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“Phew !! Thank God (and thanks to Pranav Babu) I don’t have to file ITR this year. It is such a painful process”, Said Ajay Dixit, a 27 year old BPO Executive to his friend Kapil.
“And how did you arrive at this conclusion, that you don’t need to file a return?” asked Kapil.
“Aren’t you aware of the notification that came on June 24th, that all those having income below Rs. 5 Lakhs need not file their Income Tax Return?” said Ajay.
“I’m aware of that”, smiled Kapil, “But I guess you are not aware that this exemption also requires a few more conditions to be fulfilled as mentioned below:
1. Total Income after allowable deductions is below Rs. 5 Lakhs.
2. Income is ONLY from salary and savings bank interest.
3. Salary is from ONE employer.
4. Savings bank interest is below Rs. 10,000.
5. Tax due on savings bank interest has been paid and included in Form 16.”
“But I am fulfilling most of these conditions Kapil.” Said Ajay.
“Thats good to know. However, the unfortunate part is, you can avail of the exemption, ONLY when you fulfill ALL of the above conditions, and not most of them.” Said Kapil. “Most generally, people with an income range of Rs. 2-5 Lakhs would have various other sources of income like FDs, Bonds, Mutual Funds etc. If you have income from any of these, you have to file ITR. Also, let us assume for 2 minutes that you have only savings account interest, which is below Rs. 10,000. But still have you mentioned this income to your employer prior to 31st March 2011, so that he deducts your tax accordingly and mentions it in the Form 16?”
“No ways. How would I do that before 31st March 2011, when I came to know on 24th June 2011, that I have to do something of this sort ?” Ajay was disappointed.
“There you are !! This isn’t a problem just with you but most of the people who “thought” they need not file a return. So this exemption appears to me more like a mirage. As you approach closer to it, you will find that it doesn’t really exist.” Said Kapil.
“Ohh No !! That means I will have to file an ITR”, Ajay was totally disappointed by now.
“Well, you will have to. But then why do you view filing of ITR as a compliance? It is in your benefit to file an ITR” said Kapil.
“Ok, tell me. How is it in my benefit to file an ITR?” asked Ajay.
“There are several benefits of filing an ITR such as:
1. Availing any kind of loan like home, personal or education;
2. Visa and immigration processing;
3. Income proof / net worth certification;
4. Refund claims (in case of excess taxes paid); and
5. Applying for a higher insurance cover.”
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(The views mentioned in the article are personal opinion of the author. The characters used in the article are hypothetical)