, they can skip this annual ritual.

It is important to know that ITR is not just about paying taxes, it is about documenting your financial footprint. Whether you are a new professional just starting out, a freelancer with irregular or modest income, a senior citizen, or someone whose taxes are already deducted at source, here are five reasons why you must file your ITR in 2025, even if you have no tax liability.

1) It keeps you legally safe and compliant

As per the income tax rules of India, individuals whose income crosses a certain limit, even if after deductions their taxable amount falls to zero, are required to file a return.

The income tax department doesn't just want to know who pays the tax, but also who qualifies for an exemption/deduction and why. Filing an ITR, even if your tax liability is nil, is a way of staying compliant.

Those who choose to file ITR even if their income is below the threshold limit remain officially in the clear and tax compliant. This protects you from any unwanted notices or legal complications that could arise later due to missed disclosures.

2) It helps when you need a loan

If you want to apply for a home loan or even a business loan this year, filing an ITR would be helpful. Many financial institutions ask for at least two to three years' worth of ITRs before they even consider application. This is because an ITR serves as a verified proof of income. It shows that your finances are in roder and your income is steady, which is typically checked by banks and lenders.

This is particularly important for self-employed professionals and freelancers who do not have regular salary slips to show. Even if your income is low now, building that trail through ITRs year after year sets you up for smoother loan approvals down the line.

3) Proof of income and address

For the self-employed individuals or freelancers, the ITR is often a good official document that shows how much they have earned in a given year. This can be helpful when you are applying for credit cards or even while dealing with government agencies. And here's a bonus: the address you mention in ITR is also considered valid address proof by many authorities.

This means that ITR is more than record numbers, it also vouches for your identity in both financial and personal spheres.

4) Visa Applications

Those planning to go or visit abroad, particularly countries like the U.S.A., Canada, or the U.K., should know that the visa process also includes a financial check by immigration authorities. They often ask for proof of tax filing for the last 2-3 years to make sure you are financially rooted and less likely to overstay or violate visa terms.

By showing filed ITRs, you make your case stronger and your paperwork much smoother.

5) Claim refunds and carry forward losses

Suppose your employer has deducted TDS from your salary/stipend, but you made investments in tax-saving instruments like PPF, ELSS, or NPS. You won't be able to get a refund for these if you do not file an ITR.

Similarly, if you had losses in the stock market or real estate this year, you can carry those forward to offset gains in future years, but only if you file your ITR on time. Missing this deadline and those losses would not come in the eye of the taxman.

So, even if your tax due is zero this year, it is best not to skip your ITR. Think of it not as a chore but as a safeguard for your personal finances.