Individuals with annual income up to Rs 5 lakh are now exempted from filing personal income tax return for the current financial year. This relief was proposed in the Union Budget last year. However, a circular from the Central Board of Direct Taxes (CBDT) last week indicates that this relief has been extended for this financial year. An individual can now file tax returns for this financial year by July 31, 2012. However, the exemption comes with some terms and conditions, which determine the eligibility of an individual to seek the exemption from filing returns.
Who can seek this exemption -As per the Notification, only individuals who satisfy the following conditions are eligible for exemption from furnishing the tax return for the tax year 2011-12:
a) Total income does not exceed Rs 5,00,000.
b) Total income consists only of income under the following heads:
Salaries
'Income from other sources' by way of interest, not exceeding Rs 10,000, from a savings bank account
Who can seek this exemption -As per the Notification, only individuals who satisfy the following conditions are eligible for exemption from furnishing the tax return for the tax year 2011-12:
a) Total income does not exceed Rs 5,00,000.
b) Total income consists only of income under the following heads:
Salaries
'Income from other sources' by way of interest, not exceeding Rs 10,000, from a savings bank account
Avail an exemption -Apart from the above conditions, an individual should also fulfill the following conditions to avail an exemption from furnishing tax return with the authorities:
Report his Permanent Account Number (PAN) to his/her employer
Report savings bank account interest income to employer and the employer should withhold tax on such interest income
Employer provides tax withholding certificate (Form 16) to employee which mentions the PAN, details of income and taxes withheld
There should be no further tax payable by the employee by way of advance tax or self-assessment tax
No refund claim for the relevant tax year
The employee should receive salary from only one employer for the tax year
Apart from the above-mentioned conditions, an individual should keep in mind that the exemption under this notification is restricted to voluntary filing of tax return and does not apply to tax return to be furnished in response to notice issued by the tax authority for regular assessment or reassessment or assessment pursuant to search/ survey proceedings," says Amarpal Chadha, tax partner, Ernst & Young.
