New Income Tax Returns Study Circle Meeting Bangalore

New Income Tax Returns Study Circle Meeting Bangalore Branch of SIRC of ICAI 18 th June 2009

Introduction n Central Board of Direct Taxes (CBDT) have notified the new returns of income tax for the assessment year 2009 -10. n Let us try to understand these new returns in a question and answer session. 18 -6 -2009 Vishnu Ram & Co. 2

1 Q. How many types of new returns have been notified by the CBDT? A. In all, 8 types of income tax returns have been notified by the CBDT viz; ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6, ITR-7 and ITR-8. 18 -6 -2009 Vishnu Ram & Co. 3

2 Q. Who can use ITR-1? A. ITR-1 is meant only for individuals having income from salary / pension / family pension and not having any other income except income by way of interest chargeable under the head “income from other sources”. 18 -6 -2009 Vishnu Ram & Co. 4

3 Q. Can an individual having salary income and also some exempted income (dividend) use form ITR-1? A. ITR-1 can not be used if the individual has any other income (except interest income) in addition to his salary income. Therefore, if he has dividend income (even though exempt), he cannot use ITR-1. 18 -6 -2009 Vishnu Ram & Co. 5

4 Q. Can an individual having only interest income use ITR-1? A. No. ITR-1 can be used only if the individual has salary income. In this case he should use ITR-2. 18 -6 -2009 Vishnu Ram & Co. 6

5 Q. Who can use ITR-2? A. Individuals and HUFs not having any income under the head “Profits or Gains of Business or Profession” can use ITR-2. In other words, individuals and HUFs having income under the head “Profits or Gains of Business or Profession” cannot use form ITR-2. 18 -6 -2009 Vishnu Ram & Co. 7

6 Q. Can an individual having only salary income use ITR-2? A. No. An individual having only salary income should use ITR-1 and he should not use ITR -2. 18 -6 -2009 Vishnu Ram & Co. 8

7 Q. Who can use ITR-3? A. Individuals and HUFs being partners in firms and not carrying on any business or profession as proprietors can use ITR-3. 18 -6 -2009 Vishnu Ram & Co. 9

8 Q. Who can use ITR-4? A. Individuals and HUFs having proprietary business or profession can use ITR-4. 18 -6 -2009 Vishnu Ram & Co. 10

9 Q. Can an individual having a proprietary business and also being a partner in a firm use ITR-4? A. Yes. Individual being a partner and also carrying on proprietary business should use ITR-4. 18 -6 -2009 Vishnu Ram & Co. 11

10 Q. Who can use ITR-5? A. ITR-5 is meant for firms, AOPs and body of individuals. This is a combined return for income as well as fringe benefits. 18 -6 -2009 Vishnu Ram & Co. 12

11 Q. Who can use ITR-6? A. ITR-6 is meant for companies (other than companies claiming exemption under section 11, I. e. section 25 – companies). 18 -6 -2009 Vishnu Ram & Co. 13

12 Q. Who can use ITR-7? A. ITR-7 should be used by charitable trusts, political parties, section 25 compnaies, institutions claiming exemption from tax and universities, colleges, etc. 18 -6 -2009 Vishnu Ram & Co. 14

13 Q. Who can use ITR-8? A. ITR-8 is a stand-alone fringe benefit tax return and it can be used by assessees who are not required to file their return of income but, are required to file their return of fringe benefits. 18 -6 -2009 Vishnu Ram & Co. 15

14 Q. When does one get to use ITR-8? A. E. g. An AOP whose income is below the maximum exemption limit is not required to file its return of income. In such cases, if it is liable for fringe benefit tax, it is required to file return of fringe benefits in ITR-8. 18 -6 -2009 Vishnu Ram & Co. 16

15 Q. Can an AOP which has income below the maximum exemption limit and liable to pay FBT use ITR-5 instead of ITR-8? A. No. The instructions for ITR-5 makes it clear that it cannot be used by a person who is required to file ITR-8. 18 -6 -2009 Vishnu Ram & Co. 17

16 Q. Where can one get these forms from? A. These income tax return forms can be downloaded at http// incometaxindia. gov. in 18 -6 -2009 Vishnu Ram & Co. 18

17 Q. Which is the income tax rule which prescribes the form and the manner in which income tax return is required to be furnished? A. Rule 12 of the Income Tax Rules, 1962 provides for the form and the manner in which income tax returns are required to be furnished. 18 -6 -2009 Vishnu Ram & Co. 19

