Re: E-filing of Income-tax Return Forms

Transcription

1 FOR THE KIND ATTENTION OF THE MEMBERS Re: E-filing of Income-tax Return Forms The Fiscal Laws Committee has recently submitted to the CBDT the selected issues on e-filing of income-tax return forms. Further issues would also be forwarded shortly. The CBDT has been requested to issue appropriate clarification. The list of such issues is to be published hereunder for the kind information of the members. G. Ramaswamy Chairman Fiscal Laws Committee

2 THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA E-filing of Income-tax return forms - Issues 1. A person is proprietor of two different proprietary concerns having different business each having turnover more than 40 lacs and audited u/s 44AB by different chartered accountants which data he has to fill in form no.itr 4, as the space provided for the profit & loss account and balance sheet is for only one proprietary concern. It is suggested that the separate sheet to be allowed to be inserted in the same format for the each proprietary concern. 2. If a person wants to file the personal balance sheet where can he do so. 3. A person is having the income from futures and options with no separate profit & loss account or balance sheet what details he has to fill up in balance sheet and profit & loss account that is part A-BS, part A-P & L. 4. What is to be filled in part A QD that is the quantitative details if the persons is under tax audit and not having quantitative details of the goods as he is in a business which is comprising of thousands of small commodities where none of the commodity is having a turnover of more than 10% of the total turnover e.g. Grocery shop, Hardware & Paint dealer, Stationery Shop, other retailers. 5. The assessee who is under presumptive taxation scheme i.e. no accounts case, what he should write for sundry debtors, sundry creditors, stock in trade, cash balance, gross profit as he may not have all these details since he is not maintaining books of accounts. 6. In part A - P & L the purchases are to be shown net of tax & duties the traders generally do not have the details of tax & duties separately as they entered only one amount in the purchase so if it is not possible to segregate the details of the different taxes paid on the purchase, the same can be included in the purchases as allowed in part A as allowed as per the instructions filing out the forms in Item no. 15 part A-OI and part A-QD. 7. If a persons is receiving as a partner interest, remuneration from a firm and is also proprietor of a concern can he show the share of interest and remuneration received from firm in ITR 4 in schedule BP (computation of income for Business or Profession) in item no. 23 as any other income not included in profit and loss account or in item no. 22 any other item or items of addition under section 28 to 44DA.

3 8. If a person is leaving India for good (i.e. permanently) during the accounting year and his assessment is to be made for the income of the period from to the date of his departure from India u/s 174 (i.e. for the A.Y ), which return he has to filed as form no. ITR 1 to ITR 8 have been prescribed only for assessment year How the income from house property is to be shown if the property is partly self occupied and partly rented. 10. Income from self occupied property has loss after deduction of interest on borrowing in which column should if be mentioned. 11. Many professionals have only one savings account and all professional income is also deposited in the same account. For him there may not be any balance sheet of his business. What should he fill up in the Balance Sheet part? 12. The profit and loss account contained in the forms require the assessee to furnish complete details of different types of duties paid or payable in respect of goods and services purchased. In majority of cases this may not be practically possible. 13. In case the assessee desires to convey something by the way of separate note which may be essential, no separate space has been provided for that. 14. A situation where the property could be deemed to be let out has not been considered. 15. The structure of the profit and loss account is such that it suits manufacturing or trading business only. It does not suit the service providers like hotel, transport agents, professionals etc. It is likely that the assessees in the service industry will have to recast or reframe its profit and loss account. Please clarify as to how service sector requirements could be factored in. 16. In case of refunds, the information desired is MICR, bank a/c number and type. The assessee is not required to mention the name of the bank. However, this may be necessary to ensure that the refund is not credited to a wrong account due to quoting of incorrect MICR code. 17. MS- Excel format should also be provided for the convenience of the assessees.

