Skip to main content

More complications in Filling I-T returns

Until recently, a person didn’t need to file a return if his taxable income was below Rs 2.5 lakh. But this year onwards, it doesn’t solely depend on the taxable income. Now, if the taxpayer has exempted income like long-term capital gains that crosses the basic exemption limit of Rs 2.5 lakh, he needs to file returns mandatorily.

For example, if an individual redeems equity mutual funds (MFs) worth Rs 3 lakh held for over a year and has no other income. The gains from the investment are tax-free. The entire income, therefore, is exempted from tax. But even in such cases, the taxpayer needs to file return mandatorily. “Taxpayers may not be aware of such minor changes in the regulation but these can lead the authorities to issue a notice,” says Kuldip Kumar, partner and leader personal tax, PwC India.

The government latest norms to capture details of your income and assets have made things more tedious. And, a small error or omission of information can prove costly in the future. Linking Aadhaar and PAN is compulsory: On Tuesday (July 4), the Central Board of Direct Taxation issued a notification stating all those who file income tax return need to quote their Aadhaar details or enrolment number compulsorily.

Tax experts say that in June, when the Supreme Court had granted partial relief to those who don’t have an Aadhaar, many thought it’s possible to file returns even if they don’t have an Aadhaar. The apex court had only asked the government not to cancel PAN of those who don’t have an Aadhaar. It was meant only for those who don’t have to file the return.

Such individuals can quote their PAN for financial transactions. “Taxpayers without the Aadhaar number or the enrolment ID will not be able to file their tax returns from July onwards,” Archit Gupta, founder and CEO, Cleartax. Many also feared their PAN would become invalid if not linked to Aadhaar by the end of June. But, that’s not the case. You can still link them by going to the income tax e-filing portal. Change in ITR forms:

To make it easier for individuals to file returns, the government has rationalised ITR forms. The number of forms has been brought down to seven, from the earlier nine this assessment year. “Few ITR forms are merged for simplicity. The ITR-2 form this year replaces three ITR-2, ITR-2A and ITR-3 issued last year,” says Suresh Surana, founder, RSM Astute Consulting Group.

The ITR-1 (Sahaj) this year is just a one-page form that can be used by individuals earning up to ~50 lakh a year and has only salary income, interest income and income from house property. Those who earn over ~50 lakh or own more than one house property, they need to opt for ITR-2 Form. Additional disclosure for highincome earners: Last assessment year, the government introduced a Schedule AL in the ITR for those who earn ~50 lakh or more. These highincome earners had to disclose specified assets and liabilities held at the end of the financial year.

Until last year, the taxpayers were only required to disclose assets such as immovable properties, cash in hand, jewellery, vehicles, and so on. This year, the tax authorities have widened the requirements in the scheduled. These taxpayers now need to also disclose financial assets such as stocks, MF, insurance, etc,. They also need to disclose the address of immovable properties and the description of movable assets. “If an assessee has an interest in a partnership firm, then he needs to provide the PAN of the partnership firm and details of investment in it,” says Gupta. Disclose all kinds of income:
Majority of the individuals are not aware that the interest earned on the money kept in savings bank account attracts tax if it crosses Rs 10,000. But, even if it is below that threshold, it needs to be reported when filing the return. There’s also a misconception that the interest earned on five-year tax-saving fixed deposit (FD) does not attract tax. While the FD helps to save tax during at the investment stage under Section 80C, the interest earned is fully taxable.

Also, while your bank FD is subjected to tax deduction at source (TDS), you still need to pay tax on the interest depending on your income tax slab. Banks deduct only 10 per cent as TDS. If you fall in 20 per cent or 30 per cent tax bracket, you will need to pay the additional tax on the returns accrued on FDs. Cash deposits during demonetisation: During demonetisation, if you had cash deposits of over Rs 2 lakh, you need to report it when filing the return. “You need to provide details of the money deposited and details of bank account such as name, IFSC code and account number.

This is a common requirement across all ITR forms,” says Surana. The authorities already have data from the banks. They would cross-check the details with the data from banks. In case of discrepancies, they can initiate action.Ensure you report this correctly. Change in timelines: You can now revise your return even if you don’t file it by the July 31 deadline. Earlier, a taxpayer could revise return only if he had filed it by the deadline. Say, an individual files tax return in August, past the deadline. He is free to revise returns in case of errors until March 31, 2019.

At the same time, the government has also reduced the time granted to file belated returns from the next assessment year. As of today, the taxpayer can file returns for the financial year 2016-17 until March 31, 2019. Going forward, an individual has to file the return within one assessment year. The returns for 2017-18 has to be filed by March 31, 2019.

Business Standard, New Delhi, 10th July 2017


Popular posts from this blog

Shrinking footprints of foreign banks in India

Shrinking footprints of foreign banks in India Foreign banks are increasingly shrinking their presence in India and are also becoming more conservative than private and public sector counterparts. While many of them have sold some of their businesses in India as part of their global strategy, some are trying to keep their core expertise intact. Others are branching out to newer areas to continue business momentum.For example, HSBC and Barclays Bank in India have got out of the retail business, whereas corporate-focused Standard Chartered Bank is now trying to increase its focus on retail “Building a retail franchise is a huge exercise and takes a long time. You cannot afford to lose it,” said Shashank Joshi, Bank of Tokyo-Mitsubishi UFJ’s India head.According to the Reserve Bank of India (RBI) data, foreign banks’ combined loan book shrunk nearly 10 per cent from Rs 3.78 trillion in fiscal 2015-16 to Rs 3.42 trillion last financial year. The banking industry, which includes foreign banks…

New money laundering norms stump jewellery sector

New money laundering norms stump jewellery sector Dealers with turnover of Rs 2 crore and above covered; industry says threshold too low The central government has notified the money laundering rules for the gems and jewellery sector with immediate effect. Now, any entity deals in precious metals, precious stones, or other high-value goods and has a turnover of Rs 2 crore or more in a financial year will be covered under the Prevention of Money Laundering Act, 2002 (PMLA, 2002). The limit of Rs 2 crore would be calculated on the basis of the previous year’s turnover, said the notification. The directorate general of goods and service tax intelligence has been appointed under the Act. Sources said the government’s move to apply the PMLA to the jewellery sector was a fallout of income-tax raids on jewellers soon after demonetisation last November, when it was found that they sold gold and jewellery at a huge premium and accepted old currency notes as payment. The notification, issued on Augus…

Confusion over branded food GST

Confusion over branded food GST The GST Council's statement over the weekend on applying tax on branded food items has left most of the trade confused.

Even though the Council has not changed the rates on food -0 per cent on unbranded stuff and 5 per cent on brands -many small traders who didn't levy GST earlier said they could come under the 5 per cent slab after the clarification.

While they predicted some increase in consumer prices, large players said they can absorb GST in many ways and keep prices steady.

"Trade is confused and hence on behalf of our chamber, we have asked our members to go ahead and charge 5 per cent GST," said Sushil Sureka, general secretary of the Ahilya Chamber of Commerce and Industry in Indore.

The statement clarifying the application of GST came after some businesses were found deregistering their brands and selling under corporate brand name without paying tax, after the Council exempted unbranded food from the new all-encompassing indirec…