Tag: income tax return

Tax Query: How to file ITR for the deceased

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I lost my brother to Covid-19 in May 2021. Do we need to file income tax returns on his behalf for the last financial year? Advance tax was deducted from his salary during April 2021 and May 2021 for bonus received in April 2021 and projected annual income. Is it possible to claim excess tax paid?

A. R. Chintha

As per the provisions of Section 139(1) of the Income-tax Act, 1961 (‘the Act’), every person (other than a company or a firm) whose total taxable income during the previous year exceeds the maximum amount which is not chargeable to income-tax ₹250,000 for FY 2020-21 and FY 2021-22) is required to file income tax return. As per the provisions of Section 159 of the Act, where a person dies, his / her legal representatives shall be liable to pay any tax liability due, on behalf of the deceased and are deemed to be assessed to tax on behalf of deceased. Accordingly, the legal representative shall also be eligible to file the income tax return on behalf of a deceased person. In order to do so, the legal heir would be required to register as the Representative assessee of the deceased through his/her e-filing profile.

Below are the steps to register as a legal representative:

· Legal heir will have to log in to his/her income tax e-filing account.

· Click on Authorised Partners on the home page

· Select Register as Representative Assessee

· Click on ‘Let’s get started’ and create New request

· Select the category as ‘Deceased (Legal Heir)’ in the ‘category of assessee who you want to represent’ and Continue

· Fill in the requisite details. Details like PAN of deceased, date of death, reason for registration (please select the same ‘Others’ and then mention the reason of registration), details of legal heir etc. would be required. Also, documents like copy of PAN card of the deceased, copy of death certificate, copy of legal heir proof and copy of letter of indemnity would be required to be uploaded.

Once the legal representative is registered, he/ she can file the income tax return on behalf of the deceased for the FY 2020-21. The extended due date to file the Income tax return for the FY 2020-21 is 31 December 2021 (for individuals who are not required to get their accounts audited).

For the FY 2021-22 also, the return of income would be required to be filed (even if tax has been deducted at source / advance tax has been paid) in the similar manner and any excess deducted/ paid, can be claimed as refund.

How to download the copy of Income Tax Return filed online for the financial year 2020-21 (Assessment Year 2021-22)? Please inform me the steps to be followed online to download the I.T. Return.

M.Ramanathan

I understand that you have already filed your return of income for FY 2020-21 (i.e. AY 2021-22), the extended due date for filing of which is 31 December 2021 for non-audit cases.

In order to download copy of Income, you will need to login to the income-tax e-Filing website with the following link: https://www.incometax.gov.in/iec/foportal. Please log-in with your credentials (user ID is your PAN) and follow the below steps to download the income tax return filed:

· Click on ‘e-file’ tab on the home page

· Select ‘Income Tax Forms’

· Select ‘View Filed Return’

· Select ‘Download Form’ option under the Assessment Year (AY) 2021-22

· The income tax form would be downloaded

The writer is a practising chartered accountant

Send your queries to taxtalk@thehindu.co.in

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Tax Query: How to get TDS certificate from mutual funds?

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I have a few doubts with respect to my ITR for FY 2020-21 i.e. current AY 2021-22. I have invested ₹20,000 in Templeton India Equity Income Fund in 2006 under NFO. Since then periodical dividends declared under the scheme are getting credited to my savings a/c through ECS regularly and are accounted for in my ITR returns of the respective financial years. Since the Finance Act 2020 is modified and the dividends are now taxable in the hands of investors, the mutual fund has deducted TDS and paid the balance of the dividend to my savings account. Since I have not received Form 16 A for the TDS made by the mutual fund, I have sent a mail to the RTA of the MF. Initially, they have asked for a self-attested copy of my PAN card which I have provided to them. Now the RTA has replied that my PAN was not registered in FY2020-21 with them and was registered subsequently and hence, they are unable to fetch the TDS certificate for the FY2020-21. Since, the TDS was deducted on the dividend amount paid to me, kindly inform me how I can obtain TDS certificate and show them in my returns.

