Unit 4
E-Filing and E-provisions
There is a different category of taxpayer viz. Individual, HUF, Firm, LLP, Company, Trust and AOP/BOI. Due Date is different according to audit or non-audit case of such categories as defined in section 139(1)
Last Date of Income Tax Return Filing for AY 2021-22 (Non-Audit Cases)
- The common due date of filing the Income Tax Return by Assessee whose Books of Account is not required to be audited is 31st July 2021. The revised due date is 31st December 2021
- CBDT: “The due date of furnishing of Return of Income for the Assessment Year 2021-22, which was 31st July, 2021 under sub-section (1) of section 139 of the Act, as extended to 30th September, 2021 vide Circular No.9/2021 dated 20.05.2021, is hereby further extended to 31st December, 2021”
Filing Income Tax Return Due Date for AY 2021-22 (Audit Cases)
- The general due date for filing the Income Tax Return for the audit cases is 31st October 2021. The CBDT has again extended the due date till 15th March 2022.
Due Dates for Tax Audit Report (3CA-3CD/3CB-3CD)
- The due date for filing of Tax Audit Report for all categories of assessees whose account are required to be audited extended till 15th February 2022 via the general circular no.1/2022.
Revised & Belated ITR Due Dates for AY 2021-22
- The due date for filing a revised and belated income tax return for AY 2021-22 has revised by CBDT till 31st March 2022.
- “The due date of furnishing of belated/revised Return of Income for the Assessment Year 2021-22, which is 31st December, 2021 under sub-section (4)/sub-section (5) of section 139 of the Act, as extended to 31st January, 2022, vide Circular No.9/2021 dated 20.05.2021, is hereby further extended to 31st March, 2022”
The income tax department notified the taxpayers for late filing of tax returns for A.Y. 2021-22, along with a penalty of INR 5000 However, if the taxpayer’s total income does not exceed Rs 5 lakh, then the maximum penalty levied for delay will not exceed Rs 1000.
Last Date of Income Tax Return Filing for AY 2021-22
(Assessee who are required to furnish report under sec 92E)
- The due date of filing the Income Tax Return by Assessee who are required to furnish a report under sec 92E is 30th November 2021. The govt has extended the last date till 15th March 2022.
- “The due date of furnishing Report from an Accountant by persons entering into international transaction or specified domestic transaction under section 92E of the Act for the Previous Year 2020-21, which is 31st October, 2021, as extended to 30th November, 2021 vide Circular No.9/2021 dated 20.05.2021, is hereby further extended to 15th February 2022.
Advance Income Taxes Filing Due Dates FY 2020-21
- If the tax liability is more than Rs 10,000 in a financial year then advance tax needs to be paid by the assessee.
- 15th June (15%) | 15th Sept. (45%) | 15th Dec. (75%) | 15th March (100%)
- The assessee who are covered under section 44AD and 44ADA (i.e., Presumptive Income), are also required to pay the advance tax on or before the 15th march of the previous year. However, any tax paid till 31st March will be treated as Advance Tax.
E-FILING OF INCOME TAX RETURNs AND FORMS USED
- To begin filing your income tax returns online, go to https://incometaxindiaefiling.gov.in and create your e-filing account. Your PAN will be your login ID
- Log in using your PAN and password.
- It is mandatory to link Aadhaar with your E-filing Account. The same has to be done by choosing the option of “Link Aadhaar” under the Profile Settings tab. Details including name as per Aadhaar card, Aadhaar number etc. are to be filled to conclude the linking process.
- Open Form 26AS under the Quick Link menu. Form 26AS is a summary of the taxes you have paid over the financial year. It will include TDS, Advance Tax and Self-Assessment Tax
- Download the correct ITR form or Income Tax Return form (check the table at the end of the article to choose the correct ITR form)
- Download the Excel utility of the ITR and fill in all the details:
- Name
- PAN
- Address
- Date of birth
- Email ID
- Mobile number
- Choose whether original or revised return
- Other taxable income
- Investments
- Taxes deducted
- Bank details
- Click on Validate button on all the sheets
- Once validated, click on Calculate Tax
- Pay any tax that may be payable and provide the challan details in the return form
- Click on Generate XML and save the XML file on your desktop
- Go to your account on the IT website and click on Upload Return. Fill in the ITR form, name, assessment year and upload the XML file. If you have a digital signature, then upload that, too
- Click Submit. You will get an Acknowledgement. Take a print out of this
- If you provided a digital signature, your income tax return filing process is complete
- If you did not use a digital signature, then you will receive an ITR-V form, which is an acknowledgement-plus-verification. Print it out, sign in blue ink and post it to the Income Tax Department - CPC, Post Bag No - 1, Electronic City Post Office, Bengaluru - 560100 within 120 days of e-filing. You will get an acknowledgement of receipt of ITR-V by email and SMS.
FORMS USED IN ITR FORM
In total, there are almost 9 types of ITR forms available for a tax payer to file his taxes. However, only the following forms are to be taken into consideration by individuals when filing returns as per the Central Board of Direct Taxes in India:
- ITR-1
- ITR-2
- ITR-2A
- ITR-3
- ITR-4
- ITR-4S
The following income tax return forms are applicable only for companies and firms:
- ITR-5
- ITR-6
- ITR-7
ITR-1
Also known as the Sahaj form, this income tax return form is to be filed solely by an individual taxpayer. Any other assessee liable to pay tax, is not eligible to avail of this form for filing their returns. This form is applicable for the following people:
- A person who earns his income via salary or through other means such as pension
- A person who earns his livelihood from a single housing property
- An individual who has no income from no other business or who have no income from the sale of any assets i.e., capital gains
- Individuals who do not own any assets or property in countries apart from India
- An individual who has no source of income from any country outside India
- A person whose income from agriculture is below Rs. 5,000
- A person whose source of income is from various investments or sources like investments, schemes or fixed deposits etc.
- Individuals who have not earned income from any windfall such as lotteries, horse racing etc.
- People who want to accumulate their spouses or underage child’s income with their own, as long as the income to be clubbed is in accordance with the criteria mentioned above.
ITR-2A
Introduced in the assessment year 2015-16, The ITR-2A form is a new income tax return form. This form can be used by a Hindu Undivided Family (HUF) or an individual taxpayer. The ITR-2A form is applicable for the following people:
- People whose source of income i through salary or through means such as pension
- People who are also earning income from more than one housing property
- A person who has no income from any other business or who have no income from the sale of any assets i.e., capital gains
- People who tend to earn income from different investments or sources such as Fixed Deposits, Investments, Shares etc.
- A person who does not own any property or assets in countries other than India
- A person who does not have a source of income from any country outside India
- A person whose income from agriculture is below Rs 5,000
- Individuals who have not earned income from any windfall such as lotteries or horse racing
ITR-2
The ITR-2 Form is a type of ITR form which is generally used by individuals who have accrued income through the sale of assets or property. Also, this form is useful for individuals who earn income from countries outside India. In most cases, individuals or Hindu Undivided Families (HUF) can avail of this form to file their IT returns. This form is applicable for the following persons:
- People who earn income through salary or through means such as pension
- A person whose source of income is through the sale of assets or property in India i.e., capital gains
- A person who tends to earn income from more than one housing property
- People who don’t earn money from any business venture
- A person who owns assets in countries outside of India
- People who earn income from countries outside of India
- A person whose income from agriculture is above Rs 5,000
- A person who gets his income from any windfall like lotteries or horse racing
ITR-3
The ITR-3 Form is useful for an individual taxpayer or a Hindu Undivided Family, who solely operate as a partner in a firm but who do not conduct any business under the firm. This is also applicable for individuals who do not earn any income from the business conducted by the firm. This form is usually filed by those taxpayers whose taxable income earned from business is only in the form of the following:
- Salary
- Commission
- Bonus
- Interest
- Remuneration
ITR-4
This type of ITR form is useful for those individuals who conduct a business or who earn income through a profession. This form is applicable for all types of businesses, undertaking or profession, without any limit on the income earned. Taxpayers can also club any income they receive from windfalls, speculation, salaries, lotteries, housing properties etc., along with the income earned from their business. An individual with any profession, right from shopkeepers, doctors or designers to agents, retailers and contractors, is eligible to file their ITR using this form.
ITR-4S
Also known as Sugam form, the ITR-4S form can be used by any individual or Hindu Undivided Family (HUF) for filing their income tax returns. This form is applicable for the following persons:
- Individuals who earn income from any business
- Individuals who earn income from a single housing property
- Individuals who do not earn income through the sale of assets or property in India i.e.: capital gains
- Individuals whose income from agriculture is below Rs 5,000
- Individuals who do not own any assets or property in countries other than India
- Individuals who do not earn income from any country outside India
This form is useful in special circumstances and is applicable to businesses where any income earned is based on a presumptive method of calculation.
ITR-5
The ITR-5 form is used only by the following bodies to file income tax returns:
- Firms
- Limited Liability Partnerships (LLPs)
- Body of Individuals (BOIs)
- Association of Persons (AOPs)
- Co-operative Societies
- Artificial Judicial Persons
- Local Authorities
ITR-6
Except those companies or organisations that claim tax exemption as per Section 11, the ITR-6 form is used only by all companies. Organisations that can claim tax exemptions as per Section 11 are organisations in which the income received is accumulated from the property used for the purpose of religion or charity. This particular income tax return form is only available to be filed online.
ITR-7
Those individuals or companies that are required to submit their returns under the following sections are required to file their income tax returns through ITR-7:
- Section 139(4A) - Under this section, returns can be filed by individuals who receive income from any property that is held for the purpose of charity or religion in the form of a trust or legal obligation
- Section 139(4B) - Under this section, returns are to be filed by political parties provided their total income earned is above the non-taxable limit
- Section 139(4C) - Under this section, returns are to be filed by the following entities:
- Any institution or association mentioned under Section 10(23A)
- Any association involved with scientific research
- Any institution mentioned in Section 10(23B)
- Any news agency
- Any fund, medical institution or educational institution
- Section 139(4D) - Under this section, returns are to be filed by entities such as colleges, universities or any other such institution wherein income returns or loss are not required to be provided in accordance with other provisions outlined in this section.
