A restrictive Circular?

The purpose of the government in issuing the notification is to decrease the compliance load on small tax payers who have income under the heads 'Salaries' and 'Income from other sources'. In those cases, the Form 16 issued to salaried employees will be the only evidence for taxes paid. Therefore, the conditions are limiting to ensure that the notification is useful only to small tax payers whose information or details are disclosed in the Form 16.

Chadha said, "This circular addresses those salaried tax payers whose entire tax liability is discharged through tax withholding and whose complete details are reported by the employer as part of the withholding compliance." though, tax payers require to cautiously inspect compliance of exemption situation prior to deciding not to file tax return. But the clause on non-disclosure of savings account interest to employers would eradicate many from looking for this exemption.

"At least this exemption should be extended to individuals of this income category who also hold fixed deposits, recurring deposits, NSC, PPF etc," said Suresh Surana, founder, RSM Astute Consulting Group. He also adds, "Since the current notification has been issued before the end of the financial year 2011-12, individual tax payers will have sufficient time to disclose their savings bank account interest income to their employers."