I also request you to kindly inform me how to show them in the current ITR in the absence of Form 16A.

Further, I am a retired pensioner and an amount of ₹15 lakh is invested in PMVVY Scheme and am receiving quarterly amount. Please clarify under what head should the amount be shown. Apart from my pension, during the year I have incomes including interest on bank deposits, dividend income from shares and MFs, interest income from NCDs, sovereign gold bonds, savings bank A/c, infra bonds, interest on NHAI tax-free bonds and short term & long-term capital gains. I have one self-occupied house property. My total income during the year is less than ₹50 lakh and I do not have any agriculture income. In the light of the above, I request you to kindly inform me which ITR return I have to file?

Rama Krishna

Dividend shall be taxable under the head ‘Income From Other Sources’ (IFOS) as per the Act. If your PAN is available with brokerage company/fund manager, the taxes deducted would be reported in your Form 26AS based on which the TDS credit can be claimed in the tax return. Where the company has not deposited the TDS/filed the TDS return, due to absence of your PAN details, you are required to complete the KYC formalities and provide the scanned copy of PAN to enable them to do the needful.

Pension income earned from Prime Minister Vaya Vandana Yojana Scheme (PMVVY) of LIC of India is fully taxable and shall be reported under the head IFOS. Please be informed that bank interest, dividend income from shares/mutual funds, interest income from infrastructure bonds, NCDs and sovereign gold bonds shall be taxable under the head IFOS. Short term capital gain/long term capital gain on sale of shares needs to be reported under the head capital gains.

Considering your income pattern, you are required to file ITR 2 for the FY 2020-21.

In the issue dated September 5, 2021, you have mentioned that if money is gifted to relatives, any interest earned out of that will be taxed in the hands of the recipient only. In a similar manner If shares allotted in an IPO are gifted to spouse, and if they are sold within a period of one year, will the short term capital gain be taxed in the hands of the recipient of the gift? If yes, what sort of record should be kept?

Niranjan

Your spouse is not required to pay any tax on receiving shares from you as a gift. However, Section 64(1)(iv) of the Act provides for clubbing of income in the hands of the transferor when assets are transferred for inadequate consideration. Providing gifts to your spouse would amount to transfer for inadequate consideration. Accordingly, any gains arising from sale of such shares is taxable in your hands. Besides documentation evidencing cost of acquisition of shares, sale consideration, selling expenses, etc., and documentation related to gift (like gift deed) needs to be kept on record.

The writer is Partner, Deloitte India

Send your queries to taxtalk@thehindu.co.in

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What is new in Form 26AS and how it impacts taxpayers

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Form 26AS was initially introduced as a tax credit statement, containing details of taxes deducted from the income of taxpayers (TDS/ TCS), advance tax or any self-assessment tax paid by the taxpayers or income tax refund received during the financial year.

The Budget 2020 proposed to extend the mandate of Form 26AS and make it more comprehensive, with detailed information about the taxpayer’s tax profile. Consequently, the tax department, in May last year, updated Form 26AS to provide details of pending/ completed income tax proceedings, status of income tax demand and refund along with details of specified financial transactions undertaken by taxpayer during a financial year (such as share purchase, property purchase), etc. to the taxpayers in a single form.

New additions

Once more, the scope of Form 26AS, also known as Annual Information Statement (AIS), has been expanded to incorporate 8 new particulars, including foreign remittances, interest on income tax refund, off-market transactions, dividend income/ purchase of mutual funds, detailed breakup of salary and information from Income Tax Return (ITR) of another person.

Notably, such information was already being captured by the tax authorities from authorised dealers, registrar, depositories, transfer agents etc. For instance, every authorized dealer making a payment to a non-resident is required to furnish statement of such payments in Form 15CC to the tax department. Likewise, depositories and transfer agents are obligated to report off-market transactions of account holders, which may include legacy transfers, gifts, transfer of shares between two demat accounts, shifting of securities between a client and a sub-broker and transactions in unlisted securities.

