NO SCRUTINY FOR SELECT TAXPAYERS

Adding flavour to the Budget 2011 sops,   income tax payers in personal taxation have been given one more relief as their income tax returns will not be subject to scrutiny now. This ofcourse, includes the senior citizens who have been at the receiving end in the present Budget.

We are all aware that scrutiny of income tax returns is an important tool with the revenue authorities to ensure compliance and probe possible tax evasion. This, however, causes harassment to small tax payers (particularly salaried ones) and senior citizens who do not have much of concealed incomes   unless there are investments in real estate, stocks or like transactions. At the same time, department also do not get the desired results in such scrutiny cases leading to waste of time and efforts.

Recently, Ministry of Finance has revised the tax return scrutiny procedure and appreciated the concern of small tax payers and senior citizens. The good news for these taxpayers is that in the financial year 2011-12, income tax returns of senior citizens and small tax payers who file their tax return in Form ITR -I and ITR-2 will not be scrutinized in ordinary course. The tax department may, however, subject these returns to a thorough scrutiny only when there is some credible information about revenue leakage or undisclosed sources of income in such cases.

The scope of such tax payers will included senior citizens who have attained sixty years of age or more, small taxpayers (individuals and hindu undivided families) whose gross total income , before availing any exemption under section 80 (Chapter VI A) does not exceed rupees ten lakh.

So the senior citizens and small tax payers have all reasons to cheer about but onus lies on them to offer all taxable incomes for the purposes of income tax.

Now that when there are barely five days left in the current financial year, still there is last minute  tax planning opportunity for those back benchers. On a reminding note, one need to target full utilization of section 80 C benefits to a maximum of rupees one lakh. Once this limit is fully availed, one can look at health insurance premiums, interest paid on education, interest paid on housing loans and investment in infrastructure bonds. If you have not yet invested, this is the right time.  You won’t get another opportunity after the month end to invest and save taxes.