Expert
ABHAY VASANT AROLKAR
-B Com (Hons), LLB, ACS, FCA

Q. My father took voluntary retirement from the Southern Railways. His salary plus fixed deposit interest was less than Rs 1.8 lakh. He has some fixed deposits too (interest is also taxable). Should he file his IT returns? I read an article that those with an income below Rs 5 lakh do not need to file their returns, with a condition that the individual should not get interest of more than Rs 10000 from his/her savings account. What is your opinion? Are retired individuals exempted from filing income tax returns? Also, my father received a lump sum amount. Will he be allowed to invest this money in his wife’s name (she holds a PAN Card)?

A. 1) If the total income is below the basic exemption limit, that is Rs 1.8 lakh in case of non-specified individuals, [Rs 1.9 lakh in case of women assessees below the age of 65 years, Rs 2.5 lakh in case of senior citizens above the age of 65 years and Rs 5 lakh in case of very senior citizens above the age of 80 years], then the person need not file his/her return of income. However, if the income is taxable or if the individual has any TDS or his/her income is not tax-able because of certain deductions claimed by him/her, then he/she is required to file his/her return of income.

There is no general exemption from filing of return of income for persons earning less than Rs 5 lakh. As regards per-sons with an income of less than Rs 5 lakh, they need not file their returns only in the following conditions:

a) An individual whose total income for the relevant assessment year does not exceed Rs 5 lakh and consists of only income chargeable to income-tax under the following heads– (A) “Salaries”; (B) “Income from other sources”, by way of interest from a savings account in a bank, not exceeding  Rs 10000.

b) Besides, the following conditions need to be fulfilled,  namely, the individual referred to in para 1,–
(i) Has reported to his/her employer, his/her Permanent   Account Number (PAN);
(ii) Has reported to his/her 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/her 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/her 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/her for the income of the assessment year; and
(vi) Has received salary from only one employer for the assessment year.

c) 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.2) If your father invests the money in his wife's name (despite the fact that she holds her own PAN), the income thereon will still be taxable in his hands, in view of clubbing of income as per Section 64(1)(iv) of the Income Tax Act, 1961.