Advance Payment of Tax refers to the liability to pay Income Tax for income earned during the same Financial Year. In general, taxpayers are required to pay tax only for the income of the preceding year. However, if the tax payable is in excess of ten thousand rupees, the tax should be remitted to the government before the due date mentioned in the Act. The purpose of incorporating Advance Tax provisions in the Act is to ensure that revenue reaches the Government without delay.
Liability for payment of advance tax (Section 207)
(1) Tax shall be payable in advance during any financial year, in accordance with the provisions of sections 208 to 219 (both inclusive), in respect of the total income of the assessee which would be chargeable to tax for the assessment year immediately following that financial year, such income being hereafter in this Chapter referred to as ―current income.
(2) The provisions of sub-section (1) shall not apply to an individual resident in India, who—
(a) does not have any income chargeable under the head ―Profits and gains of business or profession; and
(b) is of the age of sixty years or more at any time during the previous year.
Conditions of liability to pay advance tax (Section 208)
Advance tax shall be payable during a financial year in every case where the amount of such tax payable by the assessee during that year, as computed in accordance with the provisions of this Chapter, is ten thousand rupees or more.
Computation of advance tax (Section 209)
(1) The amount of advance tax payable by an assessee in the financial year shall, subject to the provisions of sub-sections (2) and (3), be computed as follows, namely: —
(a) where the calculation is made by the assessee for the purposes of payment of advance tax under sub-section (1) or sub-section (2) or sub-section (5) or sub-section (6) of section 210, he shall first estimate his current income and income-tax thereon shall be calculated at the rates in force in the financial year;
(b) where the calculation is made by the Assessing Officer for the purpose of making an order under sub-section (3) of section 210, the total income of the latest previous year in respect of which the assessee has been assessed by way of regular assessment or the total income returned by the assessee in any return of income furnished by him for any subsequent previous year, whichever is higher, shall be taken and income-tax thereon shall be calculated at the rates in force in the financial year;
(c) where the calculation is made by the Assessing Officer for the purpose of making an amended order under sub-section (4) of section 210, the total income declared in the return furnished by the assessee for the later previous year, or, as the case may be, the total income in respect of which the regular assessment, referred to in that sub-section has been made, shall be taken and income-tax thereon shall be calculated at the rates in force in the financial year;
(d) the income-tax calculated under clause (a) or clause (b) or clause (c) shall, in each case, be reduced by the amount of income-tax which would be 1[deductible or collectible at source] during the said financial year under any provision of this Act from any income (as computed before allowing any deductions admissible under this Act) which has been taken into account in computing the current income or, as the case may be, the total income aforesaid; and the amount of income-tax as so reduced shall be the advance tax payable.
Tax deducted at source
1. Taxes Deducted / Collected or Paid as Advance Tax in the Previous Year [Section 190]
Although regular assessment in respect of any income is to be made in a later assessment year, but tax on such income is payable in the previous year itself in the following manner:
- Tax deducted at source (TDS): In case of certain incomes/payments, tax is deducted at source by the payer at the prescribed rate at the time of accrual or payment of such incomes to the payee.
- Tax collected at source (TCS): In certain cases, tax is collected at source by the seller from buyer or a person from his licensee/lessee, etc. at the time of debiting the amount to account of the buyer/licensee/lessee or the receipt of payment whichever is earlier.
- Advance tax: The assessee, in certain cases, is under an obligation to pay tax in advance in certain instalments.
2. Procedure and Scheme of TDS:
Under the scheme of tax deduction at source (TDS), persons responsible for making payment of income, covered by the scheme, are responsible to deduct tax at source and deposit the same to the Government’s treasury within the stipulated time. The recipient of income—though he gets only the net amount (after deduction of tax at source)—is liable to tax on the gross amount and the amount deducted at source is adjusted against his final tax liability.
3. Assessee to be Deemed as Assessee in TDS Default [Section 201(1)]
Where any person, including the principal officer of a company, —
- Who is required to deduct any sum in accordance with the provisions of this Act; or?
- Referred to in section 192(1A), being an employer,
— does not deduct, or
— does not pay, or
— after so deducting fails to pay,
The whole or any part of the tax, as required by or under this Act, then, such person, be deemed to be an assessee in default in respect of such tax and hence shall be liable to penalty under section 221.
4. Penalty payable under section 221 when the payer is an assessee deemed to be in TDS Default under section 201
When an assessee is deemed to be in default in making a payment of tax, he shall, in addition to the amount of arrears, be liable to pay by way of penalty as the Assessing Officer may direct, and in the case of a continuing default, such further amount or amounts as the Assessing Officer may, from time to time, direct, so, however, that the total amount of penalty does not exceed the amount of tax in arrears.
5. Interest for Late Deposit of TDS [Section 201(1A)]
As per section 201(1A), without prejudice to the provisions of section 201(1), if any such person, principal officer or company does not deduct whole or part of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest at the rate given in the table below:
Period of Default | Rate of Interest |
(a) From the date the tax was deductible to the date on which such tax is deducted [Section 201(1A) (i)] | 1% p.m. Or part of the month on the amount of such tax. |
(b) From the date on which such tax is deducted to the date on which such tax is actually paid [Section 201(1A) (ii)] | 1.5% p.m. Or part of the month on the amount of such tax. |
6. Certificate for TDS [Section 203 and Rule 31]
Every person deducting tax in accordance with the provisions of TDS shall within such period as may be prescribed from the time of credit or payment of the sum, furnish to the person to whose account such credit is given or to whom such payment is made, a certificate to the effect that tax has been deducted, the rate at which the tax has been deducted and such other particulars as may be prescribed. Further, as per section 203(2), every person, being an employer, referred to in section 192(1A) shall, within such period, furnish to the person in respect of whose income such payment of tax has been made, a certificate to the effect that tax has been paid to the Central Government, and specify the amount so paid, the rate at which the tax has been paid and such other particulars as may be prescribed. The above provisions shall also be applicable in the case of an employer who has paid the tax on the non-monetary perquisites provided to the employee. Failure without reasonable cause to furnish a certificate as required by this section attracts penalty under section 272A (2) read with section 273B. Deliberately furnishing a false certificate, is an offence under section 277 and abatement of that offence is punishable under section 278.
7. Time of TDS Payment
- (i) Tax deducted (TDS) by an office of the Government:
- On the same day where the tax is paid without production of an income-tax challan; and
- On or before seven days from the end of the month in which the deduction is made, where tax is paid accompanied by an income-tax challan.
Ii. Tax deducted (TDS) In any other case
- On or before 30th day of April where the income or amount is credited or paid in the month of March; and
- In any other case, on or before seven days from the end of the month in which the deduction is made.
Iii. Special cases where TDS Payment can be Deposited Quarterly
In the following cases, the Assessing Officer may with the prior approval of the Joint Commissioner, allow payment of TDS quarterly as under:
| Quarter of the financial year ended on | Date for quarterly payment |
(i) Income chargeable under the head "Salaries" under section 192 | 30th June | 7th July |
(ii) any income by way of interest other than income by way of interest on securities under section 194A | 30th September | 7th October |
(iii) any income by way of insurance commission under section 194D | 31st December | 7th January |
(iv) any income by way of commission or brokerage referred to in section 194H under section 192 | 31st March | 30th April |
8. Forms and Time Limit of issue of TDS Certificate [Rule 31]
The person responsible for deducting the TDS is required to issue a certificate in the prescribed forms to the employee/payee on account of tax deducted at source.
(A) Prescribed forms for TDS Certificate [Rule 31(1)]
(i) For TDS on salary | Form No. 16. Form No. 12BA (statement of the value of perquisites and profit in lieu of salary). |
(ii) For TDS on other income | Form No. 16A |
(iii) For TDS on purchase of immovable property as per section 194-IA | Form No. 16B. |
(iv) For TDS under section 194B | Form No. 16C |
(B) What should TDS Certificates Specify? [Rule 31(2)]
The certificates in Form 16 or 16A shall specify: —
- Valid permanent account number (PAN) of the deductee;
- Valid tax deduction and collection account number (TAN) of the diductor;
- Book identification number or numbers where deposit of tax deducted is without production of challan in case of an office of the Government;
- Challan identification number or numbers in case of payment through bank.
- Receipt number of the relevant quarterly statement of tax deducted at source which is furnished in accordance with the provisions of rule 31A;
- Receipt numbers of all the relevant quarterly statements in case the statement referred to in clause (i) is for tax deducted at source from income chargeable under the head “Salaries”.
Income tax assessment
Every assessee, who earns income beyond the basic exemption limit in a Financial Year (FY), must file a statement containing details of his income, deductions, and other related information. This is called the Income Tax Return (ITR). Once you as a taxpayer file the income returns, the Income Tax Department will process it. There are occasions where, based on set parameters by the Central Board of Direct Taxes (CBDT), the return of an assessee gets picked for an assessment. Different types of assessment are-
(1) Self-Assessment (Section 140)
This is the type of income tax assessment in which the assessee calculates the tax themself, usually accompanied by payment of the amount they believe is due. After taking TDS and subtracting advance tax paid, tax payable is required to be given under section 139, section 142, section 148, or section 153A.
(2) Summary Assessment [u/s 143(1)]
The assessment under section 143(1) is similar to the initial review of a tax return. The taxpayer receives an intimation u/s 143(1) from the IRS under this section. The department will send you a comparative income tax calculation. The overall income or loss incurred is computed in the income tax assessment.
(3) Scrutiny Assessment [u/s 143(3)]
Scrutiny assessment is the assessment of a return filed by an assessee by providing an opportunity for the assessee to support the declared income and expenses, as well as claims of deductions, losses, exemptions, and so on, in the return using proof. The committee manages it using a single work plan. The committee undertakes specific work, as well as forming informal panels (for in-depth activities) or working groups. The assessing officer is given the chance to conduct an investigation in order to determine if the assessee correctly reported his or her income in the return. The claims for deductions, exemptions, and other benefits are legal and factually correct. In case of any omissions, contradictions, inaccuracies, or other errors, the assessing officer prepares his or her own assessment for the assessee, taking into account all relevant circumstances.
(4) Best Judgment Assessment [u/s 144]
The term ‘best judgement assessment’ refers to the assessing officer’s opinion or calculation of the assessee’s income in the context of income tax law. In the situation of best judgement assessment, the evaluating officer will make the decision based on the best reasoning, i.e., they will not be dishonest. The assessee will not be dishonest in his or her assessment, nor will he or she be hostile to the officer.
