FAQ ON EXEMPTION FROM FILING OF INCOME-TAX RETURN
What is the purpose of this notification and who are proposed to be exempted from the requirement of filing of the return?
1. The primary objective of this notification is to exempt those salaried taxpayers from the requirement of filing income-tax returns, who have (i) total income not exceeding Rs. 5,00,000, and (ii)
the total income consists only of income chargeable to income-tax under
the head ‘Salaries’ and interest income from savings bank account if
such interest income does not exceed Rs. 10,000.
Further, such salaried taxpayer would be eligible for exemption from
filing a return of income only if tax liability has been discharged by
the employer by way of Tax Deducted at Source (TDS) and the deposit of
the same to the credit of the Central Government. For this purpose,
taxpayer has to intimate his interest income to the employer during the
course of the year.
For Example –
(i) If
an individual has salary income of Rs. 4,90,000 and interest income
from savings bank account not exceeding Rs.10,000 (which has been
reported to the employer and tax has been deducted thereon), then the
taxpayer would be exempt from the requirement of filing income-tax
returns since the total income from both the above sources does not
exceed five lakh rupees.
(ii) A
taxpayer having salary income of Rs. 4,98,000 and interest income from
savings bank account of Rs. 2,000 (which has been reported to the
employer and tax has been deducted thereon), would also be eligible
under this Scheme.
(iii) A taxpayer having salary income up to Rs. 5,00,000 and nil interest income would also be eligible under this Scheme.
(iv) A
taxpayer having salary income of Rs.5,50,000, interest income from
savings bank account of Rs. 8,000(which has been reported to the
employer and tax has been deducted thereon), and who has claimed
deduction of Rs. 70,000 under section 80C (on account of certain
payments/investments/savings) would also be eligible under the Scheme.
(v) A
taxpayer having salary income of Rs. 6,10,000, interest income from
savings bank account of Rs. 10,000 (which has been reported to the
employer and tax has been deducted thereon), and who has claimed
deduction of Rs. 1,00,000 under section 80C (on account of certain
payments/investments/savings), a deduction of Rs. 20,000 under 80CCF
(Infrastructure Bonds) and a further deduction of Rs. 15,000 under
section 80D (Health Insurance Premium) would also be eligible under the
Scheme.
Whether
a salaried taxpayer having total income of less than Rs. 5,00,000 and
claiming a refund of Rs. 3,000 would be eligible under this Scheme
2. No. The taxpayer has to file a return of income for making a claim of refund.
Is having a valid PAN a precondition for being covered by the notification?
3. Yes. The notification
clearly specifies that the individual has to report his PAN to the
employer. Hence having a valid PAN is a precondition for falling within
the ambit of the notification.
Can an individual who is getting income under the head “salaries” from more than one employer take benefit of the notification?
4. No.
A salaried taxpayer who has earned income from more than one employer
during the financial year is not covered under this Scheme.
Whether this notification would also cover taxpayers having ‘loss from house property’, which are often reported by the employees to the employer.
5. No. Under the existing procedure, DDO/employer can give credit to the employee for a claim for loss under the head “income from house
property” under section 24 made by the employee. As a result, a salaried
employee’s total income may reduce to less than Rs. 5,00,000 as loss
from the head “income from house property” would have been set-off
against salary income. Such a taxpayer is not exempted from filing his
return of income as the notification exempts only cases where the total
income is under the head “salary” and from savings bank account (income
from other sources) not in excess of Rs. 10,000. If the taxpayer has any
loss under the head “income from house property”, he will not be
eligible for exemption from filing a return of income.
Does savings bank account include other banking accounts like fixed deposits or recurring deposits accounts?
6. No.
The benefit of the notification is available to taxpayers whose
interest income comprises of interest earned on savings bank account
ONLY.
Circular
No. 8/2010, dated 13-12-2010 which is applicable for Assessment Year
2011-12 stipulates that the Drawing and Disbursing Officer
(DDO)/Employer while deducting TDS from salary of an employee cannot
allow deduction u/s 80G except donations made to the Prime Minister’s
Relief Fund, the Chief Minister’s Relief Fund or the Lt. Governor’s
Relief Fund. Whether the notification would cover only these cases?
7. Yes. An individual cannot avail the exemption under this notification if the claim
of deduction for donations under section 80G is for donations other
than those mentioned in Circular No. 8/2010. A taxpayer has to file a
return of income for making a claim in respect of claim of deduction
under section 80G for such donations (not specified in Circular No.
8/2010).
Will
a salaried individual having agricultural income, which is exempt from
tax, be covered within the ambit of the notification?
8. A
salaried individual with agricultural income exceeding five thousand
rupees shall be out of the ambit of the notification. A return will have
to be filed in such a case, even if other conditions of the
notification are satisfied as the agricultural income (of more than Rs.
5,000) has to be included, for rate purposes, in the total income.