Tax authorities also get information about financial transactions of persons by way of declarations in other taxpayers’ ITRs. For instance, seller of a property is required to furnish particulars of buyer. Such information obtained from the ITR of another person shall be made available in the revised AIS. Additionally, complete break up of salary including allowances, deductions/ exemptions claimed, their income from other sources and house property and the final tax liability so deduced by the employer shall also form a part of AIS. For the time being, the AIS shall be accessible on the e-filing portal as well as the TRACES portal.

Implications and benefits

The additions to the information list will help both taxpayers as well as tax authorities in assessing a taxpayers’ data and effectuate better flow of information between taxpayer and tax department.

For taxpayers, the collation of almost all tax-related information/reportable transactions at one place will accelerate and facilitate ease while filing income tax returns.

Further, the revised form shall also be of significance for stakeholders such as banks/financial institutions/customers/buyers while exercising due diligence and ensuring the credibility of the corporate/person they are dealing with.

It shall also help taxpayers identify any errors or inaccuracies, if any, and take timely remedial action. Notably, this time a facility of feedback has been instituted, where taxpayers may report any incorrect particulars noticed in Form 26AS.

The reported value and value after feedback shall be shown separately in the AIS. The reporting entity (like the depositories, authorised dealers, etc.) may be contacted if the request is denied. Moreover, a simplified Taxpayer Information Summary (TIS) shall also be made available to the taxpayers, which shall derive information from the taxpayer’s feedback and shall be used for pre-filling of ITRs. Simply put, taxpayers may review AIS and provide feedback if the information reflected therein needs modification. This shall lead to real time changes in the TIS, which may be used for filing the ITR. This is in line with the department’s commitments in the Taxpayers’ Charter, to treat the taxpayers as ‘honest’ unless there is a reason to believe otherwise.

Tax base widens

The government recognises the fact that tax disputes and assessments infuse fear in the minds of the taxpayers. It has therefore been trying relentlessly to simplify tax procedures and build a taxpayer-friendly tax regime.

Facilitating tracking of transactional and tax information at the state of reporting stage itself, shall help minimise incongruities/ omissions, which is a prime reason for scrutiny assessments and shall lead to saving of time, costs and hassle at the assessment stage. With knowledge of the fact that the taxman already has information about the taxpayers, they shall be discouraged to suppress material information, thereby widening the tax base.

Since the inception of the scheme of ‘Transparent Taxation’ the tax department has taken commendable steps like simplification of ITR forms, faster processing of refunds, reduction of unnecessary litigation, etc.

The availability of complete and accurate information for fulfilling compliance obligations under law, adds strength to the government’s efforts of providing a seamless, painless and faceless tax administration.

The author is Director, Nangia Andersen LLP (with inputs from Vasudha Arora)

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Penalty for missing ITR filing deadline has been cut to half, BFSI News, ET BFSI

Banking & Finance

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For the financial year 2020-21, the deadline to file income tax return (ITR) is December 31, 2021, (it was extended twice – first from the usual deadline of July 31, 2021, to September 30, 2021, and then to December 31, 2021) due to the pandemic. Till last year, if a taxpayer missed the ITR filing deadline, the maximum penalty he/she would have had to pay was Rs 10, 000.

However, with effect from FY 2020-21, the penalty amount has been reduced by half, i.e., a person filing belated ITR will have to pay a penalty of up to Rs 5,000. Further, if your income is below the taxable limit then you won’t even have to pay the penalty amount if you file your ITR after the deadline subject to certain exceptions. Here is why the penalty this year is half that of last year.

The penalty you will have to pay
In Budget 2021, the government reduced the maximum time allowed to an individual (whose accounts are not required to be audited) for filing ITR by three months. Due to a reduction in the time limit of filing ITR, a consequential amendment was made in Section 234F of the Income-tax Act, 1961 under which the penal amount for filing belated ITR was reduced to a maximum of Rs 5,000 from Rs 10,000 earlier.

