No IT Returns if Income less than 5 Lakhs: Finance Trading Times

No IT Returns if Income less than 5 Lakhs

Details about whether IT Returns required in case of individuals earning less than 5 lakh rupees as annual income
The good news for laks of individual tax payers in India has come out yesterday, when major business news channels reported this news that Individuals Earning less than 5 lakh Rupees of Income will not be required to file Income tax returns for the assessment year 2011-12 (or financial year 2010-11)

IT Returns Not Required if Income is less than 5 Lakh Rupees

Obviously this is a good move by the government that will help reduce lots of paperwork and avoid payment of so called "service-charges" to Tax Return Preparer (TRP) and their agents. It will also be helpful for so many people, especially salaried employeesm since now they only need to maintain the Form-16 (which is usually in digital PDF form), rather than the paper based returns. IT Returns
Somehow, I still feel that this good initiative could have come a bit earlier, that would have helped a lot of people to declare their additional incomes to their employers (like income from interest on FD, savings, stock trading, etc.). Anyways, better late than never.

Now, let's look at some of the scenarios which will enable you to understand whether you are exempt from Income Tax return filing process or not. Please note that the common notion among lots of tax payers is that if their salary (mention on offer letter) or the CTC (Cost to the Company) is above 5 lakhs, then they will need to file the returns as they dont come above 5 lakh limit. However, this notion is NOT correct. Even if your CTC or offer salary on paper is above 5 lakhs, you can still be exempt from filing IT returns. Here are the various scenarios discussed.

Scenario 1: Income or Salary or CTC less than 5 Lakhs:
This is the straightforward case. Your on paper salary, or your CTC mentioned on your job offer letter is less than 5 Lakhs, then there is no need for you to file your tax returns.
All you need to do is maintain a copy of Form-16 which you must have received from the employer - that will serve the purpose of IT records.

Related: File Tax Returns: Step By Step Guide

Scenario 2: Offer Salary/ CTC mentioned on offer letter greater than 5 Lakhs
This will be the scenario for majority of the working class which will be in the 2-7 years work experience range.
Interesting thing is that even if your Offer Salary/ CTC mentioned on offer letter greater than 5 Lakhs, then also depending upon your "NET TAXABLE INCOME", you may NOT be required to file the Tax Returns. How? Let's take an example.

Your Net Salary mentioned on Offer Letter: 6.5 Lakhs. (however, this is NOT the basis of your net taxable income)
What you need to check is your FORM-16 issued by the employer. The first field in that will be something like "Gross Salary". Ignore that as well and see further down. There should be a field called "Income chargeable under the head 'Salaries'". Suppose this figure is 5.8 Lakhs

Continue further down on your FORM-16, till you see a field called "Total Income". This will usually be after a field called "Aggregate of deductible amount under Chapter VIA" and just above a field called "Tax on total income".

Continue to Part II: IT Returns for Income less than 5 Lakhs-Part II
Have Comments or Questions? Please post them as comments using "Post our Comments" link below. Your queries will be responded for free in 24 hrs!

0 Comments: Post your Comments

Wish you all happy and fruitful trading and investing activities with safety! = = = Post a Comment

Copyright Information:
© Finance-Trading-Times.com
Please see Our Copy Right Policy. All the articles, posts and other materials on this website/blog are copyrighted to the owners of this portal. The content should NOT to be reproduced on any other website or through other medium, without the author's AND owners' permission. Contact: contactus(AT)finance-trading-times.com

DISCLAIMER: Before using this site, you agree to the Disclaimer. For Any questions or comments, please mail contactus(AT)finance-trading-times.com.

About UsAdvertise with UsCopyRight Policy & Fair Use GuidePrivacy PolicyDisclaimer