4 18. Which Form of returns would be applicable in case an assessee wants to file return for earlier years? In such a situation can he file the return in physical form? 19 Are the details required under Annual Information Report mandatorily to be filled in by all assessee? What is the relevance of the same? 20 Which return form has to be used by a person who has only exempt share income from a firm? 21. Can the stand-alone form on Fringe Benefits be used by companies and firms as well? 22. If an individual has loss from house property, can he use ITR-1? 23. If AOP/BOI do not have taxable income, can they use ITR-8 instead of ITR-5? What about a firm? Can they also use ITR-8 instead of ITR-5? 24. What is purpose and implication of ITR-V? 25. What form of return should be filled by a salaried class person having housing loan also? 26. As the returns now are annexure less, it is difficult to comprehend as to how the Assessing Officer is going to verify the veracity of various claims made in respect of investments not reflected in Form Many schedules and notes to accounts form part of the financial statements of any entity. The return forms do not provide for this information. This deprives the Assessing Officer of the basic tool to understand the financial statements. Many items contained in the notes to accounts may have revenue implications. It would be difficult for the department to pick up important cases for scrutiny on random basis and call for details. 28. In case filing is done online with digital signatures, no stamped acknowledgement would be available. This would create problems for the assessee for obtaining visa, loan etc. Is there any system to verify online whether IT returns of a particular year has been filed? 29. As per Guidance Note on Accounting for State-level Value Added Tax issued by the Institute of Chartered Accountants of India, assessee are advised to disclose purchases and sales are Net of VAT. Accordingly the books of account are maintained and (finalized) the annual accounts as per entries and manner prescribed in the Guidance Note on VAT. As per entries recommended in the Guidance Note, the VAT paid on purchases

5 has been adjusted against VAT collected on sales and no entries relating to VAT on purchase and sales are reflected in the profit and loss account of the entity. Now, in the new ITR returns forms the assessees are required to disclose the VAT received or receivable on goods sold, VAT paid or payable on goods purchased and VAT paid or payable to Government separately.(refer Clause No.2c, 8f & 34c in ITR 4). When the books of account are maintained in conformity with VAT Guidance Note, it is difficult to capture the above information on the basis of trial balance given by the assessee. What is the remedy available to us? 30. As per Section 50 the Income-tax Act, there is no need to disclose sale of fixed assets made during the year out of purchases for a period of 180 days or more, or purchases for a period less than 180 days. The details asked in the Schedule DPM are against the provisions of Section 50?. Please clarify the same. 31. Is there any time limit for submitting Form ITR-V (ITR Verification Form), when the return is filed electronically without digital signature, to the Income-tax Department? 32. No enclosures are required while filing the income tax refunds. Four years back when single page challan was introduced for payment of taxes, it was stated that the same need not be enclosed to the return of income and only the particulars of payment like date, challan number, BSR code of the Bank have to be stated. However till today the returns in cities like Hyderabad and offices in moffussil areas /district headquarters are not accepting returns where the challans are not enclosed. What is the remedy? 33. The auditors report in the cases falling under Sec 44 AB need not be enclosed as per the new procedure. Only the name of the auditor, PAN and the membership number is to be quoted. There may be a chance where this may be misused by any person without the knowledge of the auditor himself whose name is quoted in the return form. It is suggested that the digital signatures may be made mandatory for both auditors and assesses in case of e-filing and compulsory enclosure of physical audit reports in case of non e-filing cases. 34. The minimum/exact configuration of computer required for e-filing may please be publicized / stated. 35. No column is provided for agricultural Income in the acknowledgement form. This may be included. 36. The Income-tax Act requires the following to be attached with return:

6 (a) (c) proof for interest for housing loan certified copy of the deed in the case of new firm or in the year of change in constitution form 30 in the case of refund But the return is annexureless; how one can comply with the requirement under the Act? 37. Salary of partners and interest of partners is appropriation of profit and in the return form there is no column for the salary and interest to partners, and such salary and interest is allowable as an expenses in income tax. Where should they be shown? 38. How to enter the quantitative particulars of the products traded or manufactured where there are multiple products of trade and the products and their measure of unit cannot be related with each other. For example - an assessee is carrying on business in petroleum products, trades in cement products, trades in pulses, manufactures tobacco products all in his own name, then how to provide quantitative details in the returns format. 39. Now that the return of Income and FBT are clubbed in ITR a single challan may serve the purpose with separate columns. 40. Area code, AO code, AO type, Range code & AO number under the designation of the Assessing officer in ITR 4 & 5 are not available and not known to the taxpayers. These may be publicized. 41. Acknowledgement of the ITR does not contain the particulars of the Assessing Officer with whom it is filed. The same is important as seal to be affixed does not contain full particulars and it is usually the Range office. 42. Individuals/HUF who are self employed doing brokerage, commission, CA practice, doctors, architects, beauty parlour, etc. and does not maintain their accounts related to the business but maintains personal accounts in the form of profit & loss and balance sheet. Please let me know: i. Which ITR form to be used. ii. If ITR 4 is to be used whether the personal accounts to be treated as accounts of proprietory business and accordingly to be loaded in the form. iii. If so, then where to reflect personal investments/assets like house, shop, jewellery shown in the balance sheet of the assessee, because the ITR form in the PART A- BS part under application of funds S. No. 2 as investment only contains details regarding Govt. and non Govt. securities quoted and unquoted under long term investments and

