No Tax Returns for India’s Low Wage Workers

June 7, 2011 Taxation in India

The government of India intends to make alterations to the national tax system, granting some taxpayers a reprieve on their tax obligations and allowing low-income earners the opportunity to not file annual tax returns.

At a press conference held in New Delhi on June 6th the chairman of the Central Board of Direct Taxes (CBDT) of India Sudhir Chandra announced that the government is making changes to the tax system which will exempt low income earners from requirements to file annual personal income tax returns.

The Chairman said that in the very near future the government would officially instate the new filing rules, which will allow taxpayers with salaries below INR 50 000 to forgo annual filing requirements. The new changes will waive obligations for low income earners to pay personal income taxes on their salaries, but taxes will still be applicable to capital gains, dividends, and interest. It is expected that the change will effect approximately 85 000 taxpayers around India. Under current rules, incomes of up to INR 50 000 would be charged a 10 percent tax.

Under the new rules, all salaried individuals who wish to apply for the new exemption will have to disclose their non-salary income sources. Currently instated regulations mandate that such a disclosure would still have to be made, and the Chairman said that taxpayers would not view this requirement as an extra filing obligation. He added that under normal circumstances, there should little, if any, changes in the information provided by low-earning taxpayers, making it easier to sort and investigate the data for signs of illicit tax evasion.

Photo by Meanest Indian