FAQ On Income Tax Return Filing

What is a return of income

ITR stands for Income Tax Return.It is a prescribed form through which the particulars of income earned by a person in a financial year and taxes paid on such income are communicated to the Income-tax Department. It also allows carry -forward of loss and claim refund from income tax department.Different forms of returns of income are prescribed for filing of returns for different Status and Nature of income. These forms can be downloaded from www.incometaxindia.gov.in

What are the forms of return prescribed under the Income-tax Law

Under the Income-tax Law, different forms of returns are prescribed for different classes of taxpayers. The return forms are known as ITR forms (Income Tax Return Forms). The forms of return prescribed under the Income-tax Law for filing of return of income for the assessment year 2017-18 (i.e., financial year 2016-17) are as follows:

What are the different modes of filing the return of income

The Return Form can be filed with the Income-tax Department in any of the following ways, –

(i) by furnishing the return in a paper form;

(ii) by furnishing the return electronically under digital signature;

(iii) by transmitting the data in the return electronically under electronic verification code;

(iv) by transmitting the data in the return electronically and thereafter submitting the verification of the return in ReturnForm ITR-V;

Note

Where the return of income is filed in the manner given at (iv) without digital signature, then the taxpayer should take two printed copies ofForm ITR-V. One copy ofITR-V, duly signed by the taxpayer, is to be sent (within the period specified in this regard, i.e., 120 days) by ordinary post or speed post to “Income-tax Department – CPC, Post Bag No. 1, Electronic City Post Office, Bengalore-560100 (Karnataka). The other copy may be retained by the taxpayer for his record.

Is it necessary to attach any documents along with the return of income

ITR return forms are attachment less forms and, hence, the taxpayer is not required to attach any document (like proof of investment, TDS certificates, etc.) along with the return of income (whether filed manually or filed electronically). However, these documents should be retained by the taxpayer and should be produced before the tax authorities when demanded in situations like assessment, inquiry, etc.

As discussed above, no documents are to be attached along with the return of income, however, in case of a taxpayer who is required to furnish a report of audit under section 10(23C)(iv),10(23C)(v),10(23C)(vi),10(23C)via),10A,10AA,12A(1)(b),44AB,44DA,50B,80-IA,80-IB,80-IC,80-ID,80JJAA,80LA,92E,115JBor115VWor to give a notice undersection 11(2)(a)shall furnish it electronically on or before the date of filing the return of income.

Who can use ITR 1 (SAHAJ)

ReturnForm ITR – 1 (SAHAJ)can be used by an individual whose total income includes:

(1) Income from salary/pension; or

(2) Income from one house property (excluding cases where loss is brought forward from previous years); or

(3) Income from other sources (excluding winnings from lottery and income from race horses, income taxable undersection 115BBDAor Income of the nature referred to insection 115BBE).

Further, in a case where the income of another person like spouse, minor child, etc., is to be clubbed with the income of the taxpayer, this return form can be used only when such income falls in any of the above categories.

ITR Description

ITR 1 (SAHAJ)For Individuals having Income from Salaries, one house property, other sources (Interest etc.) and having total income upto Rs.50 lakh

Who cannot use ITR 1 (SAHAJ)

ReturnForm ITR – 1 (SAHAJ)cannot be used by an individual:

Whose total income for the Assessment year 2018-19exceeds Rs. 50 lakh;

Whose total income for the year includes income from more than one house property.

Whose total income for the year includes income from winnings from lottery or income from race horses or income taxable undersection 115BBDA.

Whose total income for the year includes income chargeable to tax under the head “Capital Gains”.

Whose total income for the year includes income of the nature refferred to insection 115BBE.

Whose total income for the year includes agricultural income of more than Rs. 5,000.

Whose total income for the year includes income from business or profession.

Whose total income for the year includes loss under the head “Income from other sources”.

Who has claimed relief undersection 90and/or91.

Any Resident having any assets (including financial interest in any entity) located outside India or signing authority in any account located outside India.

Any resident having income from any source outside India.