7 equity shares, preference shares and debentures under trade investments. There is no other column. Since these are not business assets these cannot be included under fixed assets. 43. In case of ITR-4 PART A BS under application of funds S. No. 3 captioned as loans and advances there is no column to show loans given to business associates or others. Please advice. Such loans are neither Advances recoverable in cash or in kind or for value to recd nor deposits and balance with tax authorities. Clarifications are therefore needed. 44. In case of salaries how to incorporate details of more than one employer. 45. In case of no business assessees how to incorporate the details of their personal investments in form of jewellery, Immovable properties, movables, loans given or taken. If these items are not incorporated in the return form then serious problems will arise to prove whether these were part of disclosed assets or undisclosed assets in case of an individual or HUF. 46. As per para 5 (iv), the bar - coded return may be furnished at the option of the assessee. What is bar - coded return and the manner of its filling/furnishing. 47. Within what period the verification of the return in form ITR-V is required to be submitted. Whether above form is required to be submitted to the jurisdictional assessing officer necessarily or it may be submitted to any income tax office in India in view of on line net working. The date of transmitting the data electronically or dispatch of ITR V (by Fax/ Courier/post) or receipt of above form by income tax office shall be considered for the purpose of considering the date of filling the return. What are the consequence of non filing /late filing / non receipt of form ITR V by Income Tax Dept. 48. Whether return in paper form is necessarily to be submitted to the jurisdictional assessing officer or it may be submitted to any income tax office in India. 49. Whether all types of pension viz. under Superannuation scheme, Family pension Fund, Employees pension Scheme, pension from LIC under Jeevan Suraksha etc is to be shown under the head Salary or all/any of the above is to be shown under the head Income from other sources. 50. What is the manner in which the note(s) required to be submitted along with the return is to be furnished since no document is to be attached to the return. In absence of the said note(s), different view may be taken by the tax department while assessing the income.

8 51. Whether new ITR-2 can be used at the option of the assessee for filling return for A.Y and earlier year (s) or should old form be necessarily used for such return. 52. This query relates to ITR 5. A partnership firm engaged in retail trade declares net 5% of gross turnover. As such it is not required to maintain books of accounts. It pays salary and interest to its partner in accordance with law. Consequently its net profit as well as taxable income is reduced to nil. How can the above be filled up in ITR 5 so as to reflect that the profit declared complies with the provisions of section 44AF and also the computational provisions of the I.T. Act? 53. In ITR-4, there is no separate requirement for mentioning the trade name of the proprietary firm; disclosure of trade name is essential as most of the proprietors carry their businesses in the proprietorships firm name only. 54. In ITR 4 the requirement relating to statutory reserves in case of individual or HUFs carrying on proprietorship business or profession does not appear to be in place. 55. ITR - 4 requires the assessee to mention the amounts debited to profit and loss account to the extent disallowable under section 40A(2). Under this section the amount is disallowed only if the payment made is excessive in the opinion of the Assessing Officer. Now the question arises as to how can the assessee step into the shoes of the Assessing Officer and fill this information. 56. ITR-1 is return for individual having income from salary/pension/ family pension and interest. Can an individual having only salary income and no interest income use this form or has he to go for ITR-2? 57. ITR-2, 3 and 4 require detailed breakup of salary income like exempt allowances; perquisites etc, whereas ITR 1 requires only a single figure for salary. Is there any specific reason for such differential treatment? 58. In ITR-6 for companies the requirement of resident and not ordinarily resident needs deletion. 59. There are no columns in the ITR forms 4 & 5 to offer the following if the assessee wants to offer : (a) credits in the name of third parties-actually genuine but cannot adduce proof. credits in capital a/c of proprietor/partners to the extent unexplainable

9 (c) salary /interest from firms,if credited in capital without crediting in profit and loss account. (It is better this is separately required in computation of income, as salary allowed in the hands of firm, if less than the amount paid may require adjustment in the hands of partner). 60. E-form does not save date of birth of the assessee due to which it cannot be uploaded at the e-filing portal. 61. E-form cannot be saved in PDF format. 62. Unlike the e-form 1 (for companies) for the A.Y , there is no option to load the e-forms from XML file. 63. An assessee who is running four different businesses trading in jwellery, trading in food grains, running of a hotel, and manufacturing of components, all in proprietorship having different trade names for each business and each business is carried out in different cities. Accounts of each business is audited I by different auditors. (a) How the names of all auditors can be filled up in the return? Whether sale and receipts and expenses of all different business should be clubbed and shown in profit and loss account at one place? 64. In part A profit and loss account item No.45 is provided for provision for deferred tax which is applicable only to companies, hence was not required in form No.ITR-4 which is applicable only to individual and HUF. 65. The ITR 3 Software is not picking up the figures from CYLA Schedule nor it is allowing manual feed. 66. The ITR 3 return preparation software has a bug as it is not taking the figures of losses of current year to be set-off. 67. I have selected bank account type saving but when I uploading it says as below: Error: Please correct the following errors and upload the XML again [FATAL_ERROR]: Invalid text 1 in element Bank Account Type. 68. In Part B TTI schedule Item No.5 education cess on is showing total of 3+4 Item No.6 gross tax liability is showing 0 ITR 4.

