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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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

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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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How banks, mutual funds and companies will check if you have filed ITR, BFSI News, ET BFSI

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Effective from July 1, 2021, a person who has not filed ITR for the previous two financial years and the aggregate TDS and TCS deducted from payments made to him/her in each of these financial years exceeds Rs 50,000, then such person would be subjected to higher TDS rate.

Deductors of TDS/TCS like banks, mutual fund houses etc can now check if you have filed ITR when your income crosses the TDS limit from July 1, and levy two times the TDS amount if you haven’t filed your tax return. For this purpose, the income tax department has launched a compliance check utility for tax deductors on the department’s reporting portal. Further, the tax department has prepared a list with names of taxpayers who have not filed their ITRs for the previous two fiscals, which can be used by deductors.

Here is a look at how financial institutions will check if individuals have filed ITR or not to see if higher tax has to be deducted from their income. Also, what a taxpayer can do if their name appears on the list of those who haven’t filed ITRs for the previous two years.

When will higher TDS/TCS be levied?
As per the announcement made in Budget 2021, if an individual satisfies the following conditions, then he/she will be subjected to higher TDS/TCS rate:
a) If the individual has not filed income tax return in the two previous financial years for which due date has expired as per section 139(1) of the Income-tax Act, 1961 and
b) Sum of TDS and TCS in each of the financial years is more than Rs 50,000

Chartered Accountant Naveen Wadhwa, DGM, Taxmann.com says, “If for the relevant financial years an individual has filed belated ITR or filed ITR in response to a notice from tax department, then Section 206AB would not be applicable. It would mean that higher TDS would not be deducted on incomes.”

Compliance check utility for sections 206AB and 206CCA
As mentioned above, a compliance check utility has been launched on the income tax department’s reporting portal: https://report.insight.gov.in/reporting-webapp/portal/homePage.

Here, if an individual comes under the purview of TDS, i.e., his income exceeds the specified limit, then the financial institution such as bank, mutual fund etc., would check if the tax on the income accrued would be deducted either at the normal rate (if the above-mentioned conditions are not satisfied) or at higher rate as mentioned in the newly enacted law.

For instance, if the interest income from fixed deposit during the FY 2021-22 exceeds Rs 40,000 in a financial year, then tax would be deducted on the interest income.

As per the circular, the tax deductor or collector can enter single PAN or multiple PANs of the deductee or collectee on the reporting portal. The deductor or collector will get a response from the reporting portal if the TDS on income of such a person would be deducted at a higher rate.

As per the functionality offered on the reporting portal, a list of persons is prepared by the tax department at the start of the financial year 2021-22. This contains name of taxpayers who have not filed ITR in the previous years, i.e., 2018-19 and 2019-20. These two financial years are taken as the relevant previous years where ITR was not filed and aggregate of TDS and TCS exceeded Rs 50,000 in each of the financial years.

Can your name be removed from the list?
The tax department’s June 22, 2021 circular states that if the specified person, i.e., the person whose name has appears on the list, files ITRs for FY 2018-19 and 2019-20 during the financial year 2021-22, then his name would be removed from the list. Wadhwa says, “The due date of filing ITR for FY 2018-19 and 2019-20 has expired on 30-11-2020 and 10-01-2021 respectively. Thus, an individual cannot file ITR now, unless a notice is received from the income tax department to file ITR.”

If the taxpayer files valid ITR (i.e., filed and verified) for FY 2020-21, then his/her name would be removed from the list. Wadhwa says, “A taxpayer should ensure that once ITR is filed, it is immediately verified. The name from the list on the reporting portal would be removed either once the due date has expired (i.e., after September 30, 2021) or date of filing valid return (filed & verified), whichever is later. Thus, if you have filed and verified ITR before the expiry date (September 30, 2021 for FY 2020-21), then your name would be removed after the expiry of deadline. However, if you file your ITR, say on September 25, 2021, and verify it on say October 15, 2021, then name from the list would be removed from the list after October 15, 2021.” As per income tax laws, a taxpayer can verify his/her return within 120 days of filing ITR.

However, no new names would be added to the list. Wadhwa says, “This would mean that banks, mutual funds or any other deductor would check only once during the FY 2020-21 at the time of deducting taxes from the income accrued. If the name does not appear on the list, then such deductor would continue to deduct taxes at normal rates throughout the year. However, if higher TDS is applicable and ITR for FY2020-21 is filed during the year, then individual would have to inform the deductor, i.e., bank, mutual fund etc. to check the list again after filing ITR and deduct TDS at normal rate.”



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