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Income below Rs 5 lakh? You need not file returns

The government has exempt salaried people earning up to Rs 500,000 annually from filing income tax returns. A move that will bring relief to about 80 lakh people was announced by the Finance Minister Pranab Mukherjee  when he presented the Budget in February. On Tuesday, Pranab Mukherjee said this will be applicable in the 2011-12 assessment year for the income earned in 2010-11. He said that a notice to this effect will be brought out soon. This move will reduce the compliance burden on small taxpayers. In case such a salary earner has income from other sources like dividend, interest etc. and does not want to file returns, he will have to disclose such income to his employer for tax deduction. The Form 16 issued to salaried employees will be treated as Income Tax Return, he added. Asking the Central Board of Direct Taxes to be vigilant in suspected money laundering cases, Mukherjee cautioned that terror activities and other crimes are being funded by anti-national elements through illegal transfers.  Mukherjee disclosed that to check these transfers, government has approved setting up of Directorate of Criminal Investigation in Income Tax Department itself.  The Directorate will track the criminal activities before, during and after the crime is committed.  Expressing his keenness on fiscal consolidation, Mukherjee stressed that fiscal deficit has to be reduced drastically to achieve the goal. File e-returns, get income-tax refunds in a month To speed up refunds and encourage electronic filing of tax returns, the Central Board of Direct Taxes has promised expeditious refunds. As on December 31, 2010, there were about 40 lakh refund cases pending with the tax department. Last year, a Comptroller and Auditor General report had highlighted that it takes as much as 10 months for a taxpayer to get his refund. "The whole idea is that small taxpayers should not face any hardship in his interface with the department," Chandra added. Though the e-filing of tax returns is rising in absolute terms every year, its level has stagnated at about a quater of the total retuns filed. "E-filing ensures that tax payers' information on income, taxes and refunds are uploaded in the tax system instantly and tax computations are processed on a real-time basis," said Vikas Vasal, executive director, KPMG. "A refund banker scheme is already in place in the whole of country to ensure that taxpayers get refunds well in time," said an income-tax department official. "We issued the highest-ever refunds in 2010-11," says Chandra, who had instructed his officials to clear all pending refunds before March 31. This will also help the department begin with a clean slate when the new direct tax code comes into effect from the next financial year. Such tax-payers will not be required to file return even if they have small interest income. "Any step to help tax-payers would help increase compliance levels," he said. E-filing, which was formally launched on October 13, 2006, is mandatory for companies but remains optional for individuals.

File Service Tax Return in time as Maximum Penalty increased 10 times to Rs. 20000

Rule 7C Prescribe the Penalty which Assessee has to Pay if there is delay in filing of service Tax Return. Where the return prescribed under rule 7 is furnished after the date prescribed for submission of such return, the person liable to furnish the said return shall pay to the credit of the Central Government, for the period of delay of- (i) fifteen days from the date prescribed for submission of such return, an amount of five hundred rupees; (ii) beyond fifteen days but not later than thirty days from the date prescribed for submission of such return, an amount of one thousand rupees; and (iii) beyond thirty days from the date prescribed for submission of such return an amount of one thousand rupees plus one hundred rupees for every day from the thirty first day till the date of furnishing the said return: Provided the total amount payable in terms of this rule  shall not exceed  the amount  specified in Sec.70 of the Act. It is clear from the above that above penalty is subject to maximum specified in section 70. Section 70(1) Specify the maximum Penalty of Rs. 2,000/- in respect of  return filed up to 31st March 2011. This amount of Maximum Penalty is been increased to Rs. 20,000/- (Twenty Thousand only) w.e.f. 01.04.2011. As per Section 71 (C) of the Finance Act 2011 (8 of 2011) Applicable from 1st April Unless Otherwise specified there was an amendment in Sub Section (1) of section 70 which is as follows:- ‘in Section 70 (1) of the Finance Act, 1994, for the words “two thousand rupees”, the words “twenty thousand rupees” shall be substituted’. After Considering the above amendment the Maximum Penalty for Late Filing of Service Tax Return is been increased to 20000/- (Twenty Thousand) w.e.f. 01.04.2011 from earlier 2000/- (Two Thousand). After enactment of Finance Bill 2011, the following position will emerge out: Period of Delay Penalty/late fee before finance bill 2011 Penalty/late fee After Finance Act, 2011 (W.e.f. 01.04.2011) for delay up to 15 days INR 500 INR 500 for delay beyond 15 days but up to 30 days INR 1,000 INR 1,000 for delay beyond 30 days INR 1,000 + INR 100 per day (from 31st day subject to a maximum amount of Rs 2000. INR 1,000 + INR 100 per day (from 31st day subject to a maximum amount of Rs 20000. ‘Provided also that where the gross amount of service tax payable is nil, the Central Excise officer may, on being satisfied that there is sufficient reason for not filing the return, reduce or waive the penalty’.