Tax returns relief for salary Person

If you are salaried and your gross annual income is Rs 6.55 lakh or less, you need not file income tax returns for the assessment year 2011-12.

The Central Board of Direct Taxes (CBDT) today notified that salaried individuals having a total income up to Rs 5 lakh after allowable deductions, including salary from one employer and interest income from deposits in a savings bank account of up to Rs 10,000, need not file income tax returns.

Under current tax exemption rules, a person with gross annual income of Rs 6.55 lakh can be left with Rs 5 lakh after the allowable deductions.

This means those with Rs 6.55 lakh gross annual income in 2010-11 need not file tax returns in the assessment year 2011-12 if they don’t earn salary from more than one employer, they don’t have additional income from sources other than bank accounts and they don’t have any tax refund claims.

However, they should get from their employer Form 16 — the certificate of tax deducted at source. The returns-exempt salaried will also have to give details of their interest income from bank deposits to their employer for deduction of income tax at source.

If the new rule had not come into force, salaried persons earning more than Rs 3.15 lakh a year would have had to file returns by July 31 this year.

Filing returns is a hassle that involves seeking the services of a tax consultant for a fee ranging between Rs 250 and Rs 500, though it can be done by individuals on their own either manually or through an online process which requires the purchase of a digital signature.

According to CBDT officials, the revised rule, which was announced in the budget, will benefit 85 lakh income tax assessees. The notification mentions only the assessment year 2011-12 but the government is expected to extend the relief.