Posted on: June 24, 2011 Author: Sudhir Kaushik
CBDT has notified that the individuals with total income up to Rs. 5 lakh for fiscal 2010-11 are not required to file their income tax returns. While this is a positive move by the government, this exemption from filing ITR is NOT applicable to most of the taxpayers. Especially for those who fully comply with the tax laws and declare all their income, this exemption will bring no relief.
ONLY for the financial year 2010-11, a salaried person has been exempted from filing income tax return if s/he fulfils ALL the below conditions mentioned below:
1. Total income after allowable deductions is below Rs. 5 lakh
2. Salary is from a single employer only
3. Income constitutes only salary and savings bank interest.
4. Savings bank account interest is below Rs. 10,000
5. Full amount of savings bank account interest is included in the Form 16
6. Entire tax is paid by way of deduction of tax at source.
7. There is no refund.
In all other cases, an individual needs to file income tax return even if his/her income is below Rs. 5 lakh. An individual has to file income tax return if he/she has:
1. not declared savings bank account interest to the employer - In most cases, the savings bank account interest is not declared to the employer as the investment proof and income declaration is done in December/January. However, the details of interest income from savings account are available after the end of the year. It is not possible for an individual to declare the same before that. On examining the Form 16 of the employees, it is noticed that very few employees submit the details of interest income on savings bank account on an estimated basis. Thus, this condition is not fulfilled by most of the individuals. The income tax department can track the details of this source of income through PAN from various sources and impose penalties on such undisclosed income.
2. fixed deposit linked savings account: Such a saving account has the facility to transfer funds into a fixed deposit after a minimum balance is reached. Hence, it is not a pure saving account. Even if the interest is less than Rs. 10,000, one has to file tax return.
3. invested in fixed deposit of banks, private company, bonds, NSC, KVP. Income tax return is to be filed for interest income as low as Rs. 11 on these instruments.
4. changed job during the year: Employees from sectors like IT and retail change their jobs quite frequently. An individual cannot get this exemption if he has changed his job during the financial year.
5. sold shares, mutual funds, property, jewellery, painting, etc. There is a high probability of the sale of any of the mentioned capital assets by a salaried person during the year.
6. to claim a refund from the income tax department, as in a case where the employer has deducted excess tax or the employee has made the investment after the date of proof submission in the company.
7. income from house property, including home loan deduction.
8. received refund for the previous year. There will be an interest earned on that amount, which needs to be declared in the ITR.
9. made donations during the year. This deduction (Section 80G) is not allowed by employers in Form 16.
10. incurred losses in previous years and wants to carry them forward.
11. received notices for filing the income tax return under section 142(1) (for late or non submission of return) or section 148 (for reassessment) or section 153A (for search or requisition) or section 153C (for any other person) of the Income Tax Act 1961.
Apart from the above mentioned cases, an individual should anyway file his/her income tax return for a number of important reasons. ITR filing not only helps an individual keep a record of his/her tax history, but is also required when one wants to submit an application for a visa, a bank loan, or any such application for which one needs to furnish an authentic proof of income.
The complete text of the CBDT Press Release is:
No.402/92/2006-MC (14 of 2011)
Government of India / Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
New Delhi, dated the 23rd June, 2011
The Central Board of Direct Taxes has notified the scheme exempting salaried taxpayers with total income up to Rs.5 lakh from filing income tax return for assessment year 2011-12, which will be due on July 31, 2011.
Individuals having total income up to Rs.5,00,000 for FY 2010-11, after allowable deductions, consisting of salary from a single employer and interest income from deposits in a saving bank account up to Rs.10,000 are not required to file their income tax return. Such individuals must report their Permanent Account Number (PAN) and the entire income from bank interest to their employer, pay the entire tax by way of deduction of tax at source, and obtain a certificate of tax deduction in Form No.16.
Persons receiving salary from more than one employer, having income from sources
other than salary and interest income from a savings bank account, or having refund claims
shall not be covered under the scheme.
The scheme shall also not be applicable in cases wherein notices are issued for filing
the income tax return under section 142(1) or section 148 or section 153A or section 153C of
the Income Tax Act 1961.
Sudhir Kaushik has been a practicing tax consultant for the last 17 years. He is a Fellow Chartered Accountant and conducts seminars in large companies to help salaried employees with income tax and investment queries. Sudhir brings domain knowledge of income tax laws and their compliance difficulties faced by individuals. He is the author of Income Tax Handbook For Salaried Employees for smart financial planning and investments for salaried people. He enjoys an excellent reputation and has a strong network in the corporate sector and public sector undertakings.
How new income tax returns forms will simplify your tax life
The government last month notified the new income tax returns forms. As per the new norms, an individual or HUF who does not have capital gains ...
Tax Filing Mistakes to Avoid in Your Return
Every year taxpayers not just in lakhs but in crores file their income tax return. Majority of them have done it more than once. For ...
Alternative to posting ITR-V after E-filing
Electronic alternative to posting signed ITR-V acknowledgement after e-filing is now possible. After your e-return has been uploaded by taxspanner to Income Tax Department e-filing ...
Instructions to send ITR-V to CPC
ITR-V is an acknowledgement slip generated on filing the income tax return online. This ITR-V is to be signed and sent to the Income tax ...
Obtaining a Correct Form 16 Early is Beneficial
What is Form 16?
Form 16 is a certificate issued by the employer to its employees in the beginning of the next financial year. This ...
BLOGS CATEGORIES & TAGS
Let our CAs and Tax Experts Help You e-File Your Return AccuratelyGet Help from Tax Expert