10 Since Gross tax liability is 0, refund is the same amount which is paid in TI ITR DPM plant and machinery 70. DOA 71. OS 72. TI Item No.16 showing negative of WDV shown in item no.1 above as well as in DCG under item A also in negative while there should not be any figure because I have not shown any consideration ITR 4. Dep is not calculating automatically while it is in DPM ITR 4. Item No.5 1g+2+3+4c = double of OS income because 3 = 1g+2 - ITR 4 While entering figure in name of branch and BSR code it shows a error massage Invalid Date. ITR Validation Date of birth in Sheet Part A General is blank while there is a date available. 74. An assessee having income from a partnership firm by way of interest on capital and remuneration and also running a proprietary concern. Which ITR form is applicable? If ITR 4 is used, in which column the income from partnership concern needs to be shown. 75. In case of a firm, it is reconstituted one Whether the certified true copy of the reconstituted partnership deed is to be enclosed with the return. If no need to enclose, in what basis the interest on capital and working partner remuneration will be allowed. 76. In case of refund, Bank Account Number is asked, but not the name of the bank and place of the bank 77. In cases covered under section 5A of the Income-tax Act, 1961, how to present figures of balance sheet in the income-tax return? Whether the consolidated balance sheet of the BOI should be shown or the balance sheet of the individual spouses? Individual balance sheet may be difficult since till now it was maintained jointly.

11 78. In ITR 4, ITR 5and ITR 6 there is place only for one auditor s details. What if there are joint auditors. 79. In ITR 5 in format of profit and loss A/c there is no separate row for disclosing remuneration or interest paid to partners. 80. In the schedule of depreciation there is no row for the undertaking engaged in generating electricity to claim depreciation. 81. In ITR 4, ITR 5 and ITR 6 there is no place to mention other Investments, other liabilities in item no 2 and 3(d) in part A-BS other than specified in the return. It is suggested that others row be inserted or clarify where this other investments or liabilities be mentioned. 82. In ITR 4,ITR 5 and ITR 6 Part A P&L Service Tax and Vat/Sales tax are mention at two places one in item 8 (e),(f) and other is item 34,(c) what is the purpose. 83. In ITR 4 Part A-OI item 8 A (f) Amount of interest etc to partner is irrelevant as the said return is not for the firms and therefore no question of partner. 84. In ITR 5 Instructions for filling of forms item 16(c) (ii) it states that residual items be filled in item 21 and 26 of schedule. It should be item 22 and item 23 of the schedule. 85. In ITR 5 Instructions for filling of forms item 16(c) (iii) it states that in case accounts not maintained profit as per item 50d. It should be item 52d. 86. In ITR 5 Instructions for filling of forms item 16(h) (iv) it states row vii it should be row vi. 87. In ITR 5 Instructions for filling of forms item 16(h) (v) it states row viii it should be row vii 88. Issue relating to Annual Information Return to be given along with the new Income `Tax Return. A. Relating to cash deposit in Bank what to be reported (a) B If 8 Lacs deposited in bank A and Rs.8 lac deposited in bank If 8 lacs deposited in bank A branch X and if 8 lacs deposited in bank A branch Y

