Provisions for filing Return of Income

What is a return of income?

Return of Income is a format in which assessee furnishes information as to his total income and tax payable. The format for filing of returns by different assessees is notified by the Central Board Of Direct Taxes.

Return of Income

Various Provisions for filing Return of Income

Return of Income

Sec 139 (1)

Voluntary Return of Income Who has to file a return of income?

1)Every company and firm (irrespective of profit or loss) must file a return of income in the prescribed form on or before the due date. 2)Every other person(Individual,HUF,AOP,BOI,AJP) has to file a return of income only if their total income without giving effect to deductions U/Ch.VIA and provisions of exemptions U/Sec 10A,10B or 10BA exceeds the maximum amount not chargeable to income tax

Return of Income

Cont.. i.e. in other words if your Gross Total Income> Basic Exemption Limit (2 lacs/2.5lacs/5lacs),filing a return of income is compulsory whether tax is payable by you or not. 3)From the A.Y. 2012-2013,a person being a resident and ordinarily resident if he has during the previous year any asset (including any financial interest in any entity) located outside India or any signing authority in any account located outside India must file a return on or before the duedate irrespective of whether he has any taxable income in India or not.

Return of Income

Cont.. 4)Sec 139(4A)Even Charitable Institutions have to file a return of income on or before the due date if their total income without giving effect to provisions of Sec 11 and Sec 12 exceeds the basic exemption limit (irrespective of whether they have to pay tax or not)

5)Sec 139(4B) Similarly, even political parties have to file their return of income if their total income without giving effect to provisions of Sec.13A exceeds the basic exemption limit

6)Sec 139(4C)All other assesses whose income is exempt U/S 10 (e.g. scientific research association u/s 10(21),professional institutes u/s 10(23A),trade unions u/s 10(24) etc) must file a return of income if their total income without giving effect to provisions of Sec 10 exceeds basic exemption limit
Return of Income

Cont.. Return of Income to be filed by

Companies and firms (Including limited liability partnerships)

Charitable Institute, Political Parties and other assessess who enjoy Exemption U/s 10

Every R & OR if he has any financial Interest or signing authority outside India

Every other person whose GTI > Basic exemption limit

Return of Income

Sec 139(1C)

Special Exemption provided by the government from filing return of income

The Central Government is empowered to exempt any class of persons from furnishing return of income subject to specified conditions. So it has been notified that If the taxable income of an individual (Resident or nonresident) consists only of 1)Salary (from one employer only) and/or 2)Savings Bank Interest not exceeding 10,000 during the previous year and this interest has been reported to the employer for the purpose of deducting tax at source if any

Return of Income

Cont..

then, the assessee may not furnish a return of income provided his entire tax has been deducted at source and deposited to the Central govt. as per Form No.16 furnished by the employer so there is no tax payable by him or refund due to him. Of course, such an assessee may voluntarily furnish a return of income for record purposes.However this exemption is applicable only if the interest net total income(salary + savings bank

Return of Income

Due Dates for Filing Voluntary Return of Income 1) 30th September of the relevant assessment year for i)Companies ii)any non corporate assessee whose accounts are required to be audited under any law iii)working partner of a firm whose accounts are required to be audited under any law 2)30th November of the relevant assessment year for those assessees who have entered into an international transaction during the previous year and he is required to furnish a report (transfer pricing) pertaining to it 3)31st July of the relevant assessment year in any other case (i.e. non corporate whose accounts are not required to be audited)
Return of Income

Cont.. e.g. Discuss whether the following assessees are required to submit the return of income and if so indicate the due date: Q.1) Pednekar Jewellers Private Ltd. for the P.Y. 2012-2013 has recorded sales of 20 lacs but a loss of 2 lacs. Ans : Irrespective of profit or loss, Pednekar Jewellers Private Ltd. must file a return of income because its a company. Due Date - 30th Sept. 2013.

Q.2)Mr. X is a working partner in a partnership firm whose accounts are required to be audited. X's income is 5,50,000 for the P.Y. 2012-13 Ans: X's taxable income >basic exemption limit. Since the firm will file its return on or before 30th Sept. for Mr. X the due date of filing is also 30th Sept. 2013.

