Salaried class gets relief from filing returns!

Are you a salaried person? Relax……..…….. You need not file IT return if your income is less than Rs. 5 lac in FY 2011-12……

As per notification number 9/2012 issued by the Central Board of Direct Taxes (CBDT) Income Tax Return is not required to filed by salaried employees if their total Income is less than Rs.5,00,000/- after allowing all deductions, during the Financial Year 2011-2012 provided they satisfy certain conditions.

Who can Claim Exemption? 

1.   This exemption is available to an individual assesse only. The individual may be resident or not.

2.   The total income after deductions under sections 80C to 80U must be up to Rs. 5,00,000/-

3.   Income must be earned from Salary and/or Saving Bank Interest up to Rs.10,000/-. Pension is also covered under the head salary.

4.   The individual must have reported his/her PAN to the employer.

5.   The individual should have earned salary only from one employer during the year.

6.   The assesse should have reported his income from saving bank interest to his employer for TDS deduction purposes and the employer should have deducted the tax on the full income (salary plus interest from savings bank account) and the TDS should have been deposited into the Government Account by the employer.

7.   No income tax refund is due to the individual and he/she should have received the Form 16 from the employer clearly mentioning the PAN, Income detail and TDS details.

Who cannot claim exemption? 

1. If your total taxable income after deduction u/s 80C to 80U is more than Rs. 5,00,000/-
2. If income tax refund is due to you.
3. If  your total income includes  any one of following: 

1. Income from House property.
2. Income from Business/profession
3. Income from capital gain
4. Income from Interest other than Interest from saving bank up to Rs.10,000/-. Suppose you have earned interest from FDR then you cannot claim exemption from return filing.
5. Saving Bank interest is more than Rs.10,000/-.
6. Any other Income under "Income from other source"

4. If you have not disclosed your earnings from Saving Bank interest to your employer for tax deduction.
5. If you have discharged your tax liability through advance tax or self-assessment challan.
6. If you have received salary from more than one employer during the year.
7. If you have not submitted your PAN to your employer.
8. If Form 16 has not been issued to you by your employer.
9. If notice u/s 142(1) or section 148 or section 153A or section 153C of the Income-tax Act has been issued to you.

Some clarifications…..

This exemption is optional

Even if you satisfy all the conditions given in the notification, you can choose to file your return.

Salary should be the only source of income

An employee will be required to declare his PAN to his employer and obtain a certificate of tax deductions in Form No 16. Further the individual should not have any income from sources other than his salary and interest on Savings Bank account (maximum Rs.10,000/-). So, if you have income from fixed deposits, mutual funds, shares, property etc. you will be required to file the returns.

Single employer

The income must accrue from a single employer. In case you have changed jobs or worked in two or more jobs during the year you will have to file the IT return even if your salary income is below Rs. 5 lac.

No interest income over Rs. 10,000/-

In case you have interest income of more than Rs. 10,000 from your savings bank account you cannot claim the exemption from filing returns. However, in case your interest income from savings bank account is less than Rs.10,000, you must declare it to your employer and have the tax deducted, so as to be eligible for the exemption.

You should keep in mind that the interest income limit of Rs. 10,000/- during the year is also restricted to saving bank interest only. If you have FDR Interest or other Interest income you cannot avail of this exemption.

Not applicable in case of refund claim

In case you want to claim a refund, you will have to file the return. The exemption will not be applicable in cases where notices are issued for filing the income tax returns under Section 142(1), Section 148, Section 153A or Section 153C of the Income Tax Act.

Not applicable in case of loss claim

In case you have incurred some losses or have carried forward losses of any prior year, you will be required to file returns before the due date. If you fail to do so you will forfeit the right to carry forward the losses.

The exemption is effectively for income up to Rs. 6,50,000/- in the FY 2011-2012

Let’s take an example:-

1.   Suppose you have income of Rs. 6.5 Lac

2.   Now you can invest up to Rs.1 Lac u/s 80C (EPF, PPF, Mutual funds, Insurance etc.)

3.   You can also invest Rs.20,000/- in infrastructure bonds u/s 80CCF

4.   Health insurance is also deductible from taxable income – Rs.15,000 for self and Rs.20,000 for parents under section 80D

5.   After taking the above into account, you are left with a taxable salary of Rs.4.95 Lac and there is no need for you to file return for taxable income below Rs.5 Lac