(5) Protective Assessment
This is a type of assessment that focuses on those that are made to ‘protect’ the revenue’s interests. The income tax legislation, however, has no provision for the imposition of income tax on anyone other than the person to whom it is due. It is open to the authorities to undertake a protective or alternative assessment if it is unclear who among a few probable persons is actually liable to pay the tax. The authorities just make an assessment and keep it on paper until the situation is resolved when they make a protective assessment. A protective order of assessment, but not one of penalty, can be issued.
(6) Re-Assessment (or) Income Escaping Assessment [u/s 147]
If the assessing officer has reason to think that income liable to tax has escaped assessment for any assessment year, they will conduct an income escaping assessment under Section 147. Moreover, it gives them the authority to reassess or re-compute income, turnover, and other figures that have escaped their notice. The goal of conducting an assessment under Section 147 is to bring any income that escaped assessment in the original assessment into the tax net.
(7) Assessment in Case of Search u/s 153A
The assessing officer will do the following in this type of income tax assessment:
- Giving such a person notice requires furnishing it within the time frame mentioned in the notice. Clause (b) referred to the income return for each of the six assessment years, which is confirmed in the prescribed format. Setting forth such other particulars as may be prescribed, and the provisions of this Act shall apply as if such return were a return required to be furnished under Section 139, to the extent possible;
- The assessor re-assesses the total income of the six assessment years immediately preceding the assessment year relevant to the previous year in which such search or requisition is made.
It is extremely difficult for the income tax (IT) department of India to track the high-value transactions made by individuals. Annual Information Return helps the IT department track the details of transactions worth Rs.50,000 and above.
To monitor transactions of high values, the income tax law has now framed a concept of Annual Information Return (AIR). This will help tax officials to collect information on high value transactions of individuals undertaken in a particular year. Certain entities that are defined below are required to file the statement of transactions by furnishing details of transactions or any other account maintained by them. The information provided allows income tax department to keep a track of the transactions these entities undertake.
The basic provisions of the Annual Information Return are as follows:
- Filers are to furnish details of any financial transactions undertaken by them in a financial year with the income tax authorities. Filers or entities can include an assessee or a prescribed person if the entity is an office of the government, public bodies and associations.
- The transactions will have an aggregate value of Rs 50,000 and above.
- The rules for filing are yet to be notified but those who fail to file transactions with an aggregate higher than Rs 50,000 will be penalized under section 271FA and penalties can range up to Rs 100 per day of default.
- Section 285BA (5) states that the tax authorities will give a period of notice to those who have not filed to complete the filing process in a span of no more than 30 days from date of service of notice
- If defaulters have still not filed transactions after tax authorities have given a notice of 30 days, the fine can go up to Rs 500 per day of default effective immediately from date of expiry of notice
- If an entity comes across inaccuracy after filing the transaction report, they can rectify it within a span of 10 days from date of filing. If the inaccuracy is detected by the tax authorities, they can issue a notice period of 30 days to rectify the transaction reports starting from date of notice
- Failure to rectify renders statement invalid and entity will face consequences akin to not having filed the transaction report. Penalties for failure to rectify inaccuracies resulting from faire to comply with due diligence requirements or deliberate inaccuracy or failure in rectifying inaccuracies within prescribed time limits can attract a penalty to the tune of Rs 50,000.
Verification of AIR
When an entity has completed preparing an AIR, they can proceed to check the validity of the AIR before uploading it. Validation of AIR is done by using the AIR File Validation Utility or AIR-FVU. The AIR-FVU is available on the NSDL website and is also available at the TIN-FCs or TIN facilitation centres. The AIR-FVU can be downloaded off the NSDL website and be used to run AIR files through. The installation of the AIR-FVU will be successful only if the computer has Java installed on it. The details on how to use the AIR-FVU and its navigation can be found within the setup readme text or by clicking on the readme icon. When the AIR is run through the tool it will display the status of the file. If there are any errors relating to format of AIR then the AIR-FVU will throw up an error file with the error code and description of the error. The filers then have to keep resolving any errors that are displayed till the file returns error free. When no more errors are present the AIR-FVU will display a “File Validation Successful” message. Upon each run of the AIR-FVU it will generate a file with the same name as the report that was run through it but it will have a different extension. The extension of the files will have FVU attached to it. This file which has no errors will be the one that will need to be furnished
For keeping a watch on the high-value transactions done by the taxpayers, the Income Tax Act has framed a new concept to furnish a Statement of Financial Transactions or reportable account, previously also known as Annual Information Return (AIR).
Section 285BA of the Income-Tax Act requires specified reporting persons to furnish this statement. Rule 114E of the Income Tax Rules 1962, specifies that this statement must be furnished in Form No. 61A.
The specified financial transactions referred above are of the following kinds:
- Sale, purchase or exchange of goods, right, property, or interest in any property.
- Works contract.
- Providing services.
- Any investment made or expenditure incurred.
- Accepting any deposit or taking any loan.
It is important to note that CBDT can recommend different values with respect to different transactions for different persons by considering the nature of the transactions.
Due date to file form 61A
Statement of Financial Transactions needs to be furnished within 31st May of next year for every previous financial year where the transaction occurs.
A penalty under Section 271FA of Rs 500 per day shall be levied for the initial failure to file within the due date.
The authorities would issue a notice to such an assessee, demanding the assessee to submit the form within 30 days from the issuance of such notice.
In case such assessee continues to be the assessee in default by not answering to such notice, a penalty would be levied on the assessee that would amount to Rs 1000 per day of such default. This penalty would be calculated from the expiry of the period as stipulated in such notice.
Who is required to furnish Form 61A?
- A banking company, Cooperative bank
- A non-banking financial company (NBFC)
- Any institution issuing credit card
- Any person covered under audit under section 44AB iof the Income Tax Act.
- Post offices
- A Nidhi referred to in section 406 of the Companies Act 2013
- A company issuing bonds or debentures
- A company issuing shares
- A mutual fund institution
- A company listed on the recognised stock exchange
- A trustee of a mutual fund or such other person as authorised by the trustee
- Authorise dealer, offshore banking unit, money changer or any other person defined in FEMA
- Inspector general or sub-registrar appointed under Registration act, 1908.
References:
1. Singhanai V.K.: Student’s Guide to Income Tax; Taxmann, Delhi.
2. Prasad, Bhagwati: Income Tax Law & practice: Wiley Publication, New Delhi.
3. Dinker Pagare: Income Tax Law and Practice; Sultan Chand & Sons, New Delhi.
4. Girish Ahuja and Ravi Gupta; Systematic approach to income tax; Sahitya Bhawan Publications, New Delhi.
5. Chandra Mahesh and Shukla D.C.: Income Tax Law and Practice; Pragati Publications, New Delhi.
Unit 4
E-Filing and E-provisions
There is a different category of taxpayer viz. Individual, HUF, Firm, LLP, Company, Trust and AOP/BOI. Due Date is different according to audit or non-audit case of such categories as defined in section 139(1)
Last Date of Income Tax Return Filing for AY 2021-22 (Non-Audit Cases)
- The common due date of filing the Income Tax Return by Assessee whose Books of Account is not required to be audited is 31st July 2021. The revised due date is 31st December 2021
- CBDT: “The due date of furnishing of Return of Income for the Assessment Year 2021-22, which was 31st July, 2021 under sub-section (1) of section 139 of the Act, as extended to 30th September, 2021 vide Circular No.9/2021 dated 20.05.2021, is hereby further extended to 31st December, 2021”
Filing Income Tax Return Due Date for AY 2021-22 (Audit Cases)
- The general due date for filing the Income Tax Return for the audit cases is 31st October 2021. The CBDT has again extended the due date till 15th March 2022.
Due Dates for Tax Audit Report (3CA-3CD/3CB-3CD)
- The due date for filing of Tax Audit Report for all categories of assessees whose account are required to be audited extended till 15th February 2022 via the general circular no.1/2022.
Revised & Belated ITR Due Dates for AY 2021-22
- The due date for filing a revised and belated income tax return for AY 2021-22 has revised by CBDT till 31st March 2022.
- “The due date of furnishing of belated/revised Return of Income for the Assessment Year 2021-22, which is 31st December, 2021 under sub-section (4)/sub-section (5) of section 139 of the Act, as extended to 31st January, 2022, vide Circular No.9/2021 dated 20.05.2021, is hereby further extended to 31st March, 2022”
The income tax department notified the taxpayers for late filing of tax returns for A.Y. 2021-22, along with a penalty of INR 5000 However, if the taxpayer’s total income does not exceed Rs 5 lakh, then the maximum penalty levied for delay will not exceed Rs 1000.
Last Date of Income Tax Return Filing for AY 2021-22
(Assessee who are required to furnish report under sec 92E)
- The due date of filing the Income Tax Return by Assessee who are required to furnish a report under sec 92E is 30th November 2021. The govt has extended the last date till 15th March 2022.
- “The due date of furnishing Report from an Accountant by persons entering into international transaction or specified domestic transaction under section 92E of the Act for the Previous Year 2020-21, which is 31st October, 2021, as extended to 30th November, 2021 vide Circular No.9/2021 dated 20.05.2021, is hereby further extended to 15th February 2022.
Advance Income Taxes Filing Due Dates FY 2020-21
- If the tax liability is more than Rs 10,000 in a financial year then advance tax needs to be paid by the assessee.
- 15th June (15%) | 15th Sept. (45%) | 15th Dec. (75%) | 15th March (100%)
- The assessee who are covered under section 44AD and 44ADA (i.e., Presumptive Income), are also required to pay the advance tax on or before the 15th march of the previous year. However, any tax paid till 31st March will be treated as Advance Tax.
E-FILING OF INCOME TAX RETURNs AND FORMS USED
- To begin filing your income tax returns online, go to https://incometaxindiaefiling.gov.in and create your e-filing account. Your PAN will be your login ID
- Log in using your PAN and password.
- It is mandatory to link Aadhaar with your E-filing Account. The same has to be done by choosing the option of “Link Aadhaar” under the Profile Settings tab. Details including name as per Aadhaar card, Aadhaar number etc. are to be filled to conclude the linking process.
