By Parizad Sirwalla
The due date to file a tax return for the Financial Year (FY) 2016-17 is 31 July 2017 for individuals not required to have their books of account audited under the Income-tax Act, 1961 (the Act). There have been several changes in the tax filing rules in the past one year or so. In this article, we have listed down five key rules which you must not miss in a tax return filing process:
1. Select the correct tax return form applicable to you
The tax return forms notified for FY 2016-17 applicable to individuals are:
ITR-1 or Sahaj: Salary income, pension income, income from one house property and income from other sources (other than lottery). This form cannot be used if any losses are to be carried forward or have total income exceeding Rs 50 lakh, foreign assets, income from business or profession and capital gains.
ITR-2: Salary income, pension income, income from more than one house property, capital gains, income from other sources, income as a partner in a firm, foreign assets and foreign tax relief to be claimed. This form cannot be used by those having income from proprietary business or profession.
ITR 3: Individuals with income from proprietary business or profession, individuals involved in speculative business.
ITR-4: For taxpayers having income assessed on presumptive basis.
2. Quoting of an Aadhaar:
The newly-introduced Section 139AA of the Act by the Finance Act, 2017, provides for mandatory quoting of an Aadhaar or Enrolment ID (acknowledgement number issued at the time of enrolment for Aadhaar) by individuals (except foreign citizens, individuals above 80 years of age, non-residents and individuals staying in certain specified states) for filing a tax return with effect from 1 July 2017. Existing PAN holders also have to link their PAN with their Aadhaar to keep it active. The linking can be done on an e-filing portal of the tax department, conveniently.
It is pertinent to note that a press release was recently issued by the Central Board of Direct Taxes giving effect to Hon’ble Supreme Court judgement on PAN-Aadhaar linkage. The said press release seems to suggest that the Hon. Supreme Court has given a partial relief vis-à-vis cancellation of PAN. This relief is for consequences of non-compliance of linking PAN with an Aadhaar by those individuals who do not already have an Aadhaar and who do not wish to obtain the same for the time being.
3. Various disclosure requirements:
Appropriate disclosures of various assets and financial investments held by an individual forms an integral part of a tax return form. The prescribed disclosure schedules/requirements applicable for FY 2016-17 are:
# Details of all Indian bank accounts (name and IFSC, account number and type of account) held at any time during relevant FY. Dormant accounts are excluded.
# Schedule AL: Details of specified assets [such as land, building, movable assets (jewellery, vehicles, etc.), financial assets (bank deposits, shares and securities, cash in hand, etc.)] and corresponding liabilities are to be disclosed in case the total income of an individual exceeds Rs 50 lakh. For such disclosure schedule, guidelines have been specified for valuation of such assets and liabilities.
# Schedule FA: Resident and ordinarily resident individuals are obligated to furnish details of their assets held outside India (both as an owner and as a beneficiary) such as foreign bank accounts, immovable property, financial interest in any entity, accounts in which having a signing authority, etc. as per specified disclosure guidelines.
# Details of cash deposited during the demonetisation period (9 November 2016 to 30 December 2016) to the extent of Rs 2 lakh and above.
4. Verification of prepaid taxes with Form 26AS
It is necessary that taxpayers should verify their prepaid taxes i.e. tax deducted at source (TDS), advance tax and self-assessment tax with Form 26AS – an online tax credit statement downloadable from an e-filing portal. Any discrepancy in the details of TDS should be notified either to the employer (in case of salary income) or other deductor(s) (in case of other income) for the necessary rectification. Unless such discrepancies are recertified, the tax return will be processed by the tax department on the basis of information available in the Form No. 26AS and you can receive an intimation either for balance tax payable (to the extent of shortfall in taxes) or refund not being granted.
5. Validation of Form ITR-V
Post e-filing of the tax return (not applicable to individuals having a total income less than Rs 5 lakh), an acknowledgement in Form ITR-V is generated. It is important to validate Form ITR-V to complete the filing process. It can be validated either online (through Aadhaar, digital signatures, net banking or other modes) or manually placing the signature in a printed Form ITR-V and sending the same to the Centralised Processing Centre in Bengaluru. Without such verification, the tax return uploaded will not be considered as filed and hence will not be processed by the tax department.
As the deadline to file the tax return is now less than a month away, it would be prudent for taxpayers to assess their taxable income as per the provisions of the Act and take cognisance of aforesaid rules amongst others for filing their tax return accurately without attracting penal consequences.
(The author is Partner and Head, Global Mobility Services, Tax, KPMG in India)