What you need to know about the new rules for filing tax returns

New forms, additional information, completely paperless filing…. the Finance Ministry has introduced several changes in the way taxpayers will file their returns this year. As a taxpayer you need to be aware of these changes lest you file an incorrect return that gets rejected or results in a scrutiny notice.

Many taxpayers tend to believe that if they have no tax liability or have already paid all taxes, they need not file their returns. “It does not really matter whether you have paid any taxes or not.

Even if all your taxes are paid through TDS by the employer and bank or you have paid an advance tax, you still need to file returns if your annual income exceeds Rs 2.5 lakh,” says Archit Gupta, Founder and CEO, ClearTax.in. But before we get there, let’s look at the major changes in this year’s tax filing rules.

Who needs to file tax returns?

If the gross taxable income after exemptions, but before deductions, exceeds the basic exemption of Rs 2.5 lakh, you need to file your tax return.

Click Here for the detailed article from Economic Times, on the deadlines, forms, methodology, foreign income and assets and much more

Filing Of Income Tax Returns

While talking to my acquaintances around me I gather an impression that majority of the salaried people feel that they are not required to file their income tax returns as tax is already deducted from their salaries. This is not correct legal position. Payment of taxes and filing of income tax return are two separate obligations. There is another misconception that if I miss the deadline of 31st July, I cannot file my return later on as the deadline is sacrosanct and a now or never thing.
In this article I will explain the legal position concerning individual tax payers as regards requirement of filing the income tax return.
Do I need to file my income tax return?
Income tax filing and payment of income tax payment are two different obligations. it is better to file income tax before due date as it saves you from possible penal actions and allows you to make the most of provisions of Income Tax Act.
Who is required to file the IT returns?
So to start with, you are required to file your income tax return if your gross total income is more than the basic exemption limit. For the year ended 31st March 2015 this is Rs. 2.5 lakhs for an ordinary individual, Rs. 3 lakhs for an individual over 60 years and Rs. 5 lakhs for an Individual above 80 years.
The word gross total income is not the same as the income on which your tax liability is calculated. Gross total income is the income calculated before any deduction under Sections like 80 C, 80 CCC, 80 CCD, 80 CCG, 80D, 80E, 80EE, 80G and 80 GGA and 80 TTA is availed. The deductions cover various items like contribution towards PF, NPS and PPF, payment of School fee for your children, premium for your life and health insurance. This also covers purchase of NSC, home loan repayment, rent paid etc. as well as interest on saving bank account.
So even if you may not have any tax liability after availing above deductions, you still need to file your tax return in case your gross total income before such deductions exceeds the amount of basic exemption applicable in your case. You need to file return in case you own any asset outside India or you are an authorized signatory for any account located outside India . This becomes applicable to those of you, without you noticing it, who had gone outside India on deputation or employment and had opened a bank account and did not close the bank account.
If you have any investments like shares, bonds or mutual fund units of foreign companies, you also are required to file return irrespective of your income level for the year. So in case you have received shares of a foreign company as ESOP as part of your compensation package, you are covered under this provision and file the return.
What is the last date for filing of my income tax return?
In case you are required to file return as discussed, the due date is July 31. The due date is applicable generally in case of individual tax payers. However in case you are carrying on a business and your accounts are required to be audited, the due date gets extended till 30th September. Even for the people who are working partners in partnership firms, whose accounts are audited, the due date is 30th September.
What happens if you miss the deadline?
In case you file your current income tax return after due date i.e. 31st July, 2015 you will not be able to revise your income tax return in case any omission or error is detected. You also will have to pay penal interest on the amount of tax for the period of delay in case any tax is still payable. Another consequence of missing the deadline would be that, in case you have business loss or capital gains loss in the current year, you will not be able to carry it forward to be set of in subsequent years.
Do I pay any penalty if you do not file the return by due date?
There is no penalty if you fail to file your return by 31st July, 2015 and file the same byMarch 31, 2016. However if your income is taxable and you fail to file your return of income by March 31, 2016, the same can be filed only by 31st March 2017. However in such a situation the income tax officer can levy a penalty of Rs. 5,000 after giving you an opportunity to explain your case. So from the above discussion it becomes clear that even if you do not have any tax liability or appropriate taxes have been deducted from your income, you are still required to file your return. Moreover it is better to file the return by the due date to avoid any complication later on.
By Balwant Jain is a CA, CS and CFP.
Presently working as Company Secretary of Bombay Oxygen Corporation.
He can be reached at jainbalwant@gmail.com

Tax benefit for Sukanya Samridhi Scheme

Depositors in the ‘Sukanaya Samridhi’ scheme, notified by the government in November 2014, can now avail tax benefits under Section 80C of the Income Tax Act.