- Open Form 26AS under the Quick Link menu. Form 26AS is a summary of the taxes you have paid over the financial year. It will include TDS, Advance Tax and Self-Assessment Tax
- Download the correct ITR form or Income Tax Return form (check the table at the end of the article to choose the correct ITR form)
- Download the Excel utility of the ITR and fill in all the details:
- Name
- PAN
- Address
- Date of birth
- Email ID
- Mobile number
- Choose whether original or revised return
- Other taxable income
- Investments
- Taxes deducted
- Bank details
- Click on Validate button on all the sheets
- Once validated, click on Calculate Tax
- Pay any tax that may be payable and provide the challan details in the return form
- Click on Generate XML and save the XML file on your desktop
- Go to your account on the IT website and click on Upload Return. Fill in the ITR form, name, assessment year and upload the XML file. If you have a digital signature, then upload that, too
- Click Submit. You will get an Acknowledgement. Take a print out of this
- If you provided a digital signature, your income tax return filing process is complete
- If you did not use a digital signature, then you will receive an ITR-V form, which is an acknowledgement-plus-verification. Print it out, sign in blue ink and post it to the Income Tax Department - CPC, Post Bag No - 1, Electronic City Post Office, Bengaluru - 560100 within 120 days of e-filing. You will get an acknowledgement of receipt of ITR-V by email and SMS.
FORMS USED IN ITR FORM
In total, there are almost 9 types of ITR forms available for a tax payer to file his taxes. However, only the following forms are to be taken into consideration by individuals when filing returns as per the Central Board of Direct Taxes in India:
- ITR-1
- ITR-2
- ITR-2A
- ITR-3
- ITR-4
- ITR-4S
The following income tax return forms are applicable only for companies and firms:
- ITR-5
- ITR-6
- ITR-7
ITR-1
Also known as the Sahaj form, this income tax return form is to be filed solely by an individual taxpayer. Any other assessee liable to pay tax, is not eligible to avail of this form for filing their returns. This form is applicable for the following people:
- A person who earns his income via salary or through other means such as pension
- A person who earns his livelihood from a single housing property
- An individual who has no income from no other business or who have no income from the sale of any assets i.e., capital gains
- Individuals who do not own any assets or property in countries apart from India
- An individual who has no source of income from any country outside India
- A person whose income from agriculture is below Rs. 5,000
- A person whose source of income is from various investments or sources like investments, schemes or fixed deposits etc.
- Individuals who have not earned income from any windfall such as lotteries, horse racing etc.
- People who want to accumulate their spouses or underage child’s income with their own, as long as the income to be clubbed is in accordance with the criteria mentioned above.
ITR-2A
Introduced in the assessment year 2015-16, The ITR-2A form is a new income tax return form. This form can be used by a Hindu Undivided Family (HUF) or an individual taxpayer. The ITR-2A form is applicable for the following people:
- People whose source of income i through salary or through means such as pension
- People who are also earning income from more than one housing property
- A person who has no income from any other business or who have no income from the sale of any assets i.e., capital gains
- People who tend to earn income from different investments or sources such as Fixed Deposits, Investments, Shares etc.
- A person who does not own any property or assets in countries other than India
- A person who does not have a source of income from any country outside India
- A person whose income from agriculture is below Rs 5,000
- Individuals who have not earned income from any windfall such as lotteries or horse racing
ITR-2
The ITR-2 Form is a type of ITR form which is generally used by individuals who have accrued income through the sale of assets or property. Also, this form is useful for individuals who earn income from countries outside India. In most cases, individuals or Hindu Undivided Families (HUF) can avail of this form to file their IT returns. This form is applicable for the following persons:
- People who earn income through salary or through means such as pension
- A person whose source of income is through the sale of assets or property in India i.e., capital gains
- A person who tends to earn income from more than one housing property
- People who don’t earn money from any business venture
- A person who owns assets in countries outside of India
- People who earn income from countries outside of India
- A person whose income from agriculture is above Rs 5,000
- A person who gets his income from any windfall like lotteries or horse racing
ITR-3
The ITR-3 Form is useful for an individual taxpayer or a Hindu Undivided Family, who solely operate as a partner in a firm but who do not conduct any business under the firm. This is also applicable for individuals who do not earn any income from the business conducted by the firm. This form is usually filed by those taxpayers whose taxable income earned from business is only in the form of the following:
- Salary
- Commission
- Bonus
- Interest
- Remuneration
ITR-4
This type of ITR form is useful for those individuals who conduct a business or who earn income through a profession. This form is applicable for all types of businesses, undertaking or profession, without any limit on the income earned. Taxpayers can also club any income they receive from windfalls, speculation, salaries, lotteries, housing properties etc., along with the income earned from their business. An individual with any profession, right from shopkeepers, doctors or designers to agents, retailers and contractors, is eligible to file their ITR using this form.
ITR-4S
Also known as Sugam form, the ITR-4S form can be used by any individual or Hindu Undivided Family (HUF) for filing their income tax returns. This form is applicable for the following persons:
- Individuals who earn income from any business
- Individuals who earn income from a single housing property
- Individuals who do not earn income through the sale of assets or property in India i.e.: capital gains
- Individuals whose income from agriculture is below Rs 5,000
- Individuals who do not own any assets or property in countries other than India
- Individuals who do not earn income from any country outside India
This form is useful in special circumstances and is applicable to businesses where any income earned is based on a presumptive method of calculation.
ITR-5
The ITR-5 form is used only by the following bodies to file income tax returns:
- Firms
- Limited Liability Partnerships (LLPs)
- Body of Individuals (BOIs)
- Association of Persons (AOPs)
- Co-operative Societies
- Artificial Judicial Persons
- Local Authorities
ITR-6
Except those companies or organisations that claim tax exemption as per Section 11, the ITR-6 form is used only by all companies. Organisations that can claim tax exemptions as per Section 11 are organisations in which the income received is accumulated from the property used for the purpose of religion or charity. This particular income tax return form is only available to be filed online.
ITR-7
Those individuals or companies that are required to submit their returns under the following sections are required to file their income tax returns through ITR-7:
- Section 139(4A) - Under this section, returns can be filed by individuals who receive income from any property that is held for the purpose of charity or religion in the form of a trust or legal obligation
- Section 139(4B) - Under this section, returns are to be filed by political parties provided their total income earned is above the non-taxable limit
- Section 139(4C) - Under this section, returns are to be filed by the following entities:
- Any institution or association mentioned under Section 10(23A)
- Any association involved with scientific research
- Any institution mentioned in Section 10(23B)
- Any news agency
- Any fund, medical institution or educational institution
- Section 139(4D) - Under this section, returns are to be filed by entities such as colleges, universities or any other such institution wherein income returns or loss are not required to be provided in accordance with other provisions outlined in this section.
Advance Payment of Tax refers to the liability to pay Income Tax for income earned during the same Financial Year. In general, taxpayers are required to pay tax only for the income of the preceding year. However, if the tax payable is in excess of ten thousand rupees, the tax should be remitted to the government before the due date mentioned in the Act. The purpose of incorporating Advance Tax provisions in the Act is to ensure that revenue reaches the Government without delay.
Liability for payment of advance tax (Section 207)
(1) Tax shall be payable in advance during any financial year, in accordance with the provisions of sections 208 to 219 (both inclusive), in respect of the total income of the assessee which would be chargeable to tax for the assessment year immediately following that financial year, such income being hereafter in this Chapter referred to as ―current income.
(2) The provisions of sub-section (1) shall not apply to an individual resident in India, who—
(a) does not have any income chargeable under the head ―Profits and gains of business or profession; and
(b) is of the age of sixty years or more at any time during the previous year.
Conditions of liability to pay advance tax (Section 208)
Advance tax shall be payable during a financial year in every case where the amount of such tax payable by the assessee during that year, as computed in accordance with the provisions of this Chapter, is ten thousand rupees or more.
Computation of advance tax (Section 209)
(1) The amount of advance tax payable by an assessee in the financial year shall, subject to the provisions of sub-sections (2) and (3), be computed as follows, namely: —
(a) where the calculation is made by the assessee for the purposes of payment of advance tax under sub-section (1) or sub-section (2) or sub-section (5) or sub-section (6) of section 210, he shall first estimate his current income and income-tax thereon shall be calculated at the rates in force in the financial year;
(b) where the calculation is made by the Assessing Officer for the purpose of making an order under sub-section (3) of section 210, the total income of the latest previous year in respect of which the assessee has been assessed by way of regular assessment or the total income returned by the assessee in any return of income furnished by him for any subsequent previous year, whichever is higher, shall be taken and income-tax thereon shall be calculated at the rates in force in the financial year;
(c) where the calculation is made by the Assessing Officer for the purpose of making an amended order under sub-section (4) of section 210, the total income declared in the return furnished by the assessee for the later previous year, or, as the case may be, the total income in respect of which the regular assessment, referred to in that sub-section has been made, shall be taken and income-tax thereon shall be calculated at the rates in force in the financial year;
(d) the income-tax calculated under clause (a) or clause (b) or clause (c) shall, in each case, be reduced by the amount of income-tax which would be 1[deductible or collectible at source] during the said financial year under any provision of this Act from any income (as computed before allowing any deductions admissible under this Act) which has been taken into account in computing the current income or, as the case may be, the total income aforesaid; and the amount of income-tax as so reduced shall be the advance tax payable.
Tax deducted at source
1. Taxes Deducted / Collected or Paid as Advance Tax in the Previous Year [Section 190]
Although regular assessment in respect of any income is to be made in a later assessment year, but tax on such income is payable in the previous year itself in the following manner:
- Tax deducted at source (TDS): In case of certain incomes/payments, tax is deducted at source by the payer at the prescribed rate at the time of accrual or payment of such incomes to the payee.
- Tax collected at source (TCS): In certain cases, tax is collected at source by the seller from buyer or a person from his licensee/lessee, etc. at the time of debiting the amount to account of the buyer/licensee/lessee or the receipt of payment whichever is earlier.
- Advance tax: The assessee, in certain cases, is under an obligation to pay tax in advance in certain instalments.