Who can use ITR 2

For A.Y 2018-19, ITR 2 can be used by an individual and Hindu Undivided Family who is not eligible to file ITR-1 Sahaj and not having income from profit and gains of business or profession and also not having income from Profits and gains of business or profession in the nature of interest, salary, bonus, commission or remuneration, by whatever name called, due to, or received by him from a partnership firm.

Further, in case where the income of another person like spouse, minor child, etc., is to be clubbed with the income of the taxpayer, this Return Form can be used if income to be clubbed falls in any of the above categories.

Who cannot use ITR 2

For A.Y 2018-19,Form ITR – 2cannot be used by an individual and HUF whose total income for the year includes income from profit and gains from business or profession and also having income in the nature of interest, salary, bonus, commission or remuneration, by whatever name called, due to, or received by him from partnership firm

Who can use ITR 3

For A.Y 2018-19,Form ITR 3can be used by an individual or a Hindu Undivided Family who is having income from profits and gains of business or profession. However for the A.Y 2018-19, ITR-3 is also required to be filed by a person whose income is chargeable to tax under the head Profits and gains ofbusiness or profession is in the nature of interest, salary, bonus, commission or remuneration, by whatever name called, due to, or received by him from a partnership firm.

Who cannot use ITR 3

Form ITR 3cannot be used by any person other than an individual or a HUF. Further, an individual or a HUF not having income from business or profession cannot useITR 3.

Who can use ITR 4 (SUGAM)

Form ITR 4 (SUGAM)can be used by an Individual/HUF/Firm (Other than LLP)whose total income for the year includes:

(a) Business income computed as per the provisions ofsection 44ADor44AE; or;

(b) Income from Profession as computed as per the provisions of44ADA; or

(c) Income from salary/pension; or

(d) Income from one house property (excluding cases where loss is brought forward from previous years); or

(e) Income from other sources (excluding winnings from lottery and income from race horses).

Further, in a case where the income of another person like spouse, minor child, etc., is to be clubbed with the income of the taxpayer, this return form can be used where income to be clubbed falls in any of the above categories.

Who cannot use ITR 4 (SUGAM)

Form ITR 4 (SUGAM)cannot be used by an individual/HUF:

Whose total income for the year includes income from more than one house property.

Whose total income for the year includes income from winnings from lottery or income from race horses.

Whose total income for the year includes income chargeable to tax under the head Capital Gains.

Whose total Income for the year includes income taxable undersection 115BBDA.

Whose total income for the year includes income of the nature referred to insection 115BBE.

Any resident having income from any source outside India.

Whose total income for the year includes agriculturalincome of more than Rs. 5,000.

Whose total income for the year includes income from speculative business and other special incomes.

Whose total income for the year includes income from agency business or income in the nature of commission or brokerage.

Who claims relief undersection 90,90Aand/orsection 91

Who is a resident and ordinarily resident and has any assets (including financial interest in any entity) located outside India or signing authority in any account located outside India.

In case of a taxpayer who is engaged in any business eligible for the presumptive taxation scheme ofsection 44ADorsection 44AEorsection 44ADAbut he does not opt for the presumptive taxation scheme, then such a taxpayer has to maintain the books of account of the business as per the provisions ofsection 44AAand has to get these accounts audited. In such a case he cannot useITR 4.

Who can use ITR 5

Form ITR 5can be used by a person being a firm, LLP, AOP, BOI, artificial juridical person , cooperative society and local authority.

Who cannot use ITR 5

Form ITR 5cannot be used by, a person who is required to file the return of income undersection 139(4A)or139(4B)or139(4C)or139(4D)orsection 139(4E)orsection 139(4F)(i.e., trusts, political party, institutions, colleges, investment fund, etc.).

Who can use ITR 6

Form ITR 6can be used by a company, other than a company claiming exemption undersection 11(charitable/religious trust can claim exemption undersection 11).

Who cannot use ITR 6

Form ITR 6cannot be used by a company claiming exemption undersection 11(charitable/religious trust can claim exemption undersection 11).

