Small taxpayers and senior citizens need not bother about scrutiny of their income-tax returns (ITR) any more. The Central Board of Direct Taxes on Monday issued a notice saying that it has decided to review its procedure for selection of ITR for scrutiny.
Starting FY12, their ITR will be subject to scrutiny only if the income-tax department is in possession of “credible information”. “This clause of credible information by the department is to safeguard it against any unforeseen circumstances,” says Gautam Nayak, a Mumbai-based chartered accountant.
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Small taxpayers would include individuals and Hindu Undivided Family with gross total income of less than Rs10 lakh before availing deductions under chapter VIA through instruments such as insurance premiums. The new rule will be applicable for senior citizens and small taxpayers eligible for ITR-1 and ITR-2.
“This is definitely a good move. Earlier senior citizens who received money from mutual funds over Rs2 lakh or from maturity of bonds over Rs5 lakh were subject to scrutiny. It was a total waste of time for them,” says Nayak.
The notification comes in the wake of grievances raised by taxpayers over selection of the same cases for scrutiny year after year.