Income Tax Returns. An Overview of the Process of e-filing of Returns. Presented by CA B. K. VATSARAJ

Transcription

1 Income Tax Returns An Overview of the Process of e-filing of Presented by

2 WHAT IS E-FILING? The process of electronically filing Income tax returns through the internet is known as e-filing. The returns are not to be accompanied with any form of the documents including statutory form or report of audit (other than report u/s 92E) which is otherwise required to be furnished before the due date or along with the return for making any claims.

3 E-filing - Mandatory It is mandatory for all corporate assessees and partnership firms who are liable for audit u/s 44AB of the Income Tax Act to submit the Income tax returns electronically for A.Y & onwards. Rule 12 of the Income-tax Rules, 1962, which prescribes the forms for filing of Return of Income had been amended vide Notification S.O. No.762(E) dated 14 th May, 2007 and new forms of the Returns of Income had been notified. The new forms accordingly became applicable w.e.f. A.Y

4 E-filing Not Mandatory An Individual or HUF or a partnership firm not having Tax Audit can furnish return of income in paper form or can file in electronic form with digital signature or in electronic format without digital signature and subsequently submit the verification (acknowledgement) in paper form with physical signature. The proviso (b) to Rule 12(3) of the Income Tax Rules, 1962, specifically provides that the persons required to furnish return in ITR-7 shall furnish the return in the manner specified in clause (i). Clause (i) of Rule 12(3) specifies that the return of income is to be furnished in the paper form.

5 The ITR-7 is applicable to entities that are required to furnish their return of income u/s. 139 (4A) or (4B) or (4C) or (4D). Trusts/section 25 companies claiming exemption under section 10 or 11 have to file return in paper form with all annexure. For Agent of non-residents, within the meaning of section 160 of the Act, it has been clarified by CBDT in circular no. 8 dated 22 nd September, 2008, that it will not be mandatory to electronically furnish the returns of non-residents for A.Y Drawing the same analogy from the circular issued for A.Y , the agents can file paper returns for their non-resident principal for A.Y

6 Enclosures with the Return of Income; It is reiterated by CBDT in its Circular no. 3 of 2009 that return of income furnished in prescribed forms (except ITR 7) shall not be accompanied by any attachments. Documents like TDS certificates/tax paid challans/ profits and loss account/balance sheet etc. shall be produced before the Assessing Officer whenever he calls for the same. Tax Audit Report, is to be obtained before the due date of filing of the return. The same is not required to be attached with the return of income. Transfer pricing report should not be attached with the return of income, but the same should be filed separately before the due date of filing the return of income. As provided in section 184 of the Act, In case of first return of a partnership firm or in case of change in the constitution of the partnership firm, certified copy of the partnership Deed is required to furnished alongwith the return of income so to get assessed as a partnership firm. Since no enclosures are to be furnished with the return, certified copy of the Deed should be furnished separately with the Assessing officer.

7 Scheme of new ITR Forms Selection of the Forms of Income depends on (a) the status of the assessee and also (b) the nature of income of the assessee. - Forms to be used by different types of assessees: Saral II (ITR-1): ITR-2: For Individuals having Income from Salary / Pension / Income from One House Property (excluding loss brought forward from previous years) / Income from Other Sources (Excluding Winning from Lottery and Income from Race Horses) For Individuals and HUFs not having Income from Business or Profession

8 ITR-3: ITR-4: ITR-5: ITR-6: ITR-7: For Individuals/HUFs being partners in firms and not carrying out business or profession under any proprietorship For individuals & HUFs having income from a proprietary business or profession For firms, AOPs and BOIs For Companies other than companies claiming exemption under section 11 For persons including companies required to furnish return under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D)

9 Comparison of Saral II (ITR-1) vis-à-vis erstwhile ITR-1 S. No. Applicability to Assessment year Nature of Income/Loss covered A.Y to A.Y Erstwhile Form ITR-1 A.Y Newly substituted Form Saral-II (ITR-1) 1. Income from salary pension YES YES 2. Exempt income like dividend, L.T.C.G. (STT paid) 3. Income from House property (individual having one property) 4. Income from other sources (excl. winning from lotttery & income from race horses. 5. Income under the head capital gain (not exempt) NO NO 6. Income from House property (individual having two or more properties) 7. Loss from House property (one house) during the year & no b/fd. loss from previous year NO NO NO NO NO YES YES YES YES YES 8. Loss from income from other sources NO YES