Who can use ITR 7

Form ITR 7can be used by persons including companies who are required to furnish return undersection 139(4A)orsection 139(4B)orsection 139(4C)orsection 139(4D)orsection 139(4E)orsection 139(4f)(i.e., trusts, political party, institutions, colleges, investment fund, etc.).

Who cannot use ITR 7

Form ITR 7cannot be used by a person who is not required to furnish return undersection 139(4A)orsection 139(4B)orsection 139(4C)orsection 139(4D)orsection 139(4E)orsection 139(4F)(i.e., trusts, political party, institutions, colleges, investment fund, etc.).

How to file the return of income electronically

Income-tax Department has established an independent portal for e-filing of return of income. The taxpayers can log on to www.incometaxindiaefiling.gov.in for e-filing the return of income.

What is e-filing utility provided by the Income-tax Department

The Income-tax Department has provided free e-filing utility (i.e., software) to generate e-return and furnishing of return electronically. The e-filing utility provided by Department is simple, easy to use and also contains instructions on how to use it. By using the e-filing utility, the taxpayers can easily file their returns of income. Utility can be downloaded from www.incometaxindiaefiling.gov.in

Is there any e-filing help desk established by the Income-tax Department

In case of queries on e-filing of return, the taxpayer can contact 1800 4250 0025.

What is the difference between e-filing and e-payment

E-payment is the process of electronic payment of tax (i.e., by net banking or SBIs debit/credit card) and e-filing is the process of electronically furnishing of return of income. Using the e-payment and e-filing facility, the taxpayer can discharge his obligations of payment of tax and furnishing of return easily and quickly.

Will I be put to any disadvantage by filing my return

No, on the contrary by not filing your return inspite of having taxable income, you will be liable to the penalty and prosecution provisions under the Income-tax Act.

What are the benefits of filing my return of income

Filing of return is your duty and earns for you the dignity of consciously contributing to the development of the nation. Apart from this, your income-tax returns validate your credit worthiness before financial institutions and make it possible for you to access many financial benefits such as bank credits, etc.

What are the benefits of e-filing the return of income

E-filing can be done from any place at any time and it saves time and efforts. It is simple, easy and faster. The e-filed returns are generally processed faster as compared to returns filed manually.

Is it necessary to file return of income when I do not have any positive income

If you have sustained a loss in the financial year, which you propose to carry forward to the subsequent year for adjustment against subsequent year(s) positive income, you must make a claim of loss by filing your return before the due date.

If I fail to furnish my return within the due date, will I be fined or penalized

Yes, if you have not furnished the return within the due date, you will have to pay interest on tax due. If the return is not filed up to the end of the assessment year, in addition to interest, a penalty of Rs. 5,000 shall be levied undersection 271F. [No penaltysection 271Fwould be levied w.e.f. Assessment Year 2018-19]

Note: W.e.f. assessment year 2018-19, fee as persection 234Fis required to be paid if return is furnished after due date. Fee for default in furnishing return of income will be as follows:

1. Rs. 5000 if return is furnished on or before the 31st day of December of the assessment year;
2. Rs. 10,000 in any other case

However, late filing fee shall not exceed Rs. 1000 if the total income of an assessee does not exceed Rs. 5 lakh.

Can a return be filed after the due date

Return of income which has not been furnished on or before the due date specified undersection 139(1)is called belated return. Belated return of income is furnished undersection 139(4).

Any person who has not furnished a return of income within the time period allowed undersection 139(1)or within the time period allowed under a notice issued undersection 142(1), may furnish return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before completion of the assessment, whichever is earlier. (Applicable till assessment year 2016-17)

In assessment year 2017-18, any person who has not furnished a return of income within the time period allowed undersection 139(1), may furnish return for any previous year at any time before the end of the relevant assessment year or before completion of the assessment, whichever is earlier.

From A.Y 2018-19 and onwards a belated return attracts late filing fees undersection 234F.

