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.

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  1. sarika says:

    I have a confusion. it is said by MR. Sanjeev Agarwal in third para that exemption to salaried class employee would be available only if it does not have income from salary alone mor than four lacs. but in notification i did not found any statement related to four lacs. please clarify.
    kindly send reply on my mail id [email protected]


  2. N.Krishnamoorthy says:

    The move to exempt from filing IT returns those whose salary income plus savings bank interest does not exceed Rs. 5 lakhs is not in the interest of revenue. Even now salart earners are filing returns which are full of inadmissible3 claims. There are no persons well-versed with income-tax matters in the HR Deptts of companies with the result that whatever deductions are claimed by the employees are allowed by tyhe companies while issuing Form 16. If the present practice3 continues, a small percentage at least of the salart returns will be subjected to scrutiny which will reveal the many inadmissible claims made by tyhe employees. The fear of law will serve as a strong reason not to make inadmissible claims. If a bulk of the salary earners are exempted from filing returns (84 lakh persons), the revenue loss will be huge. Before this reform is introduced, it must be mandatory for the companies to emply CAs or persons well-versed in incometax matters so that the correct taxes due are deducted from the salaries of employees.

  3. NIRMALA.S says:

    The employer has not deducted any tax in your case and hence he has not included your particulars in his TDS Return.He is correct in doing so.You are neither liable to pay any income tax nor any refund is due to you,in that case you need nor have to file your Return of Income.

  4. M. Lakshmanan says:

    In my opinion it may not benefit the expected five million assessees, because many of the salary earners do not disclose their interest income from Savings Bank Account who may be eligible to be exempted. In many companies the cut off date to disclose their other income and for production of evidence for investments eligible for deduction is much earlier i.e. January/February and in such a situation it may not be possible to give the required information to the employer and the exact deduction of tax at source may not be possible. As of now many employers do not file their e-TDS returns correctly and the sufferers are the employees, who are served with demand notice instead of refund order. CA. M. Lakshmanan, Madurai.

  5. Paulose.P.T says:

    I have only salary income below 5L. After necessary investments my tax liability is nil and no tax is deducted at source and my employer issued form 16 showing tax liability nil. I understand that while uploading TDS return (form 24) my particulars are not included in it as no tax has been deducted from me. In that case do I need to file personal IT return?. Do the employers need to upload particulars of employees who have taxable income but no tax after investments. Please clarify

    Paulose P T

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June 2021