However if X was a sleeping partner, For him the due date of filing the return of income would be 31st July 2013.
Return of Income

Other modes of filing Return of Income

Return of Income

Sec 139(1A)

Option to file return of income through the employer

In case of salaried employees, the return of income may at the option of the employee be furnished to his employer. Such an employer shall furnish all returns received by him on or before the due date in such form and manner as may be specified in the scheme as notified by CBDT.

Return of Income

Sec 139(1B)

Filing of returns in electronic form

It is mandatory for companies and all other assessees who are subject to tax audit U/S 44AB to file return in electronic form (e return). Other assessees may at their option file return in electronic form or through any other computer readable media.

Return of Income

Sec 139B

Filing of returns through Tax Return Preparer

For the purpose of enabling any class of persons to prepare and furnish their return of income, the CBDT has framed a scheme providing that such persons may furnish their returns through a Tax Return Preparer. The Scheme specifies the manner in which the Tax return Preparer shall assist the assessee and also affix his signature on the return. The scheme also provides the educational qualifications of such a TRP and the training ,code of conduct, duties and other necessary matters for the purpose of filing the return of income.

Return of Income

Cont..

The TRP can be an individual other than 1)any legal practitioner practicing in any civil court in India or 2)any Bank officer with whom assessee maintains a current account or has regular dealings or 3)any Chartered accountant or 4)any employee of the assessee.

Return of Income

Sec 139(3)

Return of Loss

Even if an assessee has loss (instead of taxable income),he must furnish his return of income now called as "Return of Loss" on or before the due date of filing the return of income, else the following losses cannot be carried forward: 1)Business loss (other than unabsorbed depreciation, capital expenditure on scientific research and family planning) 2)Capital loss (Short term or long term) 3)Loss from the activity of owning and maintaining racehorses. Note :Loss from house property and unabsorbed depreciation, capital exp on scientific research and family planning can however be still carried forward.
Return of Income

Sec 139(4)

Belated Return

A return filed after the due date is called as Belated return. If a return is filed after the due date,then the assessee has to pay interest @1% per month or part of a month from the due date till the date of filing the return of income /date of assessment.(as per sec 234A) The interest is calculated on total tax payable less (T.D.S. and Advance tax paid) Besides paying interest, the assessee also cannot carry forward certain losses as explained earlier U/S 139(3).

Return of Income

Cont.. Time limit for filing a Belated return. A belated return can be filed within 1)one year from the end of the relevant assessment year or 2)before completion of assessment whichever is early. For e.g. For the P.Y. 2012-13 ,Mr. X is supposed to file his return by 31/07/2013 (assuming he is not subject to tax audit).In case he does not file his return by 31st of July, then he can file it late provided he pays interest on the tax due U/s 234A. However the last date by which he can submit a belated return is 31/03/2014 (one year from 31/03/2013) .If assessment is completed prior to this date, then the belated return should be submitted prior to date of assessment.
Return of Income

Sec 139(5)

Revised Return

If after furnishing a voluntary return of income U/S 139(1) or a return U/S 142(1),the assessee discovers any omission in the return or any bonafide mistake ,then he can submit a revised return. Time limit for filing a Revised Return. A Revised Return can be filed within 1)one year from the end of the relevant assessment year or 2)before completion of assessment whichever is early.(Same time limit as that of a Belated return)

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Cont.. However in order to discourage the practice of filing belated returns, it has been held that a Belated Return can never be revised.(SC decision in the case of Kumar Jagdish Chandra Sinha v/s C.I.T. 1996)

Please note :For the purpose of making an assessment, the Assessing Officer is empowered to serve a notice U/S 142(1) to any person who has not filed a return of income in order to furnish a return of income or produce certain documents or information as may be required.

The Assessing Officer may furnish such a notice even on a person who has filed his return of income if he needs certain extra documents or information for the purpose of his assessment.

