In our latest series on taxes, we are going to discuss on filing tax returns every year. Beginning in this article, we will discuss who needs to file tax returns and the use of Aadhaar card in tax returns filing.
Sec. 139AA of the Income Tax Act requires every person to obtain Aadhaar number and quote it in his returns. However, a person who has a PAN and has applied for Aaadhar but has not been allotted it as yet, may quote the enrollment ID of Aadhaar. Failure to do so will render the PAN allotted to the person invalid and the other provisions of the Act shall apply as if the person had not applied for PAN. On the other hand, where a person does not have a PAN and desires to apply for it, he must mention his Aadhar number in his application.
CBDT notification, S.0.1513(E) dt 11.5.17 exempts an individual from this requirement who is, during the previous year —
- residing in the states of Assam, Jammu and Kashmir and Meghalaya;
- a non-resident as per the Income-tax Act, 1961;
- an individual of 80 years in age or more any time during the previous year;
- not a citizen of India.
Who Must File Returns
Proviso-6 of Sec. 139(1) requires a person to furnish returns if his total income without claiming any deductions under Chapter VI-A (Sec. 80C, 80D, etc.) of the Income Tax Act and also the exemption u/s 38 related with LTCG on equities and equity-based units of MFs exceeds the maximum amount which is not chargeable to tax. In other words, the return has to be filed even if these deductions and exemptions bring down the income chargeable to tax below the tax threshold.
Moreover, where a resident individual (not an RNOR) has any asset, including financial interest in any entity located outside India or signing authority in any account (bank account, demat account, etc.) located outside India, filing of tax return is compulsory irrespective of whether such individual has taxable income below the threshold or not.
Employees who are residents and are signing authorities as representative of a company in any account outside India will get impacted along with those having assets, including financial interest in any entity located outside India. Further u/s 149, the time limit for issue of notice for reopening an assessment is up to 16 years, where the income in relation to any asset including financial interest in any entity located outside India, chargeable to tax, has escaped assessment.
The due date for furnishing the returns is September 30 for (i) companies and (ii) assessees as well as working partners of a firm whose accounts are required to be audited. For other assessees the date is July 31. This date has been extended to August 31 for returns related with FY 17-18.
To be able to process the returns within 12 months from the end of the AY in which the income was first assessable, FA17 has amended Sec. 139(5) to provide that the time for furnishing of revised return shall be available up to the end of the relevant AY or before the completion of assessment, whichever is earlier. Moreover, Sec. 234F was inserted to provide that a fee of Rs 5,000 if the return is furnished after the due date but on or before December 31 of the AY and Rs 10,000 in any other case. However, where the total income does not exceed Rs 5 lakh, the fee shall not exceed Rs 1,000.
Belated filing suffers from an embargo on carry forward of loss earned during the current year, from business (speculative or otherwise), capital loss and loss from owning and maintaining race horses. Moreover, belated tax returns cannot be revised. The ITO has no powers to condone such a lapse. Fortunately, carried forward losses from the earlier years suffer no damage.
If you do not have some data, you can file a return within the due date and then revise it later with actual details, along with the related fee for late filing. Unfortunately, foreign tax credit based on foreign tax return received later cannot be claimed if the original tax return is filed after the due date.
Sec. 288B requires any amount payable and the amount of refund due, to be rounded off to the nearest multiple of Rs 10.
The authors, A.N. and Sandeep Shanbhag, are leading financial advisors. Write to them at firstname.lastname@example.org