June 27, 2014

CA CS ICWA TAX PROFESSIONALS PORTAL - ARTICLE - PERSONS RESPONSIBLE TO FILE INCOME TAX RETURN

Hello Taxpayers , as preparation and submission of income tax returns have been started which starts making a mind boggling effect to many individuals, what to do and how to do?

But the matter is not so tough or blasting as it seems, but a person must have to take precautions and follow the guidelines, rules, provisions and instructions prevailing under Income Tax to correctly follow the procedure of filling income return.


The income tax provisions are not so confusing but the reason of trouble is, an individual is not aware of all the instruction and provisions mentioned under the Income Tax Act and Income Tax Rules



 Who will and when to file the return of Income?

Person responsible to file return of Income

 Section 139(1)  Every person: being a company [or a firm] or  being a person other than a company [or a firm], if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax,


Fourth Provision of Section 139(1)

Every resident of India (excludes NRI) having any asset including any financial interest in any entity located outside India or singing authority in any account located outside India, is required to file a return of Income whether or not he has any income chargeable to tax.



Fifth Provision of Section 139(1)


[Provided also that every person, being an individual or a Hindu undivided family or an association of persons or a body of individuals, whether incorporated or not, or an artificial juridical person, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year, without giving effect to the provisions of section 10A or section 10B or section 10BA or Chapter VI-A exceeded the maximum amount which is not chargeable to income-tax, shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed.]

Meaning:


Person
Principal
Firm or Company
They must furnish the return of income for every year (whether or not having any income chargeable to tax)
Any other Person (Other than Firm or Company)
They will furnish the return of income only if before availing any Exemption Under Section (u/s) 10A or 10B or 10BA or Deduction Under Chapter VI-A, their income exceeds the maximum amount not chargeable to tax.

Maximum Amount Not Chargeable to tax is basic exemption limit prescribe under the Income Tax Provisions:
Person
Basic Exemption Limit
Tax Liability
Super Senior Citizen (Age 80 years or more)
500000
Nil , if income does not exceed Rs 500000
Senior Citizen (Age 60 years or more)
250000
Nil , if income does not exceed Rs 250000
Other Individuals (Male or Female)
200000
Nil , if income does not exceed Rs 200000
Company
No Exemption
Nil , if there is loss.
Firm
No Exemption
Nil , if there is loss.
Trusts
Exemption u/s 11
Section has no specific amount of exemption, it is provided based on receipts and expenditure.

Section 10A or 10B or 10BA provides exemption from specified business on the basis of income earned

Chapter VI-A provides list of various deductions such as Section 80C or Section 80D, claimed as deduction by the assesse while calculating his total income.

Loss Return Section 139(3) If any person who has sustained a loss in any previous year under the head "Profits and gains of business or profession" or under the head "Capital gains" and claims that the loss or any part thereof should be carried forward under sub-section (1) of section 72, or sub-section (2) of section 73, or sub- section (1) [or sub-section (3)] of section 74, [or sub-section (3) of section 74A], he may furnish, within the time allowed under sub-section (1) , a return of loss in the prescribed form and verified in the prescribed manner and containing such other particulars as may be prescribed, and all the provisions of this Act shall apply as if it were a return under sub-section (1).

Meaning: A loss sustained by the Assesse in any previous year under the head Business and Professions, Speculative Income, Capital Gain or Owing and Maintaining Race Horses can be carried forward, only if the return of income (return of loss earned) is furnished within the time allowed.

Other Points: 

However the provisions is silent about the carried forward of Depreciation Loss u/s 32(2) and carried forward of House Property Loss u/s 71(B), so they can be carried forward even if the return is filled late , but it should be filled to gain the advantage of carried forward of loss.

Belated Return

Section 139(4) Any person who has not furnished a return within the time allowed to him under sub-section (1), or within the time allowed under a notice issued under sub-section (1) of section 142, may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier

Meaning: This provision is applicable to the person who has not furnished the return of income within the time allowed us/139(1) or in response to notice u/s 142(1).

Time limit to file return: Earlier of the following two:

1. ·         Expiry of one year from the end of the relevant assessment year.

For example: If the year is 13-14, then its assessment year will be 14-15. And one year from the end of assessment year means – Return can be filled till 31st March 2016.

2. .     Completion of assessment

Other Points:
·     
     Any return filled after the time period allowed u/s 139(4), shall be considered as no return is filled.
·         If return is filled before the expiry of normal time allowed u/s 139(1), it can still be filled as per the time limit prescribed u/s 139(4). But no benefit of carried forward will be allowed if not filled with in time allowed u/s 139(1)

Revised Return Section 139(5) If any person, having furnished a return under sub-section (1), or in pursuance of a notice issued under sub-section (1) of section 142, discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier

Meaning: The provisions is applicable to the person who wants revise the income tax return. The new file return will replace the return filled earlier. If a person observes that after filling his return of income, he has omitted or missed any information which is required to be filled but missed, then he may file the revise return to replace the existing return.

Applicability:
·          
There should be omission or wrong statement in the original return filled
The original return should be filled within the time allowed u/s139(1) or within the time allowed in the notice issued u/s 142(1)

Defective Return Section 139(9)

A return will be said defective only if it does not contain any important information regarding Identitiy of Person, Income of Person, Tax payable by Person or other information as considered necessary under the Income tax provisions to be submitted by the assesse.

As per Finance Act 2013, If the return of Income does not contain the information about Self Assessment Tax, it should be considered as defective return

A return shall be considered as defective if it doesn’t have following :

General Details

·         Statement showing the computation of Income
·         Audit report u/s 44AB
·         Proof of payment of TDS and TCS collected, Advance Tax or Self Assessment Tax

Specific Details:

If regular books of accounts are maintained:

·         Manufacturing Account, Trading Account, Profit and Loss account, Income adn Expenditure statement, Balance Sheets

·                    Capital account or Personal accounts of Owner and Partner

If regular books of accounts are not maintained by the assesse

·         Statement indicating: Turnover, Gross Receipts, Gross Profit, Expenses and Net Profit
      ·         Statement o f Current Assets and Liabilities

To file the Return of Income an assesse must do the followings:


·         Apply for a Permanent account number (PAN)

·         Correctly Calculate the Total Income for the year.

·         Collect Form 16 from the employer and Form 16A from the person other than employer who has deducted tax from the income earned

·         Calculate correctly the amount of tax  payable

·         Pay the due taxes

·         Fill the form in the manner as prescribed

·         Last file the return within the time allowed (The limit to file return of Income is already explained )

Due Dates for filling the Income Tax Return


Assesse
Nature of Assesse
Due Date
Company or Firm
For every company and Firm (other than a company of a Firm required to furnish report u/s 92E)
30th September
Any assesse
Required to furnsish a report u/s 92E .i.e. Assesse having International Transaction
30th  November
Any Other Assesse
Any assesses whose accounts are required to be audited under any Law

Working partner of the Partnership Firm whose accounts are to be audited

Any other Assesse (not covered Above)
(Means all the salaried person, all persons having income other than from  business and profession or person having income from business or profession but does not applicable to any tax audit or statutory audit)
30th September


30th September


31st July
 

Summarizing of the above provisions:

1)       Persons responsible for filling income tax return:- Section 139

  

2)       Return to be filled in case of loss:- Section 139(3)



3)       Return filled after the due date prescribed under the provisions:- Section 139(4)


4)       Revised return to replace the original return having bonafide omission and mistakes therein Section:- 139 (5)


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