Karniti Part: 47 - “Why & for whom Income Tax return Filing before 31st July is mandatory?”
Arjuna (Fictional Character): Krishna, 31st July 2014 is near and many taxpayers are hurrying up for filing income tax returns. What are the points to be considered before filing income tax returns?
Krishna (Fictional Character): Arjuna, for the financial year 2013-14, taxpayers who are not liable for tax audit under Income Tax Act, i.e. Salaried persons, pensioners, businessmen having turnover upto Rs.1 crore, professionals having gross receipts upto Rs.25 lakhs, persons having income from house property and other sources should file return upto 31st July 2014. There are many intricacies which should be followed by taxpayers.
Arjuna: Krishna, How can the taxpayers file returns?
Krishna: Arjuna, return filing has become very easy. The taxpayer should get registered on the website of the Income Tax Department www.incometaxindiaefiling.gov.in through valid mobile number and email. The taxpayer should fill the e-return form available on the website and upload the same.
After uploading the return, signed copy of the acknowledgement is to be sent to CPC, Bangalore within 120 days. Otherwise a digital signature option is also available. E-filing of returns is compulsory for assessees having income above Rs.5 lakhs. Assessees having income below Rs.5 lakhs have the option of either efiling the return or manually submitting it to the local income tax department.
Arjuna: Krishna, what are the major changes in the forms of return to be filed for financial year 2013-14 which needs to be take care off by these asseseees?
Krishna: Arjuna, the taxpayer should select proper form of return applicable to him based on his sources of income. Some of the major changes for year 2013-14 are as follows :
1. All salaries taxpayers will now have to give details of LTA (Leave Travel Allowance) and HRA (House Rent Allowance), other allowances and perquisites separately.
2. If there is more than one owner of the house then while mentioning details in the schedule of Income from House Property the percentage of co-owners alongwith with their PAN will have to be given.
3. Now onwards Income Tax Refund will be given directly in the bank account of the taxpayer through ECS. Therefore at most care should be taken while mentioning Bank Account Number and IFSC Code in the income tax returns.
We have discussed this in earlier conversations also, same may be referred.
Arjuna: Krishna, What care should be taken by salaried persons while filing income tax returns?
Krishna: Arjuna, Salaried persons unnecessarily take tension. They should not really worry as Form 16 issued by the employer contains all the details of income, deductions, tax deducted, etc. They should just confirm that Form 16 and Form 26AS match and file the return accordingly. The real problem arises only when any income other than salary or any deduction has not been included in Form 16 such as interest on saving bank account, FDR, rent from house property, capital gains, LIC payments, etc has not been included in Form 16. To avoid last minute rush and additional payment of tax, complete information of income and deductions should be given to the employer beforehand, so that proper TDS will be deducted and there will be less difficulty while filing returns.
Arjuna: Krishna, please explain briefly what care should be taken by businessmen while filing income tax returns?
Krishna: Arjuna, you asked a very complicated question as every businessman has to prepare Profit and loss account and Balance Sheet as per the nature of his business or profession. The businessman may determine his profit/loss by comparing current year’s actual financials with the previous years. Further as on 31st March, depreciation, stock, accounts of debtors and creditors, etc. have to be accounted and reconciled. Also, the figures have to be matched with other tax returns like vat, service tax, etc. Form 26AS is also required to be matched. The most important thing is that it is mandatory for businessmen having turnover upto 1 crore to show minimum 8% profit, otherwise tax audit provisions will be applicable. And yes, it is very important to file Loss return before 31st July 2014, otherwise loss cannot be carried forward to next year.
Arjuna: Krishna, does this mean that the return needs to file on time?
Krishna: Arjuna, taxpayer may face trouble if the return is not filed in time. Along with interest on tax payable, additional interest for late filing of return u/s 234A will also be required to be paid. Loss cannot be carried forward as given above. Further, if any mistake is noticed a belated return cannot be revised. Also, in case of refund interest will not be received for the period of delay. It means interest will be received from the date of filing of return. This will result in hardship to the taxpayer. Apart from this, if return is filed after 31st March 2015, penalty of Rs.5000 may be levied. Return should be filed every year as efiling of return is permissible for only two previous years due to which there can be technical difficulties. Many taxpayers file returns of previous years all at once at the time of applying for bank loan. This may create problems in the loan proposal, hence regular and timely filing of returns is beneficial.
Arjuna: Krishna, Why many taxpayers are so lethargic towards filing of returns?
Krishna: Oh Arjuna, Compliance of simple law is also difficult, be it any law. Like one become restless while waiting at the signal for one minute also. Everyone is desperate for the green signal to come so that we can go and out of this many people break the signal rules and run away. In the same way, inspite of the fact that the taxpayer is aware of the 31st July due date for filing returns since years, there is hurry and rush at the eleventh hour. Due to this, there is stress and return filing becomes burdensome. If proper information regarding income and tax is provided to the department through return, the department also avoids giving trouble by sending notices. Otherwise, legal proceedings between the taxpayer and department initiate which creates problem for everyone. In today’s era of information technology and computerization, it is difficult to find a hideout for tax evaders. The only option available to the taxpayer is timely and correct payment of tax and filing of returns, if wants to live in peace of law.
Dear CACLUBINDIA lovers, your comments please.
Tags Income Tax