As persection 234F, late filing fees of Rs.5,000 shall be payable if return furnished after due date specified undersection 139(1)but before 31st December of the assessment year. In other cases, late filing fees of Rs. 10,000 is payable. However amount of late filing fees to be paid cannot exceed Rs.1,000, if the total income of the person does not exceed Rs.5 lakhs.

If I have paid excess tax how will it be refunded to me

The excess tax can be claimed as refund by filing your Income-tax return. It will be refunded to you by crediting it in your bank account through ECS transfer. The department has been making efforts to settle refund claims at the earliest.

If I have committed any mistake in my original return, am I permitted to file a revised return to correct the mistake

Original return can be revised undersection 139(5)within a period of one year from the end of the relevant assessment year or before completion of the assessment whichever is earlier if person furnished original return on or before the due (till assessment year 2016-17). In assessment year 2017-18, any original return (which is furnished on or before or after due date) can be revised within a period of one year from the end of the relevant assessment year or before completion of the assessment whichever is earlier.

From the assessment year 2018-19 return of income can be revised (original return is filed on or before due date of after due date) at any time during the assessment year or before the assessment made whichever is earlier.

If original return has filed in paper format or manually, then technically it cannot be revised by online mode or electronically.

If a person is furnished original return and finds any mistake, omission or any wrong statement, then return should revised within prescribed time lim

How many times can I revise the return

If a person after furnishing the return finds any mistake, omission or any wrong statement, then return should be revised within prescribed time limit.

A return can be revised before the end of the Assessment Year or before the completion of the assessment; whichever is earlier.(w.e.f A.Y 2018-19)

However for the earlier Assessment Years preceding to the Assessment Year 2018-19 , a return can be revised before the expiry of one year from the end of the Assessment Year or before the completion of the assessment by the Department; whichever is earlier. (till A.Y 2017-18).

If original return has filed in paper format or manually, then technically it cannot be revised by online mode or electronically.

Revised return can be filed online under Section139(5).

Am I required to keep a copy of the return filed as proof and for how long

Yes, since legal proceedings under the Income-tax Act can be initiated up to four or six years (as the case may be) prior to the current financial year, you must maintain such documents at least for this period. However, in certain cases the proceedings can be initiated even after 6 years, hence, it is advised to preserve the copy of return as long as possible. Further, after introduction of the e-filing facility, it is very easy and simple to maintain the copy of return of income.

There are various deductions that are not reflected in the Form 16 issued by my employer. Can I claim them in my return

Yes, it can be claimed if you are otherwise eligible to claim the same.

Why is return filing mandatory, even though all my taxes and interests have been paid and there is no refund due to me

Amounts paid as advance tax and withheld in the form of TDS or collected in the form of TCS will take the character of your tax due only on completion of self-assessment of your income. This self-assessment is intimated to the Department by way of filing of the return of income. Only then the Government assumes rights over the taxes paid by you. Filing of return is critical for this process and, hence, has been made mandatory. Failure will attract levy of penalty.

Am I liable for any criminal prosecution [arrest/imprisonment, etc.] if I dont file my Income-tax return, even though my income is taxable

Non-payment of tax attracts interests, penalty and prosecution. The prosecution can lead to rigorous imprisonment from 3 months to 2 years (when the tax sought to be evaded exceeds Rs. 25,00,000 the punishment could be 6 months to 7 years).

What is Form 26AS

A taxpayer may pay tax in any of the following forms:

(1) Tax Deducted at Source (TDS)

(2) Tax Collected at Source (TCS)

(3) Advance tax or Self-assessment Tax or Payment of tax on regular assessment.

The Income-tax Department maintains the database of the total tax paid by the taxpayer (i.e., tax credit in the account of a taxpayer). Form 26ASis an annual statement maintained underRule 31ABof the Income-tax Rules disclosing the details of tax credit in his account as per the database of Income-tax Department. In other words,Form 26ASwill reflect the details of tax credit appearing in the Permanent Account Number of the taxpayer as per the database of the Income-tax Department. The tax credit will cover TDS, TCS and tax paid by the taxpayer in other forms like advance tax, Self-Assessment tax, etc.