2. Procedure and Scheme of TDS:
Under the scheme of tax deduction at source (TDS), persons responsible for making payment of income, covered by the scheme, are responsible to deduct tax at source and deposit the same to the Government’s treasury within the stipulated time. The recipient of income—though he gets only the net amount (after deduction of tax at source)—is liable to tax on the gross amount and the amount deducted at source is adjusted against his final tax liability.
3. Assessee to be Deemed as Assessee in TDS Default [Section 201(1)]
Where any person, including the principal officer of a company, —
- Who is required to deduct any sum in accordance with the provisions of this Act; or?
- Referred to in section 192(1A), being an employer,
— does not deduct, or
— does not pay, or
— after so deducting fails to pay,
The whole or any part of the tax, as required by or under this Act, then, such person, be deemed to be an assessee in default in respect of such tax and hence shall be liable to penalty under section 221.
4. Penalty payable under section 221 when the payer is an assessee deemed to be in TDS Default under section 201
When an assessee is deemed to be in default in making a payment of tax, he shall, in addition to the amount of arrears, be liable to pay by way of penalty as the Assessing Officer may direct, and in the case of a continuing default, such further amount or amounts as the Assessing Officer may, from time to time, direct, so, however, that the total amount of penalty does not exceed the amount of tax in arrears.
5. Interest for Late Deposit of TDS [Section 201(1A)]
As per section 201(1A), without prejudice to the provisions of section 201(1), if any such person, principal officer or company does not deduct whole or part of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest at the rate given in the table below:
Period of Default | Rate of Interest |
(a) From the date the tax was deductible to the date on which such tax is deducted [Section 201(1A) (i)] | 1% p.m. Or part of the month on the amount of such tax. |
(b) From the date on which such tax is deducted to the date on which such tax is actually paid [Section 201(1A) (ii)] | 1.5% p.m. Or part of the month on the amount of such tax. |
6. Certificate for TDS [Section 203 and Rule 31]
Every person deducting tax in accordance with the provisions of TDS shall within such period as may be prescribed from the time of credit or payment of the sum, furnish to the person to whose account such credit is given or to whom such payment is made, a certificate to the effect that tax has been deducted, the rate at which the tax has been deducted and such other particulars as may be prescribed. Further, as per section 203(2), every person, being an employer, referred to in section 192(1A) shall, within such period, furnish to the person in respect of whose income such payment of tax has been made, a certificate to the effect that tax has been paid to the Central Government, and specify the amount so paid, the rate at which the tax has been paid and such other particulars as may be prescribed. The above provisions shall also be applicable in the case of an employer who has paid the tax on the non-monetary perquisites provided to the employee. Failure without reasonable cause to furnish a certificate as required by this section attracts penalty under section 272A (2) read with section 273B. Deliberately furnishing a false certificate, is an offence under section 277 and abatement of that offence is punishable under section 278.
7. Time of TDS Payment
- (i) Tax deducted (TDS) by an office of the Government:
- On the same day where the tax is paid without production of an income-tax challan; and
- On or before seven days from the end of the month in which the deduction is made, where tax is paid accompanied by an income-tax challan.
Ii. Tax deducted (TDS) In any other case
- On or before 30th day of April where the income or amount is credited or paid in the month of March; and
- In any other case, on or before seven days from the end of the month in which the deduction is made.
Iii. Special cases where TDS Payment can be Deposited Quarterly
In the following cases, the Assessing Officer may with the prior approval of the Joint Commissioner, allow payment of TDS quarterly as under:
| Quarter of the financial year ended on | Date for quarterly payment |
(i) Income chargeable under the head "Salaries" under section 192 | 30th June | 7th July |
(ii) any income by way of interest other than income by way of interest on securities under section 194A | 30th September | 7th October |
(iii) any income by way of insurance commission under section 194D | 31st December | 7th January |
(iv) any income by way of commission or brokerage referred to in section 194H under section 192 | 31st March | 30th April |
8. Forms and Time Limit of issue of TDS Certificate [Rule 31]
The person responsible for deducting the TDS is required to issue a certificate in the prescribed forms to the employee/payee on account of tax deducted at source.
(A) Prescribed forms for TDS Certificate [Rule 31(1)]
(i) For TDS on salary | Form No. 16. Form No. 12BA (statement of the value of perquisites and profit in lieu of salary). |
(ii) For TDS on other income | Form No. 16A |
(iii) For TDS on purchase of immovable property as per section 194-IA | Form No. 16B. |
(iv) For TDS under section 194B | Form No. 16C |
(B) What should TDS Certificates Specify? [Rule 31(2)]
The certificates in Form 16 or 16A shall specify: —
- Valid permanent account number (PAN) of the deductee;
- Valid tax deduction and collection account number (TAN) of the diductor;
- Book identification number or numbers where deposit of tax deducted is without production of challan in case of an office of the Government;
- Challan identification number or numbers in case of payment through bank.
- Receipt number of the relevant quarterly statement of tax deducted at source which is furnished in accordance with the provisions of rule 31A;
- Receipt numbers of all the relevant quarterly statements in case the statement referred to in clause (i) is for tax deducted at source from income chargeable under the head “Salaries”.
Income tax assessment
Every assessee, who earns income beyond the basic exemption limit in a Financial Year (FY), must file a statement containing details of his income, deductions, and other related information. This is called the Income Tax Return (ITR). Once you as a taxpayer file the income returns, the Income Tax Department will process it. There are occasions where, based on set parameters by the Central Board of Direct Taxes (CBDT), the return of an assessee gets picked for an assessment. Different types of assessment are-
(1) Self-Assessment (Section 140)
This is the type of income tax assessment in which the assessee calculates the tax themself, usually accompanied by payment of the amount they believe is due. After taking TDS and subtracting advance tax paid, tax payable is required to be given under section 139, section 142, section 148, or section 153A.
(2) Summary Assessment [u/s 143(1)]
The assessment under section 143(1) is similar to the initial review of a tax return. The taxpayer receives an intimation u/s 143(1) from the IRS under this section. The department will send you a comparative income tax calculation. The overall income or loss incurred is computed in the income tax assessment.
(3) Scrutiny Assessment [u/s 143(3)]
Scrutiny assessment is the assessment of a return filed by an assessee by providing an opportunity for the assessee to support the declared income and expenses, as well as claims of deductions, losses, exemptions, and so on, in the return using proof. The committee manages it using a single work plan. The committee undertakes specific work, as well as forming informal panels (for in-depth activities) or working groups. The assessing officer is given the chance to conduct an investigation in order to determine if the assessee correctly reported his or her income in the return. The claims for deductions, exemptions, and other benefits are legal and factually correct. In case of any omissions, contradictions, inaccuracies, or other errors, the assessing officer prepares his or her own assessment for the assessee, taking into account all relevant circumstances.
(4) Best Judgment Assessment [u/s 144]
The term ‘best judgement assessment’ refers to the assessing officer’s opinion or calculation of the assessee’s income in the context of income tax law. In the situation of best judgement assessment, the evaluating officer will make the decision based on the best reasoning, i.e., they will not be dishonest. The assessee will not be dishonest in his or her assessment, nor will he or she be hostile to the officer.
(5) Protective Assessment
This is a type of assessment that focuses on those that are made to ‘protect’ the revenue’s interests. The income tax legislation, however, has no provision for the imposition of income tax on anyone other than the person to whom it is due. It is open to the authorities to undertake a protective or alternative assessment if it is unclear who among a few probable persons is actually liable to pay the tax. The authorities just make an assessment and keep it on paper until the situation is resolved when they make a protective assessment. A protective order of assessment, but not one of penalty, can be issued.
(6) Re-Assessment (or) Income Escaping Assessment [u/s 147]
If the assessing officer has reason to think that income liable to tax has escaped assessment for any assessment year, they will conduct an income escaping assessment under Section 147. Moreover, it gives them the authority to reassess or re-compute income, turnover, and other figures that have escaped their notice. The goal of conducting an assessment under Section 147 is to bring any income that escaped assessment in the original assessment into the tax net.
(7) Assessment in Case of Search u/s 153A
The assessing officer will do the following in this type of income tax assessment:
- Giving such a person notice requires furnishing it within the time frame mentioned in the notice. Clause (b) referred to the income return for each of the six assessment years, which is confirmed in the prescribed format. Setting forth such other particulars as may be prescribed, and the provisions of this Act shall apply as if such return were a return required to be furnished under Section 139, to the extent possible;
- The assessor re-assesses the total income of the six assessment years immediately preceding the assessment year relevant to the previous year in which such search or requisition is made.
It is extremely difficult for the income tax (IT) department of India to track the high-value transactions made by individuals. Annual Information Return helps the IT department track the details of transactions worth Rs.50,000 and above.
To monitor transactions of high values, the income tax law has now framed a concept of Annual Information Return (AIR). This will help tax officials to collect information on high value transactions of individuals undertaken in a particular year. Certain entities that are defined below are required to file the statement of transactions by furnishing details of transactions or any other account maintained by them. The information provided allows income tax department to keep a track of the transactions these entities undertake.
The basic provisions of the Annual Information Return are as follows:
- Filers are to furnish details of any financial transactions undertaken by them in a financial year with the income tax authorities. Filers or entities can include an assessee or a prescribed person if the entity is an office of the government, public bodies and associations.
- The transactions will have an aggregate value of Rs 50,000 and above.
- The rules for filing are yet to be notified but those who fail to file transactions with an aggregate higher than Rs 50,000 will be penalized under section 271FA and penalties can range up to Rs 100 per day of default.
- Section 285BA (5) states that the tax authorities will give a period of notice to those who have not filed to complete the filing process in a span of no more than 30 days from date of service of notice
- If defaulters have still not filed transactions after tax authorities have given a notice of 30 days, the fine can go up to Rs 500 per day of default effective immediately from date of expiry of notice
- If an entity comes across inaccuracy after filing the transaction report, they can rectify it within a span of 10 days from date of filing. If the inaccuracy is detected by the tax authorities, they can issue a notice period of 30 days to rectify the transaction reports starting from date of notice
- Failure to rectify renders statement invalid and entity will face consequences akin to not having filed the transaction report. Penalties for failure to rectify inaccuracies resulting from faire to comply with due diligence requirements or deliberate inaccuracy or failure in rectifying inaccuracies within prescribed time limits can attract a penalty to the tune of Rs 50,000.
