E-filing returns is not as complicated as it sounds

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Sonu Iyer
Tax Partner and National Leader, Human Capital Mobility services

Often on a Sunday, when my weekend planner indicates no mandatory family function that I need to attend, I pay Ram, an old friend, a visit. On one such day, I drove across to his house and as I entered, all I could see was piles of paper. At once I realized it was that time of the year again and cursed myself for choosing this inauspicious month to visit him. Ram, a successful anthropologist, has a hard time with numbers and, therefore, July is a tough month for him.

Well-equipped with his Form 16, rental income papers, investment records and interest certificates, he seemed all set. His worry seemed to evaporate when he saw me and that was indication enough for me to begin my tax gyaan. “Filing your return is actually an extremely over-rated task,” I said, asking for his laptop. I was appalled that Ram wasn’t aware that an individual having total taxable income exceeding Rs. 10 lakh is required to file returns online. Also, any resident individual having overseas assets (with or without any taxable income) is required to file his return mandatorily and that too electronically.

There are different forms that need to be filed on the basis of sources of income. ITR 1(Sahaj) is applicable to an individual having no income other than salary/pension and interest. For individuals, who have other income such as house property or capital gains but no business/profession income, ITR-2 is appropriate. A partner in a partnership firm would be required to file ITR-3. ITR 4 is applicable to individuals with income from business/profession. An already confused Ram settled for ITR-2.

I insisted he search for his Permanent Account Number (PAN) card details so that the name in the returns form is accurate before I resorted to the “Know your PAN” option on the Income-tax website. Ram carefully filled his MICR and bank account numbers so that the tax refund is credited without error. I was impressed when he took details of tax deducted at source (TDS) on salary from form 16 and on other income sources from form 16A. He checked his tax credits in 26AS statement to be sure that all went well. Advance tax and self assessment tax challan details were also filled carefully.

Once Ram had incorporated all data in the income-tax return form, I reminded him to review some obvious questions like gender, residential status and whether he was filing original or revised returns, before generating the XML file. We spent some more time trying to remember Ram’s password for his account on the income-tax website and had to ultimately resort to the “Forgot Password” link. Ram just had to fill his PAN details and he received the password on his registered email ID. He was quite surprised by the user-friendly interface of the site. Having logged into his account, we uploaded the XML file on the site. Ram was his usual self again by the time the acknowledgement in form ITR-V appeared on the screen.

The due date for submission of the signed ITR-V is 120 days from the date of uploading the income-tax return form. A paranoid Ram took a print-out of his ITR-V to send to the tax officials at Bangalore. I was surprised that he remembered from last year that ITR-V has to be sent by speed post or ordinary post only. Registered post or courier is not accepted.

One can rectify mistakes in income-tax returns by filing a “revised” returns. However, revised returns can be filed only if the original returns are filed within the due date. Remember to use this option if you make any mistake in the original returns filing. Further, revised returns can be filled any number of times within two years from the close of the year or completion of assessment by the officer, whichever is earlier.

Ram was glad he had sent an error-free return form. I enquired if he had any assets overseas. He looked at me quizzically, afraid what I was going to say next. The Finance Act, 2012 has introduced mandatory reporting of assets held outside India by individuals qualifying as “resident”, irrespective of the fact whether the person has tax filing requirement in India or not. In case of residents who have tax filing requirements, Schedule FA has been inserted into the applicable tax return forms (ITR 2/ITR3/ITR 4). It requires details of foreign bank accounts, financial interest in any entity and details of immovable property or other assets located outside India. It also requires inclusion of details of any account located outside India in which the taxpayer has any signing authority. Though one understands that this is an effort by the government to tackle the menace of black money, the ambiguity in extent and detail of reporting required has caused confusion. There is ambiguity about the minimum threshold for value of assets to be reported, the date as on which the assets should be reported and nature of assets to be reported under the head “any other asset”. Some clarifications by the government would be extremely helpful.

Ram was relieved his income-tax return was filed and so was I as we headed to the cinema to watch the new movie. Hopefully, you are almost done with filing your return—31 July is always closer than it appears.