Salaried individuals with a taxable income of less than Rs 5 lakh will not have to file income-tax returns in the current assessment year.However this comes with some riders that could make you ineligible for the benefit despite fitting into this income bracket.
-If an individual has a taxable salary income of less than Rs 5 lakh,but had switched jobs in the middle of 2010-11,then he/she would have to file tax returns.
-Another requirement is that the income must only be from salary and savings bank interest.Income from mutual funds,house rent or even NSCs to save tax,automatically fall outside the purview of this exemption.Even those who have invested in infrastructure bonds to claim deduction under Section 80CCF is not eligible for the scheme.
-The interest income from a savings bank account should not exceed Rs 10,000 for the exemption to apply.More importantly,this has to be reported to the employer through Form 16 and the employer has to withhold taxes on it while paying the salary.
-There are certain deductions that arent mentioned in Form 16.For instance,any donation to charitable organizations is not mentioned.Thus any individual who wants to earn a tax refund on such donations would have to necessarily file a tax return.
-There are also disadvantages in not filing your returns.For instance,you forego your right to modify your return to include any deduction you may have missed.Only taxpayers who file their return by the due date can file a revised return.
