No income tax return up to 5 lakh salary

Manikanta Raju CA,CWA,(CS) (Industry) (4482 Points)

28 June 2011  
No Income tax return is required to filed by Salaried employees if their total Income is less than 500000(five Lakh) and they are satisfying few Conditions .Income Tax department has issued notification no 36/2011 in this regard .This exemption is available only to specific category of employees .Following conditions are to be satisfied to claim exemption from return Filing .

Who can Claim Exemption 

  1. This exemption is available to Individual assessee only (He may be resident or not)
  2. Exemption is available for Assessment year 2011-12.
  3. Total Income(after deduction 80C to 80U) of Individual must be up to Five Lakh Rupees only.
  4. Income must be earned from Salary and/or Saving Bank Interest up to10000/- .Pension is also covered under salary head.
  5. Individual must have reported his pan to his employer.
  6. He has Earned salary only from one employer during the year.
  7. He has reported his income from saving Bank Interest to his employer for TDS deduction purposes.
  8. Employer has deducted the tax on his Full income,salary plus interest {if any},and tds has been deposited in Govt account by the employer.
  9. No refund is Due to assesse .
  10. Individual has received Form 16 From the employer ,which mention PAN, Income detail and Tax deducted and deposit detail.
If all the above conditions are satisfied then you can are exempted to file Income tax return for Financial year 2010-11.

Who can not claim exemption 
  1. If His Total taxable income after deduction u/s 80C to 80U is more than 5 (five) Lakh rupees.
  2. If refund is due to Him .
  3. If  his total income includes  any one of following Incomes
    1. Income from House property Including minus Income from interest on House Loan.
    2. Income from Business/profession
    3. Income from capital gain
    4. Income from Interest other than Interest from saving bank up to 10000.Suppose you have earned interest from FDR then you can not claim exemption from return filing.
    5. Saving Bank interest is more than 10000 rupees.
    6. Any other Income under "Income from other source"
  4. If He has not offered his Saving Bank interest income to his employer for tax deduction.
  5. If he has discharged His  tax liability through advance tax or self assessment challan.
  6. If he has received salary from two employers during the year.
  7. If  he has not submitted his PAN to his employer.
  8. If Form 16 has not been issued to Him by His  employer.
  9. If notice u/s 142(1) or section 148 or section 153A or section 153C of the Income-tax Act has been issued for filing a return of income
  10. If assessment year is other than 2011-12.
Most of Salaried persons may not avail This exemption this year !!why?
  • This circular is Good for Salaried persons But Most of them is not able to fulfill conditions given in the Notification. Very few employees declared saving Bank interest to their employer . Even employer are reluctant to consider other income of assessee for Tds deduction .So due to this reason most of the salaried person having total Income can not avail exemption given under this notification.If the circular has been issued in Feb-March 2011 then position may have changed.
  • Second Point is Interest Limit has been fixed up to 10000 only.Further that is also restricted to saving bank interest only .Person having salaried income up to 500000 may have FDR Interest or other Interest income . I am not able to under stand ,why nature of Interest has been restricted if monetary limit has already been specified . Now person having FDR interest plus saving interest less than 10000  can not avail this Exemption also.
Technical Draw Back (Mistake In notification)

Income Tax return is required to be filed by assessees having Gross total Income More than exemption Limit . Means for Return filing purpose income before deduction under 80C to 80U is to be considered.
Suppose Dinesh Kansal (male,45) Has a salary income of 280000 and saved 100000 under 80C and 20000 under 80CCF then his net taxable income works out to  be 160000.Even though his net taxable income is not more than exemption Limit ,yet return is required to be filed by him as his Gross total income is more than Basic exemption Limit. This is the position before issuance of this notification.

Now,what is the status of return Filing for Dinesh Kansal after this Notification ?

any Guess ,He should File return  or should not file as he is covered under exemption given in notification ?

Technically the answer is no,he is not covered under above notification ,He has not fulfilled condition 2(iii) of the Notification
2(iii) has received a certificate of tax deduction in Form 16 from his employer which mentions the PAN, details of income and the tax deducted at source and deposited to the credit of the Central Government;
As Dinesh income is not more than exemption Limit ,no tax is due and so his employer is not required to deduct tax at all and as the tax is not deductible, Form 16 can not be issued and without Form 16 2(iii) condition can not be fulfilled ,hence exemption is not available to him.Very sad!!!So technically He has to file His return ,though person having Income more then him but up to 500000 are exempted from return Filing ?

Though this may not be the intention of the CBDT but technically speaking Dinesh has to file his return.

In brief person having Gross total Income more than Basic exemption limit and total Income(after deductions) is less Basic exemption Limit ,still have to file his Income tax return as He is without Form 16. So I request to CBDT to please look into the notification and clarify the Issue ASAP.


Complete Notification is given hereunder for your ready reference .


NOTIFICATION NO. 36/2011 [F. NO. 142/09/2011 (TPL)], DATED 23-6-2011

In exercise of the powers conferred by sub-section (1C) of section 139 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby exempts the following class of persons, subject to the conditions specified hereinafter, from the requirement of furnishing a return of income under sub-section (1) of section 139 for the assessment year 2011-12, namely :—
Class of Persons
1. An Individual whose total income for the relevant assessment year does not exceed five lakh rupees and consists of only income chargeable to income-tax under the following head,—
(A) "Salaries";
(B) "Income from other sources", by way of interest from a savings account in a bank, not exceeding ten thousand rupees.
2. The individual referred to in para 1,—
(i) has reported to his employer his Permanent Account Number (PAN);
(ii) has reported to his employer, the incomes mentioned in sub-para (B) of para 1 and the employer has deducted the tax thereon;
(iii) has received a certificate of tax deduction in Form 16 from his employer which mentions the PAN, details of income and the tax deducted at source and deposited to the credit of the Central Government;
(iv) has discharged his total tax liability for the assessment year through tax deduction at source and its deposit by the employer to the Central Government;
(v) has no claim of refund of taxes due to him for the income of the assessment year; and
(vi) has received salary from only one employer for the assessment year.
3. The exemption from the requirement of furnishing a return of income-tax shall not be available where a notice under section 142(1) or section 148 or section 153A or section 153C of the Income-tax Act has been issued for filing a return of income for the relevant assessment year.
4. This notification shall come into force from the date of its publication in the Official Gazette.


Press Release

Salaried Taxpayers with total Income up to 5 lakh Exempted from filing Income Tax Return for Assessment Year 2011-12
The Central Board of Direct Taxes has notified the scheme exempting salaried taxpayers with total income up to 5 lakh from filing income tax return for assessment year 2011-12, which will be due on July 31, 2011.

Individuals having total income up to 5,00,000 for FY 2010-11, after allowable deductions, consisting of salary from a single employer and interest income from deposits in a saving bank account up to 10,000 are not required to file their income tax return. Such individuals must report their Permanent Account Number (PAN) and the entire income from bank interest to their employer, pay the entire tax by way of deduction of tax at source, and obtain a certificate of tax deduction in Form No.16.

Persons receiving salary from more than one employer, having income from sources other than salary and interest income from a savings bank account, or having refund claims shall not be covered under the scheme.
The scheme shall also not be applicable in cases wherein notices are issued for filing the income tax return under section 142(1) or section 148 or section 153A or section 153C of the Income Tax Act 1961.