Many people are still in confusion whether they have to file Income Tax Return or not. Some thinks that if any individual income is below five lakh rupees then filing ITR is not compulsory. This is totally wrong. Here is the detailed analysis which clarifies all your doubts. If you have already filed your return, just ignore this post.
“Any individual living in India is required by law to file Income Tax Returns, if the total income without allowing deductions (such as Section 80C etc) exceeds the basic exemption limit.”
If you don’t know the tax exemption limit for the financial year 2011-2012 then here is the information in the form of tables. This data will be applicable for filing return for the assessment year 2012-2013.
Income Tax slab for Financial Year 2011-2012
Tax slab for individual men below 60 years of age during FY 2011-12.
| Income in Rs. | Tax Liability in Rs. |
|---|---|
| Upto Rs.1,80,000 | Nil |
| Rs.1,80,001-Rs.5,00,000 | 10% of income in excess of Rs.1,80,000 |
| Rs.5,00,001-Rs.8,00,0000 | Rs.32000 + 20% of income in excess of Rs.5,00,000 |
| Above Rs.8,00,000 | Rs.92,000 + 30% of income in excess of Rs.8,00,000 |
Tax slab for women below 60 years of age during FY 2011-12.
| Income in Rs. | Tax Liability in Rs. |
|---|---|
| Upto Rs.1,90,000 | Nil |
| Rs.1,90,001-Rs.5,00,000 | 10% of income in excess of Rs.1,90,000 |
| Rs.5,00,001-Rs.8,00,0000 | Rs.31000 + 20% of income in excess of Rs.5,00,000 |
| Above Rs.8,00,000 | Rs.91,000 + 30% of income in excess of Rs.8,00,000 |
Tax slab for individuals (both men and women) 60 years or above and below 80 years of age during FY 2011-12.
| Income in Rs. | Tax Liability in Rs. |
|---|---|
| Upto Rs.2,50,000 | Nil |
| Rs.2,50,001-Rs.5,00,000 | 10% of income in excess of Rs.2,50,000 |
| Rs.5,00,001-Rs.8,00,0000 | Rs.25000 + 20% of income in excess of Rs.5,00,000 |
| Above Rs.8,00,000 | Rs.85,000 + 30% of income in excess of Rs.8,00,000 |
Tax slab for individuals (both men and women) who are of age 80 years or above during FY 2011-12.
| Income in Rs. | Tax Liability in Rs. |
|---|---|
| Upto Rs.5,00,000 | Nil |
| Rs.5,00,001-Rs.8,00,000 | 20% of income in excess of Rs.5,00,000 |
| Above Rs.8,00,000 | Rs.60,000 + 30% of income in excess of Rs.8,00,000 |
Of course the income tax slab rates for the financial year 2012-2013 are changed a bit. Individuals below sixty years of age need not pay any tax up to income Rs.2,00,000/-.
For instance for the financial year 2011-2012, for Men below the age of 60, the exemption limit is Rs. 1,80,000/-. If your total income is below Rs.1,80,000/- you don’t need to file Income Tax Return. Suppose if you earn more than Rs.1,80,000/- in the financial year 2011-2012 or else assume that if you earn Rs.2,10,000/- then you have to file returns. The rule is very clear. Remember again the income without any deductions is considered here. Detailed explanation is given below.
Suppose if you earn Rs.2,10,1000/- and even though if you manage to invest some amount around Rs.40000/- under Section 80C in LIC or NSC or Fixed Deposit scheme. Then the remaining amount becomes Rs.1,70,000/-. Don’t think that since this amount does not comes under taxable limit, you doesn’t need to file Income Tax Return. You have to file ITR compulsory because total income without deductions exceeds basic exemption limit. Of course you don’t need to pay any tax if you claim deductions under Section 80C. Hope this is clear.
Some times even though if your income is less than basic exemption limit, you may require to file return if you want to claim refunds. This may happen in different ways. Assume your bank has deducted TDS on your fixed deposit because you got some interest more than Rs.10000/- in a financial year. Actually your income is low. One way to escape from this is by submitting Form 15G to the bank when you open FD. Otherwise you have to file ITR so that you can get back the deducted amount. Hope this is also clear.
But for salaried employees Government of India issued some different rules regarding ITR filing. The rules are given below.
Salaried taxpayers does not require to file income-tax returns, If
- Total income for the financial year not exceeding Rs.5,00,000/-
- 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.
- 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.
These the exact terms and conditions a salaried person has to met in order to get exemption from filing returns. Still having doubts. Here are some scenarios which will give more details on this rule.
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.
A taxpayer having salary income upto Rs.5,00,000 and nil interest income would also be eligible under this Scheme.
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.
Also a salaried taxpayer who has earned income from more than one employer during the financial year is not covered under this Scheme.
Remember a salaried taxpayer having total income of less than Rs.5,00,000 and claiming a refund of Rs.3,000 would not be eligible under this Scheme. The taxpayer has to file a return of income for making a claim of refund.
But I think salaried people may not going to benefit much from this new scheme because, banks will issue Interest statements only after March 31st. But employer wants you to declare all your interest income before March 31st. So its not possible to avail benefits under this scheme if you are having interest income.
Also from financial year 2011-2012 onwards, it is mandatory to file Income Tax Return if you have any foreign assets. Even though you may not have any taxable Income.
One more point is If your total Income exceeds Rs.10 Lakhs, then you must e-file your Income Tax Return. Manual filing will not be applicable to you, every thing should be done via online.
Benefits of Filing ITR
- ITR is considered a customary income proof not only in India but also worldwide. If you are looking for higher education or employment abroad, ITR is the largely accepted as income proof.
- Apart from a good credit history (or past repayment track), the fact that you are filing your ITR regularly gives you speedier access to credit and at better terms. Getting a educational, home and other type of loan will be a lot easier if you are filing IT returns regularly.
- ITR also provides the impression to the financier that you are a law abiding citizen and will repay the loan with in the deadline.
- The acknowledgment for filing the tax returns would come in handy in case a visa is required to be obtained. The document would serve as proof of the financial soundness of the individual person.
- Registration of immovable properties in most states requires one to produce tax returns for the last three years.
- Filing ITR doesn’t always about paying tax. It can be used as a means to reduce your tax liability. For instance, salaried employees for whom TDS has been cut during the financial year can claim refund if the tax outgo has been more than the actual tax payable.
Consequences of not filing ITR
- If you don’t file IT Return, obviously you cannot file revised return if needed at a later stage.
- Non filing of returns may attract a penalty of Rs.5000/- from income tax department along with 1% interest on the balance tax if applicable.
- While filing return is a voluntary activity, there are legal provisions against those who do not file ITR.
Many people still avoid filing IT return because they think that no one is going to notice them. But this is not a fair deal. Nowadays online transaction activity has grown to such an extent that every thing can get tracked via PAN. Also banks demand PAN while opening account. If some thing is suspicious it can be easily tracked by IT department. Even if a person is not eligible for taxes under current laws, it is wise to file returns for the same and be on the right side of the law.
As a citizen of India, it is out duty to pay tax on time and file IT return. This is the social responsibility of every Indian. Actually filing income tax return became a lot easier now. You can file IT return online via official government site free of cost with in a matter of minutes. The dead line for filing returns for the financial year ending 31st March 2012 is 31st July 2012.
To get more details regarding Income tax rules, form downloads and e-filing do visit the official site www.incometaxindia.gov.in
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