Return of Income

Sec 139(6)

Particulars to be furnished in a return

The prescribed form of return shall in certain cases require the assessee to furnish particulars of: 1)Income exempt from tax 2)Assets of the prescribed nature and value belonging to him 3)Details of bank account and credit card held by him 4)Expenditure exceeding prescribed limits incurred by him under prescribed heads 5)Such other outgoings as may be prescribed

Return of Income

Sec 139(6A)

Particulars to be furnished in a return in case of an assessee engaged in income from Business or Profession

The prescribed form shall in case of such an assessee also require him to produce: Audit report U/S 44AB Particulars of the location and style of the principal place of business and branches ,if any Names and addresses of partners or members of AOP/BOI Extent of share in the profits of such partners or members

Return of Income

Sec 139(9)

Defective Return

Under section 139(9) Assessing Officer has power to call upon the assessee to rectify a defective return. For the purpose of this subsection, return of income shall be regarded as defective unless all the following conditions are satisfied.

Annexure, Statements and Columns: The annexure, statements and columns in the return of income relating to computation of income chargeable under each head of income, computation of gross total income and total income have been filled in.

Return of Income

Cont.. Return of income to the accompanied by statements: The return of income is accompanied by the following: A statement showing computation of the tax payable on the basis of the return accompanied by the report of audit obtained under Section 44AB. Proof regarding tax deducted: The proof regarding the tax, if any, claimed to have been deducted at source and the advance tax and tax on self-assessment, if any, claimed to have been paid. However, w.e.f. 1-6-2002 where the return is not accompanied by proof of the tax, if any, claimed to have been deducted at source, the return of income shall not be regarded as defective if: a certificate for tax deducted at source was not furnished to the person furnishing his return. Such certificate is to be produced within a period of 2 years from the end of the year in which such income is assessable.
Return of Income

Cont.. Proof of compulsory deposit: The proof of the amount of compulsory deposit, if any, claimed to have been under the compulsory deposit scheme. Copies of different accounts: Where regular books are maintained by an assessee, copies of manufacturing, trading, profit and loss account and balance sheet. In the case of proprietary business or profession, the personal account of the proprietor; in the case of firm, association of persons, body of individuals, the personal account of partners or members. assessee have been

audited, copies of the audited profit and loss account and balance sheet

Return of Income

Cont..

Where regular books of accounts are not maintained by the assessee, the return should be accompanied by a statement indicating the amount of turnover or gross receipts, expenses, net profit and basis on which such amounts have been computed. It must also include the total sundry debtors, creditors, stock in trade and cash balance at the end of the year

Pls. note :As per the CBDT circular of 2009,furnishing the tax audit report and various documents and challans is henceforth not required while filing the return of income. The same should be retained by the assessee and produced before the Assessing Officer as and when he requires.

Return of Income

Cont..

Discretion of Assessing Officer: Where the assessing officer considers that the return of income furnished by the assessee is defective he is given the discretion to intimate the defect to the assessee and give him an opportunity to rectify the defect within a period of fifteen days from the date of intimation or within such further extended time as the Assessing Officer may allow. If the defect is not rectified within the period of fifteen days or such further extended period then, the Income tax Act shall apply as if the assessee has failed to furnish the return and that return will be treated as invalid.

Return of Income

Sec 139(A)

Permanent Account Number

A PAN is a 10 digit no. consisting of alphanumeric characters issued in the form of a laminated card. It serves like an identification no. for every assessee and should be quoted in all returns, challans, documents and other correspondence with Income Tax authorities.

Return of Income

Who should apply for PAN?

1)Every person if his total income or total income in respect of which he is assessable exceeds the basic exemption limit. (Time limit : upto 31st May of the Assessment Year)

2)Every person carrying on business or profession if his total sales or gross receipts exceed or are likely to exceed Rs.5,00,000/- in an accounting year.(Time Limit: by the end of the previous year)

3)Every person who is required to furnish a return u/s 139(4A) (i.e. return of charitable Institutes) (Time Limit :by the end of the previous year)

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Cont..

4)Besides this, the Central Government may by notification in the Official Gazette specify any class or classes of persons by whom any kind of tax is payable under law and they will have to apply for PAN irrespective of whether they have to pay any income tax or not. The Central Govt. may also specify any class of persons to apply for PAN if the govt. thinks it is for the purpose of collecting any information relevant to the Act.