18 Q. What are the different modes of furnishing the income tax returns available for a company? A. A company can file its return of income in any of the following 2 modes; Electronically furnishing the return under digital signature or ii. Transmitting the data information electronically and thereafter submitting the verification of the return in form ITR-V i. 18 -6 -2009 Vishnu Ram & Co. 20

19 Q. How can partnership firms covered u/s 44 AB furnish their returns? A. They can furnish their returns in any of the following 2 modes. Electronically furnishing the return under digital signature. ii. Transmitting the data information electronically and thereafter submitting the verification of the return in form ITR-V. i. 18 -6 -2009 Vishnu Ram & Co. 21

20 Q. How can individuals, HUFs, AOPs, body of individuals and firm not covered by 44 AB furnish their returns? A. They can furnish their returns in any of the following 4 methods. Furnishing the return in a paper form. ii. Furnishing the return electronically under digital signature. iii. Transmitting the data in the return electronically and thereafter submitting the verification of the return in form ITR-V. iv. Furnishing a bar-coded return in a paper form. i. 18 -6 -2009 Vishnu Ram & Co. 22

21 Q. How does charitable / religious trusts, political parties and other non profit organization should furnish their returns? A. Such assessees must furnish their returns only in paper form. 18 -6 -2009 Vishnu Ram & Co. 23

22 Q. Can the returns prescribed for assessment year 2009 -10 be used for filing the returns of income of earlier years? Say A. Y. 2008 -09? A. No. The returns meant for 2009 -10 can be used only for the assessment year 2009 -10. For earlier years, the returns meant for those respective years alone can be used. 18 -6 -2009 Vishnu Ram & Co. 24

23 ITR-1 Q. How does ITR-1 look like? 18 -6 -2009 Vishnu Ram & Co. 25

24 ITR-2 Q. How does ITR-2 look like? 18 -6 -2009 Vishnu Ram & Co. 26

25 ITR-3 Q. How does ITR-3 look like? 18 -6 -2009 Vishnu Ram & Co. 27

26 ITR-4 Q. How does ITR-4 look like? 18 -6 -2009 Vishnu Ram & Co. 28

27 ITR-5 Q. How does ITR-5 look like? 18 -6 -2009 Vishnu Ram & Co. 29

28 ITR-6 Q. How does ITR-6 look like? 18 -6 -2009 Vishnu Ram & Co. 30

29 ITR-7 Q. How does ITR-7 look like? 18 -6 -2009 Vishnu Ram & Co. 31

30 ITR-8 Q. How does ITR-8 look like? 18 -6 -2009 Vishnu Ram & Co. 32

31 ITR- V Q. How does ITR-V look like? 18 -6 -2009 Vishnu Ram & Co. 33

32 Q. Is there any requirement to attach TDS certificates, audit reports, etc. , to the returns? A. No. Income tax rule 12 provides that the returns of income shall not be accompanied by any attachments / annexures. 18 -6 -2009 Vishnu Ram & Co. 34

33 Q. Is there any exception to these rules? A. Yes. In the case of charitable / religious trusts, political parties and other non profit organizations who are filing their returns in ITR-7 are required to attach audit reports, advance tax challans, etc. (as was the case earlier) along with the return of income. 18 -6 -2009 Vishnu Ram & Co. 35

34 Q. Is there any requirement of production of computation of income tax, copies of balance sheet, profit and loss account, TDS / TCS certificates, proof of payment of advance tax or self assessment tax etc. , before any authority? A. Yes. In case jurisdictional assessing officer legally demands production of any of the above, the assessee is duty bound to produce such documents before him. 18 -6 -2009 Vishnu Ram & Co. 36

35 Q. In the case of electronic filing of return when does the assessee obtain his tax audit report? A. The tax audit report is required to be obtained before furnishing of the e-return. The assessee is required to mention the date and other particulars of tax audit report in his return of income. 18 -6 -2009 Vishnu Ram & Co. 37

36 Q. Is there any requirement of filing transfer pricing report? A. Yes. Transfer pricing report in form 3 CEB is required to be filed before the due date of filing of the return and it is to be filed with the jurisdictional assessing officer. 18 -6 -2009 Vishnu Ram & Co. 38

37 Q. What are the steps involved in furnishing the return electronically under digital signature? A. First of all the user should register himself at the website http// www. incometaxindiaefilinggov. in The return information should be filled in an excel file. Thereafter, the excel file should be converted into XML file. Affix the digital signature. Thereafter, using the return submit option in the website, return should be filed. With this, the process of furnishing the return will be complete in all respects. If the return is digitally signed, the system will generate an acknowledgement which should be kept for reference. 18 -6 -2009 Vishnu Ram & Co. 39

