Exemption from filing IT returns is a big relief

21 July, 2012

Finance ministry's direct taxes department, Central Board of Direct Taxes (CBDT) has exempted salaried employees from the requirement of filing the income tax returns for assessment year 2012-13 if their annual income from salary and interest from their saving bank accounts is not more than five lakh rupees.

BUT IN case the annual interest from their saving banks account exceeds ten thousand rupees then they have to file the return. An employee will have to also file IT return in case he has refund claims.

Akshay, a media professional said that this decision by the government has come as a relief, because people earning below 5 lakh per year generally feel burdened to file return.

Chandra Mohan, who is an engineer by profession, also welcomed the step saying it will end up his tension regarding filing the return, as his earnings are not above the said amount.

Tax expert Surya Bhatia explained that if someone is earning from other sources apart from salary then he has to file the return. If someone is earning from any other source than the regular salary like consultancy, then he has to file IT return, said Bhatia.

To get the exemption it is necessary that the employee has reported his PAN and income from interest on savings bank account to the employer. To claim exemption employee has to receive Form 16 from his employer.

The exemption will be applicable if the employer by way of TDS has paid off the total tax liability of employee and employer has deposited TDS with central government.

If somebody is getting salary from more than one employer then he will not be entitled to this exemption. Further, one should not be able to enjoy this exemption if he has received any notice from the Income Tax department for filing of IT return.

This step by the government is set to benefit about 85 lakh salaried persons in the country whose yearly income, including earnings from other sources like bank deposits, does not exceed 5 lakh rupees.