5)The Assessing Officer considering the nature of the transactions as may be prescribed may also allot a PAN to any other person(whether any tax is payable by him or not)

Return of Income

The following transactions have been prescribed: (a) Sale/purchase of any immovable property valued at Rs. 5 lacs or more; (b) Sale /purchase of motor vehicle (other than two wheeler) ; (c) Time deposit exceeding Rs. 50,000 with a bank; (d) Deposits exceeding Rs. 50,000 in Post Office Savings Bank; (e) Contract for sale/purchase of securities exceeding Rs. 1,00,000; (f) Application for installation of a telephone connection including cellular connection; (g) Payment of hotels/restaurants bills exceeding Rs. 25,000 at any time; (h) Deposit in cash aggregating Rs. 50,000 or more with a banking company to which the Banking Regulation Act applies; (i) Payment in cash for purchase of bank draft or pay order or cheque for an amount aggregating Rs. 50,000 or more;
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Cont.. (k) Making an application for issue of credit card; (l) Payment of an amount of Rs. 50,000 or more to a mutual fund for purchase of its unit; (m) Payment of an amount of Rs. 50,000 or more to a company for acquiring shares issued by it; (n) Payment of an amount of Rs. 50,000 or more to a company or institution for acquiring debentures or bonds issued by it; (o) Payment of an amount of Rs. 50,000 or more to the Reserve Bank of India, for acquiring bonds issued by it; (p) Opening a new bank account (in case of a minor, PAN of parent/guardian is required); (q)Payment to a dealer of Rs.5 lac or more for purchase of bullion or jewellery; (r)Payment of Life insurance premium of Rs. 50,000 or more p.a.
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Cont.. Transactions Where PAN is Mandatory

Sale / Purchase of
1) I M Property > 5 Lacs 2) Securities > 1 Lac 3) Motor Car 4) Bullion or Jewellery (Purchase) > 5 Lacs

Investments
If Exceed Rs.50,000 1) Deposits in Bank of Post Office 2) Cash Deposits 3) Payment to Institutions or Company for
i) Shares ii) Debentures iii) Units iv) RBI Bonds

Expenses
1) Hotel Bills > 25,000 2) Cash Payments for foreign Travel > 25,000 3) Cash payment for DD or Pay order > 50,000 4) L.I.Premium > 50,000

New Application 1) Bank A/c 2) Landline / Cell 3) Credit Card

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Cont..

Besides the above transactions ,every person who receives any amount from which tax has been deducted at source should intimate his PAN to the person responsible for deducting his tax. A buyer or licensee or lessee from whom tax has been collected at source should also intimate his PAN to the person collecting tax at source. The person deducting/collecting the tax should quote this PAN in all statements, certificates and returns filed by him. However these rules do not apply to a person who has no taxable income or is not required to obtain PAN provided such person furnishes a declaration U/S 197A that tax on his estimated total income is nil.

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Exemptions from quoting PAN

In case of the following class or classes of persons, provisions of sec 139A do not apply 1)Persons who receive agricultural income and are not in receipt of any other income provided they furnish a declaration in form no. 61 2)Non residents 3)Central/State Government officers and Consular officers.

Return of Income

Sec 140

Authorised signatories to the Return of Income A return u/s 139 is to be signed by In the case of Individual H.U.F. Company Firm L.L.P. Local authority Political Party AOP/BOI Any other person By whom Himself Karta Managing Director Managing Partner Designated Partner Principal Officer Chief Executive Officer Member/Principal officer Person competent to act on his behalf

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When can the return be signed by persons other than those mentioned above? If the person required to sign is absent from India or for any other reason it is not possible for him to sign the return, then any person duly authorised by him can sign it. In case of a company, if the managing director is absent, it can be any other director or if the company is a nonresident, it can be a person who holds a valid power of attorney. In case of a company in liquidation, It will be the liquidator. If the management of a company has been taken over by the Central/State Govt., it will be the principal officer of the co. In case of a firm or LLP, by any other authorised partner. In case of an individual, by any authorised person holding a valid power of attorney. In case the individual is mentally incapacitated ,then by his guardian or any person competent to act on his behalf. In case of H.U.F., any other adult member of the family Note:An unsigned return is considered as invalid.

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Return of Income

State giving reasons whether True or False

1) Mr. X, a resident and ordinarily resident earns fixed deposit interest Rs. 1,00,000/- from India. He has no other income or assets in India. He also owns shares in a foreign company in Canada on which no dividend is earned. Since his taxable income is less than 2 lacs, he need not file a return of income.