The maximum deposit under the scheme for planning the future of the girl child will be ₹1.50 lakh in a financial year. Apart from this scheme, an individual also has the option of getting tax benefits through investments in National Savings Certificates, five-year Post Office Time Deposits, Public Provident Fund, Life Insurance, Equity-Linked Tax Saving Scheme, Five-year Tax Saving Bank Fixed Deposits or even principal repayment of home loan under Section 80C.

Scheme specifics

As per a Finance Ministry notification, tax benefits for the Sukanya Samridhi scheme have come into effect from January 21, which means anyone investing on after the said date will get tax benefits.

The scheme prescribes opening of a deposit account with post offices in the name of girl child by her biological parents or legal guardian. One girl will have one account, while the parent can open such an account for a maximum of two girl children till the age of 10.

However, if there are twin girls, then the facility will also be available for the third girl child.

Though the account will mature in 21 years from the date of opening of account, one can withdraw half the balance (at the end of preceding financial year) for higher education and marriage.

There is one condition — this withdrawal will be possible only after the girl attains the age of 18 years. The account will be closed if a girl marries before the scheme’s maturity period.


Ensure that your TDS reaches the income-tax department

If not, an assessee might be charged interest for not paying TDS on time

There are several instances of taxpayers getting notices from the I-T department for no fault of theirs. Notices might be sent if TDS hasn’t been deducted, or if the TDS has been deducted but not paid to the I-T department on time.

If a bank doesn’t deduct TDS on fixed deposits, or does this after the end of the financial year, the onus is on the taxpayer to show he/she doesn’t intend to avoid tax, that it was merely an error. One of the ways to go about this is showing the interest income while filing tax returns and paying taxes. In case this isn’t done, you could file a revised return. But ensure you revise the tax return before the end of the next assessment year, says Rakesh Nangia, of Nangia and Company, chartered accountants.

However, if the interest income is being declared on a cash basis, the assessee can carry forward the TDS by the bank and clam credit in the year in which the income is taxed. In case the fixed deposit is for five years, you could carry forward the TDS and pay it in the last year, when it matures.

Click Here for the full story from Business Standard

TDS on Purchase of Immovable Property (Section 194 IA)

1. Section has been inserted w.e.f. 01.06.2013.

2. Deductor & Deductee: Any person (being a transferee) responsible for paying (other than person referred to in section 194LA) to a Resident transferor any sum by way of consideration for transfer of any immovable property (other agricultural land in rural area in India), is liable to deduct the TDS under this section.

3. Time of deduction: At the time of payment or credit to the transferor in the books of transferee, whichever is earlier.

4. Rate of TDS:-

a. In case of PAN of Deductee is available-1%

b. In case of NO PAN of Deductee is available-20%

5. Limit: No TDS is to be deducted when consideration is less than Rs 50, 00,000.

6. Provision of TAN not applicable.

7. Immovable property means any land or building or part of building. Such may be situated in India or may be situated out of India.


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Save more in provident fund, but take home less as salary

A recent circular issued by the EmployeesProvident Fund Organisation – which comes under the ministry of labour and employment – will reduce the take home pay of salaried employees. As per this circular, various allowances paid to employees will have to be added back to the basic salary and provident fund contributions computed against this higher value. This, in turn, will mean a lower take home pay.

The circular dated November 30, 2012, was issued after internal review meetings held in late November and has been forwarded to Employee Provident Fund offices across India.

Historically, most companies have been computing provident fund (PF) contributions (at 12% each by the employer and employee) against basic salary and dearness allowance only. However, the definition of basic wages has been a contentious issue, with PF authorities claiming that companies split the basic wages into various allowances to reduce the quantum of PF contributions.

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Housing Loan Interest Eligible For Double Deduction: ITAT Chennai

Interest paid on borrowing for acquiring house deductible u/s 24(b) & 48
The assessee borrowed funds for purchasing a house. The interest paid on the said loan was claimed as a deduction u/s 24(b). When the house was sold, the interest paid on the said loan was treated as “cost of acquisition” and claimed as a deduction u/s 48 in computing the capital gains. The AO held that as the interest had been allowed as a deduction u/s 24(b), it could not be allowed again in computing capital gains. The CIT(A) allowed the claim. On appeal by the department to the Tribunal, HELD dismissing the appeal:

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