Verification of AIR
When an entity has completed preparing an AIR, they can proceed to check the validity of the AIR before uploading it. Validation of AIR is done by using the AIR File Validation Utility or AIR-FVU. The AIR-FVU is available on the NSDL website and is also available at the TIN-FCs or TIN facilitation centres. The AIR-FVU can be downloaded off the NSDL website and be used to run AIR files through. The installation of the AIR-FVU will be successful only if the computer has Java installed on it. The details on how to use the AIR-FVU and its navigation can be found within the setup readme text or by clicking on the readme icon. When the AIR is run through the tool it will display the status of the file. If there are any errors relating to format of AIR then the AIR-FVU will throw up an error file with the error code and description of the error. The filers then have to keep resolving any errors that are displayed till the file returns error free. When no more errors are present the AIR-FVU will display a “File Validation Successful” message. Upon each run of the AIR-FVU it will generate a file with the same name as the report that was run through it but it will have a different extension. The extension of the files will have FVU attached to it. This file which has no errors will be the one that will need to be furnished
For keeping a watch on the high-value transactions done by the taxpayers, the Income Tax Act has framed a new concept to furnish a Statement of Financial Transactions or reportable account, previously also known as Annual Information Return (AIR).
Section 285BA of the Income-Tax Act requires specified reporting persons to furnish this statement. Rule 114E of the Income Tax Rules 1962, specifies that this statement must be furnished in Form No. 61A.
The specified financial transactions referred above are of the following kinds:
- Sale, purchase or exchange of goods, right, property, or interest in any property.
- Works contract.
- Providing services.
- Any investment made or expenditure incurred.
- Accepting any deposit or taking any loan.
It is important to note that CBDT can recommend different values with respect to different transactions for different persons by considering the nature of the transactions.
Due date to file form 61A
Statement of Financial Transactions needs to be furnished within 31st May of next year for every previous financial year where the transaction occurs.
A penalty under Section 271FA of Rs 500 per day shall be levied for the initial failure to file within the due date.
The authorities would issue a notice to such an assessee, demanding the assessee to submit the form within 30 days from the issuance of such notice.
In case such assessee continues to be the assessee in default by not answering to such notice, a penalty would be levied on the assessee that would amount to Rs 1000 per day of such default. This penalty would be calculated from the expiry of the period as stipulated in such notice.
Who is required to furnish Form 61A?
- A banking company, Cooperative bank
- A non-banking financial company (NBFC)
- Any institution issuing credit card
- Any person covered under audit under section 44AB iof the Income Tax Act.
- Post offices
- A Nidhi referred to in section 406 of the Companies Act 2013
- A company issuing bonds or debentures
- A company issuing shares
- A mutual fund institution
- A company listed on the recognised stock exchange
- A trustee of a mutual fund or such other person as authorised by the trustee
- Authorise dealer, offshore banking unit, money changer or any other person defined in FEMA
- Inspector general or sub-registrar appointed under Registration act, 1908.
References:
1. Singhanai V.K.: Student’s Guide to Income Tax; Taxmann, Delhi.
2. Prasad, Bhagwati: Income Tax Law & practice: Wiley Publication, New Delhi.
3. Dinker Pagare: Income Tax Law and Practice; Sultan Chand & Sons, New Delhi.
4. Girish Ahuja and Ravi Gupta; Systematic approach to income tax; Sahitya Bhawan Publications, New Delhi.
5. Chandra Mahesh and Shukla D.C.: Income Tax Law and Practice; Pragati Publications, New Delhi.
Unit 4
E-Filing and E-provisions
There is a different category of taxpayer viz. Individual, HUF, Firm, LLP, Company, Trust and AOP/BOI. Due Date is different according to audit or non-audit case of such categories as defined in section 139(1)
Last Date of Income Tax Return Filing for AY 2021-22 (Non-Audit Cases)
- The common due date of filing the Income Tax Return by Assessee whose Books of Account is not required to be audited is 31st July 2021. The revised due date is 31st December 2021
- CBDT: “The due date of furnishing of Return of Income for the Assessment Year 2021-22, which was 31st July, 2021 under sub-section (1) of section 139 of the Act, as extended to 30th September, 2021 vide Circular No.9/2021 dated 20.05.2021, is hereby further extended to 31st December, 2021”
Filing Income Tax Return Due Date for AY 2021-22 (Audit Cases)
- The general due date for filing the Income Tax Return for the audit cases is 31st October 2021. The CBDT has again extended the due date till 15th March 2022.
Due Dates for Tax Audit Report (3CA-3CD/3CB-3CD)
- The due date for filing of Tax Audit Report for all categories of assessees whose account are required to be audited extended till 15th February 2022 via the general circular no.1/2022.
Revised & Belated ITR Due Dates for AY 2021-22
- The due date for filing a revised and belated income tax return for AY 2021-22 has revised by CBDT till 31st March 2022.
- “The due date of furnishing of belated/revised Return of Income for the Assessment Year 2021-22, which is 31st December, 2021 under sub-section (4)/sub-section (5) of section 139 of the Act, as extended to 31st January, 2022, vide Circular No.9/2021 dated 20.05.2021, is hereby further extended to 31st March, 2022”
The income tax department notified the taxpayers for late filing of tax returns for A.Y. 2021-22, along with a penalty of INR 5000 However, if the taxpayer’s total income does not exceed Rs 5 lakh, then the maximum penalty levied for delay will not exceed Rs 1000.
Last Date of Income Tax Return Filing for AY 2021-22
(Assessee who are required to furnish report under sec 92E)
- The due date of filing the Income Tax Return by Assessee who are required to furnish a report under sec 92E is 30th November 2021. The govt has extended the last date till 15th March 2022.
- “The due date of furnishing Report from an Accountant by persons entering into international transaction or specified domestic transaction under section 92E of the Act for the Previous Year 2020-21, which is 31st October, 2021, as extended to 30th November, 2021 vide Circular No.9/2021 dated 20.05.2021, is hereby further extended to 15th February 2022.
Advance Income Taxes Filing Due Dates FY 2020-21
- If the tax liability is more than Rs 10,000 in a financial year then advance tax needs to be paid by the assessee.
- 15th June (15%) | 15th Sept. (45%) | 15th Dec. (75%) | 15th March (100%)
- The assessee who are covered under section 44AD and 44ADA (i.e., Presumptive Income), are also required to pay the advance tax on or before the 15th march of the previous year. However, any tax paid till 31st March will be treated as Advance Tax.
E-FILING OF INCOME TAX RETURNs AND FORMS USED
- To begin filing your income tax returns online, go to https://incometaxindiaefiling.gov.in and create your e-filing account. Your PAN will be your login ID
- Log in using your PAN and password.
- It is mandatory to link Aadhaar with your E-filing Account. The same has to be done by choosing the option of “Link Aadhaar” under the Profile Settings tab. Details including name as per Aadhaar card, Aadhaar number etc. are to be filled to conclude the linking process.
- Open Form 26AS under the Quick Link menu. Form 26AS is a summary of the taxes you have paid over the financial year. It will include TDS, Advance Tax and Self-Assessment Tax
- Download the correct ITR form or Income Tax Return form (check the table at the end of the article to choose the correct ITR form)
- Download the Excel utility of the ITR and fill in all the details:
- Name
- PAN
- Address
- Date of birth
- Email ID
- Mobile number
- Choose whether original or revised return
- Other taxable income
- Investments
- Taxes deducted
- Bank details
- Click on Validate button on all the sheets
- Once validated, click on Calculate Tax
- Pay any tax that may be payable and provide the challan details in the return form
- Click on Generate XML and save the XML file on your desktop
- Go to your account on the IT website and click on Upload Return. Fill in the ITR form, name, assessment year and upload the XML file. If you have a digital signature, then upload that, too
- Click Submit. You will get an Acknowledgement. Take a print out of this
- If you provided a digital signature, your income tax return filing process is complete
- If you did not use a digital signature, then you will receive an ITR-V form, which is an acknowledgement-plus-verification. Print it out, sign in blue ink and post it to the Income Tax Department - CPC, Post Bag No - 1, Electronic City Post Office, Bengaluru - 560100 within 120 days of e-filing. You will get an acknowledgement of receipt of ITR-V by email and SMS.
FORMS USED IN ITR FORM
In total, there are almost 9 types of ITR forms available for a tax payer to file his taxes. However, only the following forms are to be taken into consideration by individuals when filing returns as per the Central Board of Direct Taxes in India:
- ITR-1
- ITR-2
- ITR-2A
- ITR-3
- ITR-4
- ITR-4S
The following income tax return forms are applicable only for companies and firms:
- ITR-5
- ITR-6
- ITR-7
ITR-1
Also known as the Sahaj form, this income tax return form is to be filed solely by an individual taxpayer. Any other assessee liable to pay tax, is not eligible to avail of this form for filing their returns. This form is applicable for the following people:
- A person who earns his income via salary or through other means such as pension
- A person who earns his livelihood from a single housing property
- An individual who has no income from no other business or who have no income from the sale of any assets i.e., capital gains
- Individuals who do not own any assets or property in countries apart from India
- An individual who has no source of income from any country outside India
- A person whose income from agriculture is below Rs. 5,000
- A person whose source of income is from various investments or sources like investments, schemes or fixed deposits etc.
- Individuals who have not earned income from any windfall such as lotteries, horse racing etc.
- People who want to accumulate their spouses or underage child’s income with their own, as long as the income to be clubbed is in accordance with the criteria mentioned above.
ITR-2A
Introduced in the assessment year 2015-16, The ITR-2A form is a new income tax return form. This form can be used by a Hindu Undivided Family (HUF) or an individual taxpayer. The ITR-2A form is applicable for the following people:
- People whose source of income i through salary or through means such as pension
- People who are also earning income from more than one housing property
- A person who has no income from any other business or who have no income from the sale of any assets i.e., capital gains
- People who tend to earn income from different investments or sources such as Fixed Deposits, Investments, Shares etc.