38 Q. What is the procedure for furnishing the return electronically but without digital signature? A. First of all the user should register himself at the website http// www. incometaxindiaefiling. gov. in The return information should be filled in an excel file. Thereafter, the excel file should be converted into XML file. Thereafter, using the return submit option in the website, return should be filed. There will not be any affixation of digital signature. The system will generate an acknowledgement which should be kept for reference. The system will also generate a bar-coded ITR-V. The ITR-V that is generated by the system should be sent by post to the Income Tax Department-CPC, Post Box No. 1, Electronic City Post Office, Bangalore – 560 100, Karnataka. The filing of the return will be complete once the ITR-V is posted. 18 -6 -2009 Vishnu Ram & Co. 40

39 Q. Is there a time limit for sending the ITR-V? A. ITR-V should be posted within 30 days from the date of transmitting the data electronically. 18 -6 -2009 Vishnu Ram & Co. 41

40 Q. What happens if it is not posted within 30 days? Or posted beyond 30 days? A. It will be treated as if the return of income is not filed. 18 -6 -2009 Vishnu Ram & Co. 42

41 Q. If transmitting the return data electronically is followed up with ITR-V, what will be the date of filing the return? A. The date of transmitting the data electronically will be treated as the date of furnishing the return. 18 -6 -2009 Vishnu Ram & Co. 43

42 Q. Is ITR-V required to be signed by the assessee? A. Yes. ITR-V is required to be signed by the assessee and if it is not signed, it will be considered as invalid. 18 -6 -2009 Vishnu Ram & Co. 44

43 Q. What happens if the ITR-V is sent beyond 30 days? A. It will be treated as if the assessee has never been furnished his return and he has to go through the process of filing the return all over again if he wants to file his return. 18 -6 -2009 Vishnu Ram & Co. 45

44 Q. How will CPC match the ITR-V with the return of income? A. ITR-V is bar-coded and using the bar-code, CPC will match ITR-V with the return. 18 -6 -2009 Vishnu Ram & Co. 46

45 Q. How does one know that CPC has received ITR-V? A. CPC is expected to send e-mail acknowledging the receipt of form ITR-V 18 -6 -2009 Vishnu Ram & Co. 47

46 Q. Is there any time limit prescribed for sending the email? A. No. There is no time limit prescribed for sending the e-mail acknowledgement. 18 -6 -2009 Vishnu Ram & Co. 48

47 Q. Can ITR-V be filed with the jurisdictional assessing officer? A. No. ITR-V cannot be filed anywhere else other than CPC. 18 -6 -2009 Vishnu Ram & Co. 49

48 Q. Can ITR-V be filed across the counter in CPC? A. No. ITR-V can be sent only by post. 18 -6 -2009 Vishnu Ram & Co. 50

49 Q. Is there only one CPC for the whole of India? A. Yes. At present, there is only one CPC situated in Bangalore which will process the returns filed electronically by assessees all over India. 18 -6 -2009 Vishnu Ram & Co. 51

50 Q. Who will process the paper returns? A. In due course of time, these will also be processed by the CPC but, till such time as the infrastructure is put in place, these returns will be processed by jurisdictional assessing officers. 18 -6 -2009 Vishnu Ram & Co. 52

51 Q. How does the processing happens in CPC? A. The computer system in the CPC will process the data furnished electronically and match the data for tax deducted at source, tax collected at source, advance tax and self assessment tax with the independent information received from the deductors, collectors and bankers. 18 -6 -2009 Vishnu Ram & Co. 53

52 Q. How will the matching of these data done? A. The matching of the data is done by using the unique transaction numbers and challan identification numbers. Therefore, proper mentioning of these numbers is very essential. 18 -6 -2009 Vishnu Ram & Co. 54

53 Q. Can the returns of income be filed without UTN? A. The returns can be filed without UTN but, without UTN credit for pre-paid taxes will not be given. Therefore, for filing the returns of income for the assessment year 2009 -10, it is essential that assessees wait to get the UTN in respect of their pre-paid taxes. 18 -6 -2009 Vishnu Ram & Co. 55

and Finally S. Vishnumurthy VISHNU RAM & CO. 23568910 9880034940 vishnu@vishnuram. in 18 -6 -2009 Vishnu Ram & Co. 56