As many as 85 lakh tax payers will benefit from the government''s decision to exempt persons earning less than Rs 5 lakh a year from filing I-T returns, a finance ministry official said.

"The decision, which will come into effect from June 1, 2011, will reduce the compliance burden about 85 lakh small taxpayers," he said.

As per the Memorandum to the Finance Bill 2011, the government will be issuing a notification exempting ''classes of persons'' from the requirement of furnishing income tax returns.

Tax payers with income of less than Rs 5 lakh will not have to file tax returns for the assessment year 2011-12 and a notification in this regard is likely next month, the official said.

In case such a salary earner has income from other sources like dividend, interest etc and does not want to file returns, he will have to disclose such income to his employer for tax deduction.

However, if such an assesse wants to claim a refund, he will have to file the I-T return.

The Form 16 issued to salaried employees will be treated as Income Tax Return.

The idea behind the move is that in cases where there are no other sources of income, filing of a return is a duplication of existing information. (PTI)