Salaried taxpayers with taxable income of up to Rs 5 lakh may be exempted from the requirement of furnishing tax returns to the Income-Tax Department.
To reduce the compliance burden of small taxpayers, Budget 2011-12 has come up with a proposal to empower the Centre to exempt, by notification, any class or classes of persons from filing their tax returns. This facility would be provided so long as certain conditions are met.
This amendment will take effect from June 1, according to the Finance Bill 2011.
“Salaried people, with a taxable income of up to Rs 5 lakh, need not file the (income tax) return. The Form 16 issued to salaried employees will be treated as income-tax return,” Mr Sudhir Chandra, Chairman of the Central Board of Direct Taxes (CBDT), told reporters at the customary post-Budget press conference here on Monday. In case a salary earner has income from other sources such as dividend, interest and does not want to file returns, he will have to disclose such income to his employer for tax deduction.
Mr Chandra said that the Government is working out the modalities of the scheme and will be notified soon.
The Centre may also extend this facility to armed forces personnel. The CBDT has already conducted a pilot study among them to understand the issues involved and design a scheme.
Currently, in case of most salaried tax payers, the entire tax liability is discharged by the employer through deduction of tax at source.
Complete details of such taxpayers are also reported by the employer through TDS statements.
In cases where there are no other source of income, filing of a return is a duplication of existing information, according to the CBDT.