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Answer : False

From the A.Y. 2012-13 onwards if a R and OR has any asset outside India, he must file a return of income whether he has taxable income or not.

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2) Mr. Y has a total income of 5 lacs out of which agricultural income is 3.5 lacs and business income is 1.5 lacs. Since his total income exceeds 2 lacs, he must file a return of income.

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Answer : False

Agricultural income is exempt U/S 10(1).Since the non agricultural income is less than 2 lacs, he need not file a return of income.

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3)A salaried employee earns a salary of Rs. 4,00,000/- and savings bank interest Rs.12,000/-He has reported his income to his employer and tax has been deducted at source. As per the special exemption provided by the Govt. he need not file a return of income.

Return of Income

Answer : False

The special exemption provided by the Central Govt. is applicable only to salaried employees whose savings bank interest doesn't exceed 10,000/-.In the above case, it exceeds 10,000/- hence the exemption is not applicable to him and he must file a return of income even though his entire tax has been paid by way of TDS.

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4)Mr. R is a sleeping partner in a partnership firm which is subject to tax audit. The firm will file its return on or before 30th September and R will file his return on or before 31st of July of the relevant assessment year.

Return of Income

Answer : True

In case of tax audits the due date of filing return is 30th Sept. Had Mr. R been a working partner, even he can file his return by 30th Sept. because his remuneration depends upon the taxable profits of the firm u/s 40(b).However in the above case ,he is a sleeping partner who will not receive any remuneration, hence he will file his return on or before 31st July of the relevant assessment year.

Return of Income

5)Mr. X has a business turnover of 100 lacs. He has incurred a business loss of Rs.1,20,000 after providing for depreciation of Rs. 80,000. He files his return of the P.Y. 2012-13 on 5th Sept. 2013. He can carry forward his loss of 1,20,000.

Return of Income

Answer : Partly True and Partly False

Since his turnover does not exceed 100 lacs, there is no tax audit, so he has to file his return by 31st of July 2013.He files his return late. If the return is filed late, business loss other than unabsorbed depreciation cannot be carried forward. Hence X can carry forward unabsorbed depreciation of 80,000.He can not however carry forward the remaining business loss of 40,000.

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6)Mr. Anil has furnished his return of income for the A.Y. 2010-11 on 31st March 2012.The assessment was completed on the basis of such return on 10th May 2012.The return is valid.

Return of Income

Answer : True

The last date for filing a belated return is within one year from the end of the relevant assessment year or before completion of assessment whichever is earlier. In the above case it will be 31/03/2012 or 10/05/2012 whichever is early. Anil has filed the return on 31/03/2012,hence his return is valid.

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7)Miss Rekha has loss from House Property but she files her return late .Since it is a belated return, she cannot carry forward the loss.

Return of Income

Answer : False

Even if a return is filed late, House property loss and unabsorbed depreciation can be carried forward. So in the above case, Rekha can carry forward HP Loss.

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8)Mr. Amitabh has loss from other sources Rs. 25,000/- and he files his return on or before the due date of filing the return of income. Since his return is filed on time, he can carry forward the loss.

Return of Income

Answer : False

Loss under the head "Income from other Sources" can never be carried forward (unless it is loss from owning and maintaining race horses) even if return of income is filed on time. Such loss lapses and we loose the right to carry it forward.

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9)Mr. Bhola filed his return of income but forgot to affix his signature. He now wants to rectify the defect or file a revised return. He can accordingly do either of it.

Return of Income

Answer : False

A return unsigned is an invalid return ( as good as not having filed the return of income).So it can't be revised or rectified. Bhola will have to file a fresh return which will be considered as a belated return.

Return of Income

10)A return of loss was filed U/S 139(3). After filing the return, the assessee can revise it.

Return of Income

Answer : True

A return of loss u/s 139(3) is to be filed on or before the due dates as mentioned u/s 139(1) i.e. 31st July or 30th September. Since the return of loss is filed on time, it can always be revised later on.

Return of Income

1. Filing voluntary return of income 2. Filing return of loss/Belated return/Revised return 3. Special exemption from filing return of income 4. Defective return 5. Particulars to be furnished in a return 6. PAN 7. Tax return preparer scheme 8. Signing of return of income.

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Return of Income