Earlier, an individual was allowed time till the end of the financial year, i.e., March 31 to file belated ITR by paying a maximum penalty of up to Rs 10,000.

From this year onwards, the deadline for filing belated ITR is December 31. Accordingly, for FY2020-21 the deadline for filing belated ITR was December 31, 2021, but has been extended twice – first to January 31, 2022, and then to March 31, 2022, due to covid-19. As mentioned above, an individual filing belated ITR by the deadline of March 31, 2022 will now have to pay maximum penalty of Rs 5,000.

Abhishek Soni, CEO, Tax2Win.in, an ITR filing website says, “The last date of filing belated return for FY 2020-21 was December 31, 2021 (originally) which was extended till January 31, 2022 and which is again extended by two months. Now the last date of filing belated ITR is March 31, 2022. This needs to be noted that the deadline for filing the belated return has been extended but late filing fees will be Rs. 5000/- only rather than Rs. 10,000 if you file belated ITR between January 1, 2022 and March 31, 2022.”

Up until last year, there was two-tier penalty structure for missing the ITR filing deadline. If the belated ITR was filed after the expiry of the deadline and on or before December 31, then the individual was required to pay a late filing fee of Rs 5,000. If the ITR was filed between January 1 and March 31, then a late filing fee of Rs 10,000 was levied.

Kapil Rana, Founder & Chairman, HostBook, a fintech startup offering ITR filing services, says, “As per section 234F, till FY 2019-20, if the taxpayer failed to file ITR on or before the due date, then he/she was liable to pay a fee of Rs 5,000 if the tax return was furnished on or before 31st December of the relevant assessment year, otherwise, it will be Rs 10,000 if tax return is furnished after 31st December but from FY 2020-21, the law has been changed. The maximum late filing fees of Rs. 5000 shall be payable if, return is submitted after the expiry of the due date.”

However, there is no change in the penal amount levied on small taxpayers who miss the ITR filing deadline. If you are a small taxpayer whose total income does not exceed Rs 5 lakh during an FY, then the maximum fees you are liable to pay is Rs 1,000 if the ITR is filed any time after the expiry of the deadline (i.e., December 31, 2021) but before March 31, 2022.



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Is it mandatory to file income tax returns, by only referring to Form 26AS?

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What head of income is the compensation received on compulsory acquisition of a house with plot taxable under? Or is it exempt?

Rajan NA

Section 45(5) of the Income Tax Act, 1961 (the Act) deals with taxability of capital gains pursuant to compulsory acquisition of capital asset under any law. A house with plot is a capital asset and gains arising due to compulsory acquisition shall be taxed under the head ‘Capital Gain’. Depending on the period of holding the capital gains may have to be categorized as long-term or short-term .

The query is related to tax deducted at source. Is it mandatory to file income tax returns, by only referring to Form 26AS? I am yet to receive Form 16/16a from the deductor. In another case Form 26AS doesn’t reflect amounts appropriately, partly they have allowed partly they have not given credit. I request you to please clarify what can be claimed as tax paid now, in ITR?

Sivalingam

Income earned during the financial year needs to be offered to tax while filing the tax return in India. An individual is required to collate details of all income earned during the financial year, like salary income, rental income, interest income, etc. and consider the same for tax filing, regardless of whether there has been tax deduction on such income. It may be noted that the details reflected in the Form 26AS are based on the withholding tax returns filed by tax deductor. It is important to reconcile the income and taxes reported in Form 26AS before filing the tax return. The central processing unit (CPC) checks the accuracy of the amounts offered in the tax return by comparing it with 26AS and raises queries in case of discrepancies. Therefore, in case of any difference in the amount, you are required to connect with the deductor so that necessary corrective action can be undertaken which should then reflect in Form 26AS.

