Fenil's Library

Govt seems hell bent on making the process more complicated

Sandeep Shanbhag

The July 31 deadline for filing taxes is drawing closer.

As readers would be aware, the old tax return form, SARAL, has been scrapped since last year and replaced with the new ITR series. There are eight forms in all, each applicable to a particular category of taxpayer (see table) and are classified as ITR series 1 to 8.

Simultaneously, e-filing of tax returns is now available for all categories of taxpayers, though it is mandatory only in the case of corporate taxpayers and firms which are liable to tax audit under Section 44 AB of the Income Tax Act (ITA). More on this later in this column.

On the new forms, the CBDT has spelt out clearly vide Circular no. 03/ 2009, dated May 21, 2009 that the tax return should not be accompanied by any attachment/ annexure. Thus, taxpayers should not enclose any statement along with the return such as the computation of income or tax, Form 16, copies of balance sheet, profit and loss account, TDS/ TCS certificates, proof of payment of advance tax or self-assessment tax, etc.

However, take care to maintain these documents on file as the same will have to be produced before the assessing officer upon a demand by him.

Though similar instructions were issued last year, taxpayers found there were several instances where the tax department staff and officials insisted on annexures being attached to the forms, especially Form 16 and TDS certificates. Therefore, this year, in case there is a refusal to accept returns without annexures, taxpayers can point out to the erring official the relevant provision of the above mentioned circular that clearly states that accepting a tax return with annexures is against the expressed policy of the government and is not in consonance with legal provisions.
Those who are computer savvy as also reasonably familiar with the tax provisions may opt for the simplicity of e-filing. This way, you can actually file your tax return without having to get up from your chair. Detailed information is available on www.incometaxindiaefiling.gov.in. The basic process may be summarised as follows:


l First, select the appropriate Return form (see table)

l Download the Return Preparation Software available on the site. This is nothing but a simple Microsoft Excel Utility

l Fill your return offline and generate an XML file

l Register and create a user ID/ password. In all cases, the taxpayer’s PAN is the user ID

l Login and click on the relevant form on the left panel and select “Submit Return”

l Select the XML file from your computer and click on “Upload” button

l Upon successful upload, acknowledgement details would be displayed. Click on “Print” to generate a printout of acknowledgement/ ITR-V Form

l In case the return is digitally signed, upon generation of the acknowledgement, the return filing process gets completed. You may keep a print of the acknowledgement for your record

l In case the return is not digitally signed, upon successful uploading of e-Return, the ITR-V Form would be generated, which needs to be printed by taxpayers. This is an acknowledgement cum verification form. Duly filled, this form should be mailed to “Income Tax Department - CPC, Post Box No - 1, Electronic City Post Office Banaglore - 560100, Karnataka” within 30 days of filing electronically.

Taxpayers may note that the above process is a major departure from last year where ITR-V was to be submitted with the local income-tax office within 15 days of filing electronically.

Several issues arise due to this newly instituted procedure.

First and foremost, if Form ITR-V is furnished after the 30-day period, it will be taken as if the return was never filed and the entire process will have to be repeated again.

Now, take a case where a taxpayer mails the form in time, but there is a delay at the postal department’s end. The assessee will be penalised for filing the return late for no fault of his.

Secondly, a stamped copy of ITR-V, which served as proof of having filed tax return, will not be available. Copies of tax returns are needed for many purposes, from applying for a visa to taking a home loan. Now, in the absence of a stamped acknowledgement from the tax department, it is not clear how the taxpayer can prove to someone outside the department of having duly filed the tax return.

It is because of such issues that electronic filing has not taken off in a way it should have. Yet, as if these weren’t enough, there is yet another issue this year —- with respect to claiming credit for TDS only by way of the system of Unique Transaction Number (UTN) on which there is much debate and controversy currently.
We shall take up that topic next week.

To sign off, how about marvelling at the irony that in a country where less than 3% of the population pays taxes, rather than lay out a red carpet for this minority, the government has been making the process becomes more complicated every year?

The writer is director, Wonderland Consultants, a tax and financial planning firm. He may be contacted at sandeep.shanbhag@gmail.com.