All about Income Tax Return Filing- Part 2 [Taxation Basics for Startups]

This article is in continuation of our last article on “Income Tax Return filing” for series on “Taxation Basics for Startups”. In this article we will discuss and address in detail about some of issues relating to “Income Tax Return Filing”.

What happens if you file your tax returns after the due date?

Individuals and businesses, not required to get their books of accounts audited are required to file their Tax Returns before 31st July for financial year (For FY 2011-12, the due date extended to 31^st August 2012). However, there are some consequences of delay in filing of income tax return, listed as below:

• Interest will be charged @ 1% per month for delay in every month or part of the month.
• Losses cannot be carried forward under the head Business or Profession or under the head Capital Gains.
• Return cannot be revised even you discover any error on belated return filed.
• Interest on the refund u/s 244A will not be given by the income tax department, in case one is eligible for tax refund and filed belated return.

When to Avail re-filing or revise return option?

Only if original return is filed within the due date then only one can avail the benefit of re-filing of ITR referred as revise return. Revise return can be filed if after filing the original return any omission or any wrong statement in the return filed is discovered. Here, it is important to note these points to avail full benefit of this option:

• Only return filed online can be revised online.
• Return can be revised at any time before the expiry of one year from the completion of the said assessment year or before the completion of assessment, whichever is earlier.
• A loss return filed u/s 139(3) can be revised and loss as per the revised return can be carried forward.
• Benefit of revising return cannot be claimed by a person who has made a false return knowing it to be false. Deliberate omission and false and fraudulent statements fall outside the purview of the provision.

What is Tax Return Filing - With or without Digital Signature?

Online return filing can be done with or without digital signature. Government has mandated certain assessee for online return filing and along with this it has also mandated certain class of assessee to file online return only with the digital signature. Here is the list of them:

Compulsory E-filing with or without Digital signatures –

• An Individual or HUF whose total income in the previous year exceeds Rs. 10 lacs.
• An Individual or HUF being a resident, having assets (including financial interest in any entity) located outside India or signing authority in any account located outside India and required to furnish the return in Form ITR-2 or ITR-3 or ITR-4, as the case may be.

Compulsory E-filing only with Digital signatures –

• An Individual & HUF who are required to get their books of accounts audited u/s 44AB.
• A firm who is required to get their books of accounts audited u/s 44AB.
• A company who is required to file in Form ITR -6.

What is ITR V & ITR Acknowledgement?

Online ITR can be filed with or without the use of a digital signature and this filing option lays little difference between ITRV and ITR Acknowledgment.

ITR V stands for ‘Income Tax Return – Verification’ form which is generated when ITR is filed without the use of a digital signature. Duly signed copy of ITR V has to be submitted to the IT Department and upon the receipt of ITR V, department will send an e-mail acknowledging the receipt and this is our ITR Acknowledgement and now filing is complete.

ITR Acknowledgement is instantly generated when ITR is filed with the use of a digital signature and there is no need to submit to the IT Department.

What steps to follow after getting the ITR V to complete Tax filing?

Duly Signed copy of ITR V has to be submitted to the Income Tax Department so as to complete the filing process as the department needs to verify the authenticity of income tax return when filed online without using a digital signature. Follow these basic steps to avoid rejection or delay in acknowledgement of receipt.

• Print two copies of form ITR V
• One copy of such ITR V, duly signed has to be sent in A-4 size envelope by ordinary post to CPC Bangalore (Income Tax Department CPC, Post Bag No.1, Electronic City Office, Bengaluru – 560100, Karnataka.)
• Keep the other copy for own record
• The ITR V should be mailed within 120 days of e-filing.
• Upon the receipt of ITR V, Income Tax Department will send an e-mail acknowledging the receipt of signed copy of ITR V.

What happens if the Original Return has been rejected at CPC due to non-receipt of ITR-V?

In case 120 days period (with extension, if any) has not elapsed : The assessee is required to send a signed copy of ITR-V again to "Income Tax Department – CPC, Post Bag No - 1, Electronic City Post Office, Bengaluru - 560100, Karnataka" within 120 days of uploading the return by ordinary post or speed post only.

In case 120 days period (with extension, if any) has elapsed: The assessee is required to file a revised return; however, the revised return filed now will be treated as original belated tax return.

How to verify status of ITR and Refund?

Income tax department has given benefits to the assessees for verifying various statuses online in the Income Tax department. One can easily check their ITR V receipt status, ITR Processing Status, Tax Refund status and Refund Failure status too and these statuses can be easily checked by logging in the income tax website.

E-return has been processed by CPC raising a demand or with less refund. Whom do I need to approach for Rectification?

The online rectification application may be filed on income tax website so long as e-return processed for relevant Assessment Year is still with CPC. However, in case, processed e-return has been transferred to Assessing Officer, then, one needs to approach AO with rectification application on paper.

What to do if refund failed due to error in bank account number or Change in the bank account details?

In case refund is delayed or failed due to error in bank account number provided or change in the account details following things need to be done to get refund processed:

• Assessee needs to download the “Response Sheet” from the Income Tax website (www.incometaxindia.gov.in) and take a printout of the same.
• If intimation is received, then the Response sheet will be sent along with it.
• Fill in the necessary fields in the Response sheet, Original Cancelled Cheque should be enclosed with it as a proof.
• In case if there is no cheque, Passbook front page/Bank statement with seal and signature is accepted.

In coming weeks, we would come up with more articles on issues related to taxation for our series on “Taxation Basics for Startups”.

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