The reason for this concession is that for those who have no other sources of income, filing of returns is a duplication of information
New Delhi: As many as 85 lakh salaried taxpayers with an annual income of up to Rs5 lakh will not be required to file income-tax returns henceforward, according to a finance ministry official.
“No income-tax returns would be required for salaried persons earning up to Rs5 lakh per annum. We will notify this in the first week of June,” Sudhir Chandra, outgoing chairman of the Central Board of Direct Taxes, told journalists on Tuesday. The scheme would be applicable from the assessment year 2011-12 onwards, PTI reports.
This means that salaried persons eligible under the scheme would not have to file returns for the financial year 2010-11 in 2011-12 (assessment year). However, those wanting to claim refunds would have to file returns, Mr Chandra said.
As per the Memorandum to the Finance Bill 2011, the government will issue a notification exempting ‘classes of persons’ from the requirement of furnishing income-tax returns. In case such a salary earner has income from other sources like dividend, interest, etc, and does not want to file returns, he would have to disclose such income to his employer for the purpose of tax deduction. In such cases, the Form 16 issued to salaried employees will be treated as income-tax returns.
The explanation for this move is that in cases where there are no other sources of income, filing of returns is a duplication of existing information.
Central Bank, Union Bank chiefs stress importance of strong growth based on lower inflation
Mumbai: Leading bankers today said that the slowdown in GDP growth to 7.8% in the March quarter was on expected lines and that the Reserve Bank of India and international agencies like the International Monetary Fund had hinted at a dip in growth.
"(It) is not something totally unexpected. It was clear (through) many of RBI's reports and international financial institutions had been hinting that the growth may not be the same as last year," Central Bank of India's chairman and managing director, S Sridhar, told journalists.
Recognising the possibility of a slowdown in growth, banks had already taken the right steps, he said, and the RBI had also downsized its growth expectations for advances and deposits in its annual monetary policy, PTI reports.
With the data released today confirming the slowdown in growth, lenders and other agencies will have to take a "more nuanced" response, Mr Sridhar said.
According to data released today, the gross domestic product (GDP) grew by 7.8% in the January-March quarter versus 9.3% in the corresponding period a year ago, while total GDP growth for the entire FY11 was a healthy 8.5%.
Union Bank of India chairman and managing director MV Nair said one should not read too much into the 7.8% number as it is only a couple of notches below the RBI's forecast of 8%. "A few points here and there should not matter much," he said, but conceded that the numbers were less than what he had expected.
Both Mr Sridhar and Mr Nair drew attention to the RBI's stated policy of targeting rising inflation numbers even if it resulted in economic growth slowing down in the near term.
"I think growth per se should be based on a strong foundation, on a base of lower inflation...trying to control inflation is more important," Mr Nair said.
Mr Sridhar also pointed out to certain positives like the forecast of a normal monsoon and a good show on the exports front. "There is reason for optimism. There is no cause for pessimism at this stage just because the number has come down to 7.8%," he said.
Our second resistance of 5,540 has been breached. Investors shrug off slower growth concerns
The market today opened positive on a strong Asian rally, backed by speculation that European officials will sanction more assistance for Greece. The Sensex and Nifty opened at 18,267 and 5,492 respectively. That was the day's low for the Sensex, while the Nifty touched its intra-day low of 5,490 in the first hour. The market, which was on an uptrend, witnessed a jolt on the news of slower GDP growth in the March quarter. The Indian economy grew by a slower-than-expected 7.8% in the January-March 2011 period, compared with 9.4% in the previous corresponding quarter.
Poor manufacturing sector output growth at 5.5% dragged down overall economic growth, farm output showed tremendous improvement at 7.5% in the quarter under review. Overall, GDP grew at 8.5% in the fiscal year ended March 2011, a touch lower than the government's expectation of 8.6%. A finance ministry official today said economic growth in FY12 would probably be around 8.75%, lower from the earlier target of 9%. The official said the government hoped to meet its FY12 fiscal deficit target of 4.6%.
The market resumed its uptrend quickly, perhaps recognizing a silver lining in slower economic growth that might cause the RBI to soften its stance on interest rates.
In afternoon trade, the Sensex and Nifty hit 12-day highs at 18,527 and 5,572 respectively. The Nifty crossed it first resistance of 5,540 and closed well above it. The Sensex rallied 271 points to close at 18,503 and the Nifty gained 87 points to end the day at 5,560. We can expect the Nifty to reach at least 5,600.
All Asian indices ended positive, in the range of 0.13% to 2.32%. All European markets were up and Dow futures was up a huge 117 points at the time of writing.
Jaiprakash Associates (up 4.59%) was the major gainer in the Sensex stocks, followed by HDFC Bank (up 3.47%), DLF (up 3.27%) and ITC (up 3.07%). The only loser was Cipla, which dropped by 1.05%. On the Nifty, 47 stocks gained, while only two fell and the GAIL stock remain unchanged.
All the sectoral indices ended in the green. The interest sensitive realty sector was the biggest winner with the BSE-Realty index up by 2.53%. FMCG stocks rose on hopes that the timely monsoon rains would help boost rural income, which contributes a substantial part of the revenues of FMCG firms. The BSE- FMCG index was up by 2.25%. BSE-IT rose by 0.50%. The advance-decline ratio on the National Stock Exchange was 1257:484.
ONGC, the country's largest oil & gas exploration firm by sales, rose 1.15%, following the March quarter results announced after market hours on Monday. While sales grew by a meager 1%, the operating profit fell by 15% over the corresponding year-ago period. ONCG attributed the weak results to higher discounts on crude sales given to PSU oil marketing companies to meet their under-recoveries on fuel sales at government-controlled prices. ONGC gave a discount of Rs12,136 crore to these firms in the quarter, sharply higher than Rs4,999 crore in the previous corresponding quarter.
Reliance Communications (RCom) rose 2.17%, following the announcement of quarterly results after market hours on Monday. Meanwhile, RCom has decided to initiate due diligence to sell its stake in Reliance Infratel, its passive infrastructure subsidiary.