10 Due dates of filing the return of income The due dates by which the return of income should be filed are as under: Sr. No. Person Due date 1. Companies 30 th September 2. A person other than company whose accounts are required to be audited under this Act or under any other law 3. A working partner of the firm whose accounts are required to be audited under this Act or under any other law 30 th September 30 th September 4. In case of any other assessee 31 st July

11 TYPES OF e-filing There are three ways to file returns electronically Option 1: Use digital signature in which case no paper return is required to be submitted Option 2: File without digital signature in which case ITR V form is to filed with the department. This is a single page receipt cum verification form. Option 3: File through an e-return intermediary who would do e-filing and also assist the assessee to file the ITR Form

12 Part-1 Step 1: Procedure to be followed before going for e-filing: Log on to the website to download the ITR forms applicable. These will be available in excel format. A check should be kept for downloading the latest version of these forms

13 CVO CA ASSOCIATION - TORAL GADA

14 CVO CA ASSOCIATION - TORAL GADA

15 Step 2: Procedure to be followed before filling up the form: Before filling up the form it is important to have with you all the mandatory details required to be filled up. For that it is advisable to keep a checklist with you along with your audit program while on audit. It is important to have the signed audit report & financial statements in front of you while filing up the forms.

16 A specimen of the checklist is given below: General Details : Full and Correct Name of the assessee Correct PAN Full address with city, state and pin-code Date of formation / Birth Residential status Nature of business Bank A/c. No. & MICR code

17 In case of firms, following details in respect of all the partners 1. Name, 2. Address (with city, state & pin-code), 3. Percentage of share and 4. PAN

18 Step 3 : Procedure to be followed for filling up the form: Whenever the ITR forms in excel format are accessed, one needs to Enable macros Enabling Macros in Excel 2003: 1. On the Tools menu, point to Macros >> Security. 2. Now select Security Level as low or medium and press OK. 3. Restart your Excel Utility, and if asked whether you want to Enable Macros, select YES.

19

20

21

22

23 Enabling Macros in Excel 2007: 1. Click the Microsoft Office button and then click Excel Options. 2. Click Trust Center, Click Trust Center Settings, and then click Macro Settings. 3. Click the option Enable Macros. 4. Restart your Excel Utility.

24

25

26

27 Fill up the entire form by picking up all items from the audit report/financial statements & placing them under their appropriate heads. General Points to remember while filling up the forms: Name of the assessee should be written as per PAN Card PAN should be of 10 digits Status of assessee should be properly selected Date of birth/formation should as per PAN Card Section under which return is filed should be correctly mentioned Correct Ward No. should be mentioned Information about the auditor should be correct i.e. name of the signing auditor, membership no., name and PAN of auditor (proprietary/firm name)

28 Special attention to be given, while providing following information in the ITR form:- 1) Information of certain transactions as reported through Annual Information Return (AIR). Information of following transactions is to be furnished: a) Cash deposits aggregating to Rs.10 lakh or more in a year in any savings account. b) Payment against bills raised in respect of credit card aggregating to Rs.2 Lakh or more in a year (if you have more than one credit card, total payment for both more than Rs.2 Lakh but each card less than Rs.2 Lakh, then information not required to be furnished. c) Payment more than Rs.2 Lakh for purchase of units of mutual fund (payment to each mutual fund more than Rs.2 Lakh information to be furnished).

29 d) Payment more than Rs.5 Lakh for purchase of bonds or debentures issued by a company or institution or RBI Limit of Rs.5 Lakh is qua company/institution. e) Payment more than Rs.1 Lakh for acquiring shares issued by a Company. This refers to initial allotment/right issue by a Company, and does not refer to shares purchased in the secondary market. f) Purchase/Sale of immovable property more than Rs.30 Lakh. Mutual funds/banks/sub-registrar of assurances etc. are required to file Annual information return giving details of above transactions. Hence, cases are also selected for scrutiny based thereon. Hence, correct details of the above transactions are to be filled up in the return form.

