Although Income Tax Department has issued a notification, that individual assessees with income not exceeding 5 lakhs do not need to file Income Tax Return, it is advisable to read through the notification and understand the eligibility for the exemption. Additionally, remember if an individual plans on taking a loan or any other banking activity in future that requires her/him to present the ITR, it will be advisable to file the ITR, irrespective of the eligibility criteria. If you have any doubts, it will be best to file your ITR and not take a chance.
Do you need to file an Income Tax Return if your income does not exceed Rs. 5 lakhs?
Income Tax Department has issued a notification on June 23rd, 2011 that individuals with income not exceeding Rs 5 lakhs from salaries/other sources are not required to file a return. What does that mean?
Who is eligible for this exemption?
1. Individuals assessee only for the assessment year 2011-2012
2. Individuals whose total income after deduction 80C thru 80U was up to Five Lakh Rupees only.
3. Individuals whose Income from other sources, by way of interest from a savings account in a bank, is not exceeding ten thousand rupees
4. (S)he must have reported PAN number to employer
5. (S)he must not have earned salary from more than 1 employer
6. (S)He has reported his/her income from saving bank interest to his/her employer for TDS deduction purposes.
7. Assessee's employer has deducted the tax on his/her total income, salary plus interest (if there is any interest) and has deposited the TDS in its government account.
8. There is no refund due to the assessee.
9. Form 16 for the assessee from the employer mentions PAN, Income detail and Tax deducted and deposit detail.
Some reasons why individual with less than Rs. 5 lakh income may not be eligible for this exemption and may want to file ITR
1. If interest income is more than Rs. 10 thousand
2. If interest income is not reported to the employer and TDS was not deducted for it
3. If individual has held more than 1 employments and thereby has more than 1 form 16
4. Individual may have some refund due
5. Individuals Form 16 does not have the her/his PAN information
Official Notification from Income Tax Department
AN INDIVIDUAL HAVING INCOME NOT EXCEEDING RS. 5 LACS FROM SALARIES/OTHER SOURCES FOR A.Y. 2011-12 IS NOT REQUIRED TO FILE RETURN U/S 139(1)
In exercise of the powers conferred by sub-section (1C) of section 139 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby exempts the following class of persons, subject to the conditions specified hereinafter, from the requirement of furnishing a return of income under sub-section (1) of section 139 for the assessment year 2011-12, namely :
Class of Persons
1. An Individual whose total income for the relevant assessment year does not exceed five lakh rupees and consists of only income chargeable to income-tax under the following head,
(B) "Income from other sources", by way of interest from a savings account in a bank, not exceeding ten thousand rupees.
2. The individual referred to in para 1,
(i) has reported to his employer his Permanent Account Number (PAN);
(ii) has reported to his employer, the incomes mentioned in sub-para (B) of para 1 and the employer has deducted the tax thereon;
(iii) has received a certificate of tax deduction in Form 16 from his employer which mentions the PAN, details of income and the tax deducted at source and deposited to the credit of the Central Government;
(iv) has discharged his total tax liability for the assessment year through tax deduction at source and its deposit by the employer to the Central Government;
(v) has no claim of refund of taxes due to him for the income of the assessment year; and
(vi) has received salary from only one employer for the assessment year.
3. The exemption from the requirement of furnishing a return of income-tax shall not be available where a notice under section 142(1) or section 148 or section 153A or section 153C of the Income-tax Act has been issued for filing a return of income for the relevant assessment year.
4. This notification shall come into force from the date of its publication in the Official Gazette.
CBDT Press Release
The Central Board of Direct Taxes has notified the scheme exempting salaried taxpayers with total income up to Rs.5 lakh from filing income tax return for assessment year 2011-12, which will be due on July 31, 2011.
Individuals having total income up to Rs.5,00,000 for FY 2010-11, after allowable deductions, consisting of salary from a single employer and interest income from deposits in a saving bank account up to Rs.10,000 are not required to file their income tax return. Such individuals must report their Permanent Account Number (PAN) and the entire income from bank interest to their employer, pay the entire tax by way of deduction of tax at source, and obtain a certificate of tax deduction in Form No.16.
Persons receiving salary from more than one employer, having income from sources other than salary and interest income from a savings bank account, or having refund claims shall not be covered under the scheme.
The scheme shall also not be applicable in cases wherein notices are issued for filing the income tax return under section 142(1) or section 148 or section 153A or section 153C of the Income Tax Act 1961.