Income-tax Department will generally allow a taxpayer to claim the credit of taxes as reflected in hisForm 26AS.

What to do if discrepancies appear in actual TDS and TDS credit as per Form 26AS

Every person deducting tax at source has to furnish the details of tax deducted by him to the Income-tax Department. The details will cover the name of the deductee, Permanent Account Number of the deductee, amount of tax deducted, amount paid to the deductee, date of payment of TDS to the credit of Government, etc. On the basis of the details of TDS provided by the deductor, the Income-tax Department will updateForm 26ASof the deductee.

Many times the actual amount of TDS and TDS credit as appearing inForm 26ASmay differ and it may happen that the TDS credit appearing inForm 26ASmay be less as compared to actual TDS, this may happen due to reasons like non-furnishing of TDS details to the Income-tax Department by the deductor, deducting the tax in incorrect Permanent Account Number, etc. In such a case the deductee should approach the deductor and request him to take the necessary steps to rectify the discrepancy due to above reasons.

The Income-tax Department updates the TDS details inForm 26ASon basis of details provided by the person deducting the tax (i.e., the deductor), hence, if there is any default on the part of deductor like non -furnishing of TDS details (i.e., TDS return) to the Income-tax Department, deducting the tax in incorrect Permanents Account Number, etc. thenForm 26ASwill not reflect the actual TDS. In such a case, the taxpayer may not be able to claim the credit of correct TDS. Hence, the taxpayers are advised to confirm the tax credit appearing inForm 26ASand should reconcile the difference, if any.

If discrepancy is due to deductor , then he may file TDS/TCS correction statement and correct the same.

What precautions should be taken while filing the return of income

The followings are the important steps/points/precautions to be kept in mind while filing the return of income:

1) The first and foremost precaution is to file the return of income on or before the due date. Taxpayers should avoid the practice of filing belated return. Following are the consequences of delay in filing the return of income/ Loss (other than house property loss):

a. Losses cannot be carried forward.

b. Levy of interest undersection 234A.

c. Late filing fees undersection 234Fis levied for return filed from A.Y 2018-19 onwards. Late filing fee of Rs. 5,000 shall be payable if return furnished after due date but before 31st December of the assessment year.

In other cases, late filing fees of Rs. 10,000 is payable. However amount of late filing fees to be paid cannot exceed Rs. 1,000, if total income does not exceed Rs. 5 Lakh.

d. Exemptions undersection 10A,section 10B, are not available.

e. Deduction under80-IA,80-IAB,80-IB,80-IC,80-IDand80-IE, are not available.

f. Deduction under80IAC,80IBA,80JJA,80JJAA,80LA,80P,80PA,80QQBand80RRBare not available. (From A.Y 2018-19)

g. Belated return cannot be revised undersection 139(5)till A.Y 2016-17. However, from A.Y 2017-18, even a belated can be revised by the taxpayer.

2) Taxpayer should downloadForm 26ASand should confirm actual TDS/TCS/Tax paid. If any discrepancy is observed then suitable action should be taken to reconcile it.

3) Compile and carefully study the documents to be used while filing the return of income like bank statement/passbook, interest certificate, investment proofs for which deductions is to be claimed, books of account and balance sheet and P&L A/c (if applicable), etc.

4) No documents are to be attached along with the return of income. The taxpayer should identify the correct return form applicable in his case. Carefully provide all the information in the return form. Confirm the calculation of total income, deductions (if any), interest (if any), tax liability/refund, etc.

5) Ensure that other details like PAN, address, e-mail address, bank account details, etc., are correct.

6) After filling all the details in the return of income and after confirmation of all the details, one can proceed with filing the return of income. In case return is filed electronically without digital signature and without electronic verification code do not forget to post the acknowledgement of filing the return of income at CPC Bangalore within 120 days of filing return of income.

7) For details on e-filing please log on towww.incometaxindiaefiling.gov.in

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