- A person who does not own any property or assets in countries other than India
- A person who does not have a source of income from any country outside India
- A person whose income from agriculture is below Rs 5,000
- Individuals who have not earned income from any windfall such as lotteries or horse racing
ITR-2
The ITR-2 Form is a type of ITR form which is generally used by individuals who have accrued income through the sale of assets or property. Also, this form is useful for individuals who earn income from countries outside India. In most cases, individuals or Hindu Undivided Families (HUF) can avail of this form to file their IT returns. This form is applicable for the following persons:
- People who earn income through salary or through means such as pension
- A person whose source of income is through the sale of assets or property in India i.e., capital gains
- A person who tends to earn income from more than one housing property
- People who don’t earn money from any business venture
- A person who owns assets in countries outside of India
- People who earn income from countries outside of India
- A person whose income from agriculture is above Rs 5,000
- A person who gets his income from any windfall like lotteries or horse racing
ITR-3
The ITR-3 Form is useful for an individual taxpayer or a Hindu Undivided Family, who solely operate as a partner in a firm but who do not conduct any business under the firm. This is also applicable for individuals who do not earn any income from the business conducted by the firm. This form is usually filed by those taxpayers whose taxable income earned from business is only in the form of the following:
- Salary
- Commission
- Bonus
- Interest
- Remuneration
ITR-4
This type of ITR form is useful for those individuals who conduct a business or who earn income through a profession. This form is applicable for all types of businesses, undertaking or profession, without any limit on the income earned. Taxpayers can also club any income they receive from windfalls, speculation, salaries, lotteries, housing properties etc., along with the income earned from their business. An individual with any profession, right from shopkeepers, doctors or designers to agents, retailers and contractors, is eligible to file their ITR using this form.
ITR-4S
Also known as Sugam form, the ITR-4S form can be used by any individual or Hindu Undivided Family (HUF) for filing their income tax returns. This form is applicable for the following persons:
- Individuals who earn income from any business
- Individuals who earn income from a single housing property
- Individuals who do not earn income through the sale of assets or property in India i.e.: capital gains
- Individuals whose income from agriculture is below Rs 5,000
- Individuals who do not own any assets or property in countries other than India
- Individuals who do not earn income from any country outside India
This form is useful in special circumstances and is applicable to businesses where any income earned is based on a presumptive method of calculation.
ITR-5
The ITR-5 form is used only by the following bodies to file income tax returns:
- Firms
- Limited Liability Partnerships (LLPs)
- Body of Individuals (BOIs)
- Association of Persons (AOPs)
- Co-operative Societies
- Artificial Judicial Persons
- Local Authorities
ITR-6
Except those companies or organisations that claim tax exemption as per Section 11, the ITR-6 form is used only by all companies. Organisations that can claim tax exemptions as per Section 11 are organisations in which the income received is accumulated from the property used for the purpose of religion or charity. This particular income tax return form is only available to be filed online.
ITR-7
Those individuals or companies that are required to submit their returns under the following sections are required to file their income tax returns through ITR-7:
- Section 139(4A) - Under this section, returns can be filed by individuals who receive income from any property that is held for the purpose of charity or religion in the form of a trust or legal obligation
- Section 139(4B) - Under this section, returns are to be filed by political parties provided their total income earned is above the non-taxable limit
- Section 139(4C) - Under this section, returns are to be filed by the following entities:
- Any institution or association mentioned under Section 10(23A)
- Any association involved with scientific research
- Any institution mentioned in Section 10(23B)
- Any news agency
- Any fund, medical institution or educational institution
- Section 139(4D) - Under this section, returns are to be filed by entities such as colleges, universities or any other such institution wherein income returns or loss are not required to be provided in accordance with other provisions outlined in this section.
Advance Payment of Tax refers to the liability to pay Income Tax for income earned during the same Financial Year. In general, taxpayers are required to pay tax only for the income of the preceding year. However, if the tax payable is in excess of ten thousand rupees, the tax should be remitted to the government before the due date mentioned in the Act. The purpose of incorporating Advance Tax provisions in the Act is to ensure that revenue reaches the Government without delay.
Liability for payment of advance tax (Section 207)
(1) Tax shall be payable in advance during any financial year, in accordance with the provisions of sections 208 to 219 (both inclusive), in respect of the total income of the assessee which would be chargeable to tax for the assessment year immediately following that financial year, such income being hereafter in this Chapter referred to as ―current income.
(2) The provisions of sub-section (1) shall not apply to an individual resident in India, who—
(a) does not have any income chargeable under the head ―Profits and gains of business or profession; and
(b) is of the age of sixty years or more at any time during the previous year.
Conditions of liability to pay advance tax (Section 208)
Advance tax shall be payable during a financial year in every case where the amount of such tax payable by the assessee during that year, as computed in accordance with the provisions of this Chapter, is ten thousand rupees or more.
Computation of advance tax (Section 209)
(1) The amount of advance tax payable by an assessee in the financial year shall, subject to the provisions of sub-sections (2) and (3), be computed as follows, namely: —
(a) where the calculation is made by the assessee for the purposes of payment of advance tax under sub-section (1) or sub-section (2) or sub-section (5) or sub-section (6) of section 210, he shall first estimate his current income and income-tax thereon shall be calculated at the rates in force in the financial year;
(b) where the calculation is made by the Assessing Officer for the purpose of making an order under sub-section (3) of section 210, the total income of the latest previous year in respect of which the assessee has been assessed by way of regular assessment or the total income returned by the assessee in any return of income furnished by him for any subsequent previous year, whichever is higher, shall be taken and income-tax thereon shall be calculated at the rates in force in the financial year;
(c) where the calculation is made by the Assessing Officer for the purpose of making an amended order under sub-section (4) of section 210, the total income declared in the return furnished by the assessee for the later previous year, or, as the case may be, the total income in respect of which the regular assessment, referred to in that sub-section has been made, shall be taken and income-tax thereon shall be calculated at the rates in force in the financial year;
(d) the income-tax calculated under clause (a) or clause (b) or clause (c) shall, in each case, be reduced by the amount of income-tax which would be 1[deductible or collectible at source] during the said financial year under any provision of this Act from any income (as computed before allowing any deductions admissible under this Act) which has been taken into account in computing the current income or, as the case may be, the total income aforesaid; and the amount of income-tax as so reduced shall be the advance tax payable.
Tax deducted at source
1. Taxes Deducted / Collected or Paid as Advance Tax in the Previous Year [Section 190]
Although regular assessment in respect of any income is to be made in a later assessment year, but tax on such income is payable in the previous year itself in the following manner:
- Tax deducted at source (TDS): In case of certain incomes/payments, tax is deducted at source by the payer at the prescribed rate at the time of accrual or payment of such incomes to the payee.
- Tax collected at source (TCS): In certain cases, tax is collected at source by the seller from buyer or a person from his licensee/lessee, etc. at the time of debiting the amount to account of the buyer/licensee/lessee or the receipt of payment whichever is earlier.
- Advance tax: The assessee, in certain cases, is under an obligation to pay tax in advance in certain instalments.
2. Procedure and Scheme of TDS:
Under the scheme of tax deduction at source (TDS), persons responsible for making payment of income, covered by the scheme, are responsible to deduct tax at source and deposit the same to the Government’s treasury within the stipulated time. The recipient of income—though he gets only the net amount (after deduction of tax at source)—is liable to tax on the gross amount and the amount deducted at source is adjusted against his final tax liability.
3. Assessee to be Deemed as Assessee in TDS Default [Section 201(1)]
Where any person, including the principal officer of a company, —
- Who is required to deduct any sum in accordance with the provisions of this Act; or?
- Referred to in section 192(1A), being an employer,
— does not deduct, or
— does not pay, or
— after so deducting fails to pay,
The whole or any part of the tax, as required by or under this Act, then, such person, be deemed to be an assessee in default in respect of such tax and hence shall be liable to penalty under section 221.
4. Penalty payable under section 221 when the payer is an assessee deemed to be in TDS Default under section 201
When an assessee is deemed to be in default in making a payment of tax, he shall, in addition to the amount of arrears, be liable to pay by way of penalty as the Assessing Officer may direct, and in the case of a continuing default, such further amount or amounts as the Assessing Officer may, from time to time, direct, so, however, that the total amount of penalty does not exceed the amount of tax in arrears.
5. Interest for Late Deposit of TDS [Section 201(1A)]
As per section 201(1A), without prejudice to the provisions of section 201(1), if any such person, principal officer or company does not deduct whole or part of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest at the rate given in the table below:
Period of Default | Rate of Interest |
(a) From the date the tax was deductible to the date on which such tax is deducted [Section 201(1A) (i)] | 1% p.m. Or part of the month on the amount of such tax. |
(b) From the date on which such tax is deducted to the date on which such tax is actually paid [Section 201(1A) (ii)] | 1.5% p.m. Or part of the month on the amount of such tax. |
6. Certificate for TDS [Section 203 and Rule 31]
Every person deducting tax in accordance with the provisions of TDS shall within such period as may be prescribed from the time of credit or payment of the sum, furnish to the person to whose account such credit is given or to whom such payment is made, a certificate to the effect that tax has been deducted, the rate at which the tax has been deducted and such other particulars as may be prescribed. Further, as per section 203(2), every person, being an employer, referred to in section 192(1A) shall, within such period, furnish to the person in respect of whose income such payment of tax has been made, a certificate to the effect that tax has been paid to the Central Government, and specify the amount so paid, the rate at which the tax has been paid and such other particulars as may be prescribed. The above provisions shall also be applicable in the case of an employer who has paid the tax on the non-monetary perquisites provided to the employee. Failure without reasonable cause to furnish a certificate as required by this section attracts penalty under section 272A (2) read with section 273B. Deliberately furnishing a false certificate, is an offence under section 277 and abatement of that offence is punishable under section 278.
7. Time of TDS Payment
- (i) Tax deducted (TDS) by an office of the Government:
- On the same day where the tax is paid without production of an income-tax challan; and
- On or before seven days from the end of the month in which the deduction is made, where tax is paid accompanied by an income-tax challan.
Ii. Tax deducted (TDS) In any other case
- On or before 30th day of April where the income or amount is credited or paid in the month of March; and
- In any other case, on or before seven days from the end of the month in which the deduction is made.