30 2) If refund is to be received by way ECS MICR code of Bank is to be provided. 3) Details of brought forward losses i.e. head of loss, year of loss, date of filing a return in that relevant year, setting off such loss during the year under various head and carrying forward of balance unabsorbed loss are to be furnished in the return. 4) Name/PAN/relationship of person whose income is clubbed is to be furnished along with nature and amount of income clubbed. 5) Nature and amount of exempt income earned. 6) Details of income taxable at special rate e.g.: Long Term Capital Gain Short Term Capital Gain etc.

31 7) In ITR-3 Details of Name and PAN of the firm, in which he is a partner, capital balance as on last day, % share of profit, amount of profit share, salary, bonus, and interest received from firm and expenses incurred are to be provided. If the partner earns any other income like Directors Sitting Fee which is taxed under the head Profits and Gains of Business, there is no column provided in ITR-3 to write this amount and you are forced to reflect that amount under the head other sources. 7) In ITR-4 complete details of all items of Profit and Loss, Balance Sheet and Clauses of Tax Audit Report are to be furnished. 9) In ITR 5 and ITR 6 Complete details of items of Profit and Loss Account, Balance Sheet and Tax Audit information is to be provided. 10) In ITR 7 inter alia, Details of Trustees, 12A registration, Section under which exemption is claimed.

32 Step 4 : Validation of the file Click on the Validate all sheets & generate XML file tab to validate the data entered into. An XML file will be created and saved at the opted destination. If there are any errors in filling up the form, then the error will be traced and displayed on the screen. These errors should be rectified and once again validation should be done before generating the XML file. If these errors are not rectified then validation will not be possible. Note: Filling up the ITR Forms and generating XML file can be done offline itself.

33 CVO CA ASSOCIATION - TORAL GADA

34 Part 2: Procedure to be followed after filling up the form and after generating XML file: Obtain a photocopy of the assessee s PAN Card for correct details of name & date of birth / formation, which are required for creating login user ID. Log on to the website Click on the e-file your returns tab.

35 CVO CA ASSOCIATION - TORAL GADA

36 The procedure for e-filing of returns will be displayed which is as follows: 1) Select appropriate type of Return form. 2) Download Return Preparation Software for selected Return Form. (Excel File) 3) Fill your return offline and generate a XML file. (The above 3 steps have been explained earlier)

37

38 4) Register and create a user id/password: a) Click on the REGISTER option, which appears on the right hand side of the web page. Here the PAN, First Name, Middle Name & Surname and Date of Birth/Incorporation of the assessee are to be entered. Then click on the Register tab.

39

40

41 b) Then create User ID/Password. The PAN of the assessee should be used as user id & password may be anything It is mandatory to fill up the options - Password, Confirm Password, Phone No.& address.

42 5) Login with the user id & password created.

43 Once logged in it would display Logged in as (NAME). Click on the relevant form on the left panel and select SUBMIT RETURN option. For making use of digital signature, one needs to download a software named Java Runtime Environment 6 (JRE 6Beta).

44

45 Click on BROWSE to select the XML File from the destination where it was saved after generating. Then click on UPLOAD button.

46

47 7) If your upload is successful, then the acknowledgement of return would be displayed. Save the acknowledgement at required destination. Click on PRINT to generate printout of the same. 8) In case the return is digitally signed; then on generation of "Acknowledgement" the Return Filing process gets completed.

48

49 Any return which is digitally signed by the assessee and filed with an E-Return Intermediary (ERI), who, in turn, submits the return to the Income Tax Department under his digital signature, will also be deemed to have been filed under a digital signature of the assessee and no Form ITR-V is required to be submitted. Until now, the digital signature was just to be attached to the xml file prior to uploading the return. Now, the digital signature either in form of USB token or PFX file has to be registered on the income tax portal before the same can be attached to xml file for uploading.