12 (c) If 8 lacs deposited in bank A branch X account 1 and if 8 lacs deposited in bank A branch X account 2 (d) (e) Mr. A,B,C have a joint account and each of them deposit Rs. 4 lacs in the bank account thus aggregating to more than 10 lacs whether to be reported if yes who should report and what amount. The reporting has to be qua saving account or qua bank or all the aggregate cash deposits. B. Payments for Credit Cards what to be reported (a) Payment for original card 1 lac 80 thousand, payment for add on card 40 thousand. Credit card in the name of employee who uses the credit card for the business of the company. All the payment made by the company and debited in the company books payment is more than 2 lacs. Here bills are in the name of employee payment made by company who should report and what amount. (c) If there are more than one credit card issued by one company whether the payment to individual credit card is to be considered or aggregate payment for all the credit card is to be considered. (d) If there are more than one credit card issued by different companies whether the payment to individual credit card if to be considered or aggregate payment for all the credit card is to be considered. (e) The reporting is to be done by the person who make the payment or the person on whose name the bills are raised. (f) The reporting is qua credit card or qua company issuing the credit card. C. Payments to Mutual Fund (a) (c) (d) If fifty thousand rupees is invested in five different scheme of the same mutual fund whether the reporting has to be made. If fifty thousand rupees is invested in five different mutual fund whether the reporting has to be made. Mr. A,B,C have a jointly applied for the mutual fund and each of them have contributed Rs. 1 lac each in the scheme of mutual fund thus aggregating to more than 2 lacs whether to be reported if yes who should report and what amount. The reporting is to be done qua scheme or qua mutual fund D. In relation to Bond or Debentures

13 (a) (c) (d) (e) The bonds purchased from the secondary market Bonds received in gift. Where application for the bond is more than 5 lacs but the allotment is less than 5 lacs. Where application for the bond is more than 5 lacs but there is no allotment and whole money is refunded. Mr. A,B,C have a jointly applied for the bonds and each of them have contributed Rs. 2 lac each in the bond thus aggregating to more than 5 lacs whether to be reported if yes who should report and what amount. E. In relation to Shares (a) The shares purchased from the secondary market Shares received in gift. (c) Where application for the shares is more than 2 lacs but the allotment is less than 2 lacs. (d) Where application for the shares is more than 2 lacs but there is no allotment and whole money is refunded. (e) Where the shares are issued at premium and the value paid for the face value is less than 2 lacs but including premium it is more than 2 lacs. (f) Whether the reporting is qua the face value of the shares or qua payment made or qua total value including face value and premium. (g) Mr. A,B,C have a jointly applied for the shares and each of them have contributed Rs. 1 lac each in the shares thus aggregating to 3 iacs i.e more than 2 lacs whether to be reported if yes who should report and what amount. F. In relation to Purchase of Immovable Property (a) (c) (d) Flat purchase jointly in the name of Mr. A and Mrs. A both contributing 20 lacs each total Rs. 40 lacs whether to be reported if yes who should report and what amount. The agreement value of the flat Rs. 28 lacs and the value taken by the registration authorities for the purpose of payment of stamp duty is 32 lacs whether to be reported if yes what amount. The right in Immovable property which is held jointly by five persons and each right is purchased by a separate agreement for Rs. 10 lacs each and thus entering five different agreement all registered separately whether to be reported if yes what amount. Property purchased on 28 March, 2007 and registered in April 2007 whether to be reported as the assessee would

14 (e) (f) (g) report in accounting year and registering authority is reporting in year A Flat is purchase for 50 lacs from a builder in a building under construction and a token amount paid in the year is Rs 10,000 balance is to be paid over a period of next 3 years whether it is to be reported if yes in which year and what amount. A part right is purchased in a flat where the total value the flat is 40 lacs but the part right purchase by a separate agreement is Rs. 10 lacs whether to report if yes what amount. Flat received in gift. G. In relation to Sale of Immovable Property (a) (c) (d) (e) Flat sold which was jointly in the name of Mr. A and Mrs. A both receiving 20 lacs each total Rs. 40 lacs whether to be reported if yes who should report and what amount. The agreement value of the flat Rs. 28 lacs and the value taken by the registration authorities for the purpose of payment of stamp duty is 32 lacs whether to be reported if yes what amount. The right in Immovable property which is held jointly by five persons and each right is sold by a separate agreement for Rs. 10 lacs each and thus entering five different agreement all registered separately whether to be reported if yes what amount. Property sold on 28 March, 2007 and registered in April 2007 whether to be reported as the assessee would report in accounting year and registering authority is reporting in year A property is sold for 50 lacs and a token amount received in the year is Rs 10 thousand balance is to be received over a period of next 3 years on full filing certain condition. Whether it is to be reported if yes in which year and what amount. (f) A part right is sold in a flat where the total value the flat is 40 lacs but the part right sold by a separate agreement is Rs. 10 lacs whether to report if yes what amount. (g) Flat given in gift. H. Investment in RBI Bonds (a) If six applications are made during the year of Rs. 1 lacs each whether it has to be report.

15 (c) Where Rs. 3 lacs are invested in bond A and Rs. 3 in bond B both bond issued by RBI whether to be reported if yes what amount. RBI Bond are sold by different banks from 3 banks I have purchased the bonds of 2 lacs rupees aggregating to 6 lacs rupess whether to be reported if yes what amount.