Iii. Special cases where TDS Payment can be Deposited Quarterly
In the following cases, the Assessing Officer may with the prior approval of the Joint Commissioner, allow payment of TDS quarterly as under:
| Quarter of the financial year ended on | Date for quarterly payment |
(i) Income chargeable under the head "Salaries" under section 192 | 30th June | 7th July |
(ii) any income by way of interest other than income by way of interest on securities under section 194A | 30th September | 7th October |
(iii) any income by way of insurance commission under section 194D | 31st December | 7th January |
(iv) any income by way of commission or brokerage referred to in section 194H under section 192 | 31st March | 30th April |
8. Forms and Time Limit of issue of TDS Certificate [Rule 31]
The person responsible for deducting the TDS is required to issue a certificate in the prescribed forms to the employee/payee on account of tax deducted at source.
(A) Prescribed forms for TDS Certificate [Rule 31(1)]
(i) For TDS on salary | Form No. 16. Form No. 12BA (statement of the value of perquisites and profit in lieu of salary). |
(ii) For TDS on other income | Form No. 16A |
(iii) For TDS on purchase of immovable property as per section 194-IA | Form No. 16B. |
(iv) For TDS under section 194B | Form No. 16C |
(B) What should TDS Certificates Specify? [Rule 31(2)]
The certificates in Form 16 or 16A shall specify: —
- Valid permanent account number (PAN) of the deductee;
- Valid tax deduction and collection account number (TAN) of the diductor;
- Book identification number or numbers where deposit of tax deducted is without production of challan in case of an office of the Government;
- Challan identification number or numbers in case of payment through bank.
- Receipt number of the relevant quarterly statement of tax deducted at source which is furnished in accordance with the provisions of rule 31A;
- Receipt numbers of all the relevant quarterly statements in case the statement referred to in clause (i) is for tax deducted at source from income chargeable under the head “Salaries”.
Income tax assessment
Every assessee, who earns income beyond the basic exemption limit in a Financial Year (FY), must file a statement containing details of his income, deductions, and other related information. This is called the Income Tax Return (ITR). Once you as a taxpayer file the income returns, the Income Tax Department will process it. There are occasions where, based on set parameters by the Central Board of Direct Taxes (CBDT), the return of an assessee gets picked for an assessment. Different types of assessment are-
(1) Self-Assessment (Section 140)
This is the type of income tax assessment in which the assessee calculates the tax themself, usually accompanied by payment of the amount they believe is due. After taking TDS and subtracting advance tax paid, tax payable is required to be given under section 139, section 142, section 148, or section 153A.
(2) Summary Assessment [u/s 143(1)]
The assessment under section 143(1) is similar to the initial review of a tax return. The taxpayer receives an intimation u/s 143(1) from the IRS under this section. The department will send you a comparative income tax calculation. The overall income or loss incurred is computed in the income tax assessment.
(3) Scrutiny Assessment [u/s 143(3)]
Scrutiny assessment is the assessment of a return filed by an assessee by providing an opportunity for the assessee to support the declared income and expenses, as well as claims of deductions, losses, exemptions, and so on, in the return using proof. The committee manages it using a single work plan. The committee undertakes specific work, as well as forming informal panels (for in-depth activities) or working groups. The assessing officer is given the chance to conduct an investigation in order to determine if the assessee correctly reported his or her income in the return. The claims for deductions, exemptions, and other benefits are legal and factually correct. In case of any omissions, contradictions, inaccuracies, or other errors, the assessing officer prepares his or her own assessment for the assessee, taking into account all relevant circumstances.
(4) Best Judgment Assessment [u/s 144]
The term ‘best judgement assessment’ refers to the assessing officer’s opinion or calculation of the assessee’s income in the context of income tax law. In the situation of best judgement assessment, the evaluating officer will make the decision based on the best reasoning, i.e., they will not be dishonest. The assessee will not be dishonest in his or her assessment, nor will he or she be hostile to the officer.
(5) Protective Assessment
This is a type of assessment that focuses on those that are made to ‘protect’ the revenue’s interests. The income tax legislation, however, has no provision for the imposition of income tax on anyone other than the person to whom it is due. It is open to the authorities to undertake a protective or alternative assessment if it is unclear who among a few probable persons is actually liable to pay the tax. The authorities just make an assessment and keep it on paper until the situation is resolved when they make a protective assessment. A protective order of assessment, but not one of penalty, can be issued.
(6) Re-Assessment (or) Income Escaping Assessment [u/s 147]
If the assessing officer has reason to think that income liable to tax has escaped assessment for any assessment year, they will conduct an income escaping assessment under Section 147. Moreover, it gives them the authority to reassess or re-compute income, turnover, and other figures that have escaped their notice. The goal of conducting an assessment under Section 147 is to bring any income that escaped assessment in the original assessment into the tax net.
(7) Assessment in Case of Search u/s 153A
The assessing officer will do the following in this type of income tax assessment:
- Giving such a person notice requires furnishing it within the time frame mentioned in the notice. Clause (b) referred to the income return for each of the six assessment years, which is confirmed in the prescribed format. Setting forth such other particulars as may be prescribed, and the provisions of this Act shall apply as if such return were a return required to be furnished under Section 139, to the extent possible;
- The assessor re-assesses the total income of the six assessment years immediately preceding the assessment year relevant to the previous year in which such search or requisition is made.
It is extremely difficult for the income tax (IT) department of India to track the high-value transactions made by individuals. Annual Information Return helps the IT department track the details of transactions worth Rs.50,000 and above.
To monitor transactions of high values, the income tax law has now framed a concept of Annual Information Return (AIR). This will help tax officials to collect information on high value transactions of individuals undertaken in a particular year. Certain entities that are defined below are required to file the statement of transactions by furnishing details of transactions or any other account maintained by them. The information provided allows income tax department to keep a track of the transactions these entities undertake.
The basic provisions of the Annual Information Return are as follows:
- Filers are to furnish details of any financial transactions undertaken by them in a financial year with the income tax authorities. Filers or entities can include an assessee or a prescribed person if the entity is an office of the government, public bodies and associations.
- The transactions will have an aggregate value of Rs 50,000 and above.
- The rules for filing are yet to be notified but those who fail to file transactions with an aggregate higher than Rs 50,000 will be penalized under section 271FA and penalties can range up to Rs 100 per day of default.
- Section 285BA (5) states that the tax authorities will give a period of notice to those who have not filed to complete the filing process in a span of no more than 30 days from date of service of notice
- If defaulters have still not filed transactions after tax authorities have given a notice of 30 days, the fine can go up to Rs 500 per day of default effective immediately from date of expiry of notice
- If an entity comes across inaccuracy after filing the transaction report, they can rectify it within a span of 10 days from date of filing. If the inaccuracy is detected by the tax authorities, they can issue a notice period of 30 days to rectify the transaction reports starting from date of notice
- Failure to rectify renders statement invalid and entity will face consequences akin to not having filed the transaction report. Penalties for failure to rectify inaccuracies resulting from faire to comply with due diligence requirements or deliberate inaccuracy or failure in rectifying inaccuracies within prescribed time limits can attract a penalty to the tune of Rs 50,000.
Verification of AIR
When an entity has completed preparing an AIR, they can proceed to check the validity of the AIR before uploading it. Validation of AIR is done by using the AIR File Validation Utility or AIR-FVU. The AIR-FVU is available on the NSDL website and is also available at the TIN-FCs or TIN facilitation centres. The AIR-FVU can be downloaded off the NSDL website and be used to run AIR files through. The installation of the AIR-FVU will be successful only if the computer has Java installed on it. The details on how to use the AIR-FVU and its navigation can be found within the setup readme text or by clicking on the readme icon. When the AIR is run through the tool it will display the status of the file. If there are any errors relating to format of AIR then the AIR-FVU will throw up an error file with the error code and description of the error. The filers then have to keep resolving any errors that are displayed till the file returns error free. When no more errors are present the AIR-FVU will display a “File Validation Successful” message. Upon each run of the AIR-FVU it will generate a file with the same name as the report that was run through it but it will have a different extension. The extension of the files will have FVU attached to it. This file which has no errors will be the one that will need to be furnished
For keeping a watch on the high-value transactions done by the taxpayers, the Income Tax Act has framed a new concept to furnish a Statement of Financial Transactions or reportable account, previously also known as Annual Information Return (AIR).
Section 285BA of the Income-Tax Act requires specified reporting persons to furnish this statement. Rule 114E of the Income Tax Rules 1962, specifies that this statement must be furnished in Form No. 61A.
The specified financial transactions referred above are of the following kinds:
- Sale, purchase or exchange of goods, right, property, or interest in any property.
- Works contract.
- Providing services.
- Any investment made or expenditure incurred.
- Accepting any deposit or taking any loan.
It is important to note that CBDT can recommend different values with respect to different transactions for different persons by considering the nature of the transactions.
Due date to file form 61A
Statement of Financial Transactions needs to be furnished within 31st May of next year for every previous financial year where the transaction occurs.
A penalty under Section 271FA of Rs 500 per day shall be levied for the initial failure to file within the due date.
The authorities would issue a notice to such an assessee, demanding the assessee to submit the form within 30 days from the issuance of such notice.
In case such assessee continues to be the assessee in default by not answering to such notice, a penalty would be levied on the assessee that would amount to Rs 1000 per day of such default. This penalty would be calculated from the expiry of the period as stipulated in such notice.
Who is required to furnish Form 61A?
- A banking company, Cooperative bank
- A non-banking financial company (NBFC)
- Any institution issuing credit card
- Any person covered under audit under section 44AB iof the Income Tax Act.
- Post offices
- A Nidhi referred to in section 406 of the Companies Act 2013
- A company issuing bonds or debentures
- A company issuing shares
- A mutual fund institution
- A company listed on the recognised stock exchange
- A trustee of a mutual fund or such other person as authorised by the trustee
- Authorise dealer, offshore banking unit, money changer or any other person defined in FEMA
- Inspector general or sub-registrar appointed under Registration act, 1908.
References:
1. Singhanai V.K.: Student’s Guide to Income Tax; Taxmann, Delhi.
2. Prasad, Bhagwati: Income Tax Law & practice: Wiley Publication, New Delhi.
3. Dinker Pagare: Income Tax Law and Practice; Sultan Chand & Sons, New Delhi.
4. Girish Ahuja and Ravi Gupta; Systematic approach to income tax; Sahitya Bhawan Publications, New Delhi.
5. Chandra Mahesh and Shukla D.C.: Income Tax Law and Practice; Pragati Publications, New Delhi.