50 9) Incase the return is not digitally signed, on successful uploading of e-return; the ITR-V Form would be generated. This is an acknowledgement cum verification form. This form has to be verified and signed & should be submitted with centralized processing unit at Bengaluru. This completes the Return filing process for non-digitally signed Returns.

51 Dos and Dont's for printing and submitting of ITR-Vs to ITD-CPC Bengaluru 1.Please use Ink Jet /Laser printer to print the ITR-V Form. 2.The ITR-V Form should be printed only in black ink. 3.Do not use any other ink option to print ITR V. 4.Use of Dot Matrix printer should be avoided. 5.Ensure that print out is clear and not light print/faded copy.

52 Dos and Dont's for printing and submitting of ITR-Vs to ITD-CPC Bengaluru 6. Please do not print any water marks on ITR-V. The only permissible watermark is that of "Income tax Department" which is printed automatically on each ITR-V. 7. The document that is mailed to CPC should be signed in original. 8. Photocopy of signatures will not be accepted. 9. The signatures or any handwritten text should not be written on Bar code.

53 Dos and Dont's for printing and submitting of ITR-Vs to ITD-CPC Bengaluru 10. Bar code and numbers below barcode should be clearly visible. 11. Only A4 size white paper should be used. 12. Avoid typing anything at the back of the paper. 13. Perforated paper or any other size paper should be avoided. 14. Do not use stapler on ITR V acknowledgement.

54 Dos and Dont's for printing and submitting of ITR-Vs to ITD-CPC Bengaluru 15. In case you are submitting original and revised returns, do not print them back to back. Use two separate papers for printing ITR-Vs separately. 16. Please do not submit any annexures, covering letter, pre stamped envelopes etc. along with ITR-V. 17. The ITR-V form is required to be sent to Post Bag No.1, Electronic City Post Office, Bengaluru, Karnataka , by ordinary post. 18. ITR-Vs that do not conform to the above specifications may get rejected or acknowledgement of receipt may get delayed.

55

56 e-filing Process At a glance 1 Select appropriate type of Return Form 2 Download Return Preparation Software for selected Return Form. 3 Fill your return offline and generate a XML file. 4 Register and create a user id/password 5 Login and click on relevant form on left panel and select "Submit Return 6 Browse to select XML file and click on "Upload" button

57 e-filing Process At a glance 7 On successful upload acknowledgement details would be displayed. Click on "Print" to generate printout of acknowledgement/ ITR-V Form. 8 In case the return is digitally signed, on generation of "Acknowledgement" the Return Filing process gets completed. You may take a printout of the Acknowledgement for your record. (Contd..)

58 e-filing Process At a glance In case the return is not digitally signed, on successful uploading of e-return, the ITR-V Form would be generated which needs to be printed by the tax payers. This is an acknowledgement cum verification form. The tax payer has to fill-up the verification part and verify the same. A duly verified ITR-V form should be mailed to Income Tax Department CPC, Post Bag No - 1, Electronic City Post Office, Bengaluru , Karnataka, BY ORDINARY POST ONLY within 30 days after the date of transmitting the data electronically.

59 e-filing Process At a glance 9 ITR-V sent by Speedpost, Registered Post or Courier will not be accepted. No Form ITR-V shall be received in any other office of the Income-tax Department or in any other manner. In case, Form ITR-V, is furnished after the above mentioned period, it will be deemed that the return in respect of which the Form ITR-V has been filed was never furnished and it shall be incumbent on the assessee to electronically re-transmit the data and follow it up by submitting the new Form ITR-V within thirty days. This completes the Return filing process for non-digitally signed Returns. 10 For any assistance in filing the ITR-V please contact the Public Relations Officer of the local Income Tax Office.

60 Relevant Notifications, Circulars & Instructions CIRCULAR NO. 03 / 2009, DATED CIRCULAR NO. 8/2008, DATED CIRCULAR NO. 6/2008, DATED CIRCULAR NO. 5 / 2007, DATED CIRCULAR NO. 3/2007, DATED CIRCULAR NO. 9/2006, DATED NOTIFICATION NO. 75/2009, DATED NOTIFICATION NO. 70/2009, DATED NOTIFICATION NO. 210/2007, DATED

61 THANK