Dr. Sanjiv Agarwal
In a major relief in this year’s budget, Finance Minister had proposed to exempt salaried class assessees from filing tax returns provided they do not have income from other sources. It was proposed that salary earners having an income of less than Rs. 5 lack will not have to file income tax returns from this year. However, a notification was to be issued to give effect to this. That dream day has just arrived as the Central Board of Direct Taxes (CBDT), has very recently issued a notification No. 36/2011 last week on 23 June 2011only which has come into effect with immediate effect.
Thus, there is a major relief to a large assessee base who are employees, both in government and private employment. The exemption from filing of tax returns is applicable for the assessment year 2011-12 only ,i.e., Finance year 2010-11 for which returns are to be filed now (latest by 31st July 2011). Though the exemption is specific to assessment year 2011-12, in all probability, it may get extended to future years also.
The exemption from return filing is applicable only to individuals whose source of income in only salary and income from other sources by way of interest from a savings bank account not exceeding Rs. ten thousand only. The exemption would not be available where salary income and interest from saving bank account exceed Rs. five lakh or salary alone is more than Rs. four lakh or interest income from saving bank account is more than Rs. ten thousand. Interest earned on fixed deposits, debentures, bonds etc. will not be considered for this purpose nor will the incomes not includible in salary income. Those who have income from other sources viz, capital gains or house property will be deprived from such exemption.
Not only this, exemption from tax return filing is subject to certain other conditions such as employer must have PAN of assessee, income from interest is reported to employer, employee is issued TDS certificate in Form No. 16 from his employer containing necessary particulars, total tax liability has been discharged by way of tax deducted at source (TDS), no refund is due for the year, salary has been received from one employer only etc. The exemption will also not be available where any proceedings are pending against the assessee or any notice has been issued.
It is expected that this exemptions will benefit over five million tax payers. However, many of the assessees have either housing loans and income from house property, shares income, interest on various instruments other than savings account. All such assessees will have to file returns despite having total income of less than Rs. five lakh. Refund seekers will also have to file returns. People who have changed jobs also disqualify. While this move will benefit really small assessees, it will also relieve tax collectors to focus on large tax payers.