The writer is Partner, Deloitte India

Send your queries to taxtalk@thehindu.co.in

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Here’s a ready reckoner on changes in new ITR forms

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Last week, the CBDT notified the new ITR forms for assessment year 2021-22. Tax payers can breathe easy this year, given the limited changes in the tax forms. The changes this year are only with respect to certain amendments in the tax law, proposed in the Budget of 2020.

Besides, certain schedules introduced last year to accommodate the relief given to taxpayers during the pandemic have now been removed. For instance, Schedule DI (Detail of Investments/deposit/payment for the purpose of claiming deduction) finds no place in the new ITRs.

Here is a low-down on a few important changes in the new ITR forms, that can come in handy while filing your returns for assessment year 2021-22.

Eligibility tweaks

The exclusion list of ITR-1, that is, persons who cannot file their returns using ITR-1 has got some new frills this year. Now, taxpayers for whom TDS has been deducted under section 194N can no longer file their returns in ITR-1. Per the section, banks (including co-operative societies and post office) are required to deduct TDS at the rate of 2 per cent on cash withdrawals exceeding Rs 1 crore (in aggregate) in the previous year. For non-filers of income tax returns (i.e. those who did not file returns in all of the last three assessment years), the deduction shall be 2 per cent for amounts exceeding ₹20 lakh or at the rate of 5 per cent if withdrawals exceed Rs 1 crore.

In addition, following the recent amendments to tax law, employees who can defer their tax liability on ESOPs cannot file returns in ITR 1 or 4. They have to file returns in forms 2 and 3 only.

ESOP taxation

The Budget of 2020 proposed deferring the tax on ESOPs allotted for employees of a narrow stream of eligible start-ups. ESOPs are taxed twice, in the hands of the recipient employees – once at the time of receipt as a perquisite and next upon subsequent sale of the shares (Capital gains).

Employees of eligible start-ups can now defer the tax on perquisite by 48 months from the end of the relevant assessment year in which the shares are allotted. The Schedule TTI (Computation of tax liability on total income) now requires clear bifurcation of such current and deferred tax amount on ESOPs.

Dividend income

Another Budget amendment was the abolition of DDT and the consequential taxation of the same in the hands of the shareholders. In the ITR forms, apart from withdrawing the redundant mentions of the DDT sections, the Schedule OS (Income from Other Sources) has also been accordingly tweaked to accommodate these amendments. For example, a new row has been inserted to provide deduction for interest expenditure which can be claimed as a deduction under section 57(1) if incurred in relation to dividend income. Further new rows have been added to incorporate dividends earned by non-resident taxpayers, that are chargeable at special rates, under section 115A.

ITR Forms 2, 3 and 4 required taxpayers to provide quarterly break up of dividend income, which helps in computing the interest liability according to advance tax provisions. This break up is now also required to be furnished by taxpayers filing returns using ITR-1.

Concessional tax rates

Starting AY 2021-22, taxpayers can opt for lower tax regime under section 115BAC, by foregoing certain exemptions and deductions. In Part A of all the ITR Forms, taxpayers are required to specify if they are opting for new tax regime under section 115BAC. Assessees with income from business or profession were required to exercise such option on or before the due date for furnishing the returns by filing Form 10-IE. ITR Form-3 hence requires such taxpayers, to furnish the date of filing form 10-IE and its acknowledgement number.

Besides, consequential amendments, with respect to exemptions and deductions foregone have also been made. For instance, in ITR 3, amendments have been made in Schedule DPM (Depreciation on Plant and Machinery) and Schedule UD (Unabsorbed Depreciation), to make one -time adjustment in the written down value of the plant and machinery, for the exemptions now foregone.

New utility

In a bid to ease the burden of taxpayers when filing the returns, the CBDT has launched a new offline utility called JASON for the assessment year 2021-22. The existing excel and java utility have been discontinued. The new JSON utility has currently been enabled for ITR 1and 4 only.

The utility will import and pre-fill the data from e-filing portal to the extent possible. It is enough if taxpayers fill the balance data. However, facility to upload ITR at the e-filing portal using the utility is not yet enabled. It is expected to be available sooner than later.

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