Filing Income Tax Return

  Filing Income Tax Return

The Income Tax Return (ITR) is mandatory to be e-filed by every person whose Gross Total Income is more than his Basic Exemption Limit i.e. Rs. 2,50,000 for Individuals who are not senior citizens, Rs. 3,00,000 for senior citizens, and Rs. 5,00,000 for super senior citizens. The individuals before e-filing the Income Tax Return should prepare details and keep in hand so that no problem appears while filling the desired Income Tax Return Form. What documents should be realized for preparing the details of incomes. Why to provide complete details and how to be assured that every financial earning has been detailed as required by Income Tax Department:

(i) Form 16 from Employers:

The salaried individuals should receive Form 16 from their respective employers as it is a proof of the Tax Deducted at Source by the employer and the details provided in Form 16 should be kept in hand so that the same details are filled in Income Tax Return Form under the head ‘Salaries’.

(ii) Form 16A from Deductors other than Employers:

In case, the tax is deducted by others than the employer/s then Form 16A should be realized from them. Generally, banks and post office deduct tax at source on ‘Interest on Deposits’; in such cases, Form 16A should be taken from them and kept in hand while e-filing Income Tax Return.

(iii) Form 16B from the Buyers:

Sometimes, properties are sold during the financial year and buyers deduct Tax Deduction at Source from the amount to be paid by them. In such case, the buyer deposits such TDS to Income Tax Department and generate Form 16B. Therefore, in such cases, Form 16B should be taken from the Buyers (if any).

(iv) Form 16C from Tenants:

In case, an individual is getting rent form the tenants and it is more than Rs. 50000 per month; in such cases, the tenants are directed to deduct Tax Deduction at Source from the payment of rent to the individual (landlord). Then the tenants deposit the TDS in Income Tax Department and realized Form 16C to be provided to the landlord. Such Form 16C should also be realized and kept in hand while e-filing Income Tax Return.

(v) Tax Credit Statement 26AS / Annual Information Statement - AIS from website of Income Tax:

Apart from Form 16, 16A,16B, and 16C from the Deductors, an individual should also download Tax Credit Statement 26AS / Annual Information System - AIS, from the website of Income Tax Department and match the details of deductions at source with the Tax Credit Statement before e-filing Income Tax Return. In case of mis-match, it should be decided which details are accurate and accordingly the return should be filed. In case, there is any mismatch, the individual should ask the deductor to rectify the mistake and e-file rectified TDS statement so that accurate amount be reflected in Tax Credit Statement / Annual Information Statement. In case, the mismatch is not corrected, then the individual will receive a notice from the Income Tax Department for clarification of mismatch.

(vi) Statement of interest on Deposits:

The amount of interest earned on deposits in Post Office, Banks, and other Financial Institutions should be prepared from the Statement of Interest taken from them.

(vii) Collection of proofs to claim Deductions:

There are a lot of deductions available to be claimed under section 80C to 80U for the individuals and there are a lot of exemption available under section 10 which may be taken into consideration while quantifying the taxable portion of incomes earned during the financial year. An individual should keep all the records relatingto claimed exemptions, deductions in separate file as the proofs may be asked by the Income Tax Officers at any time in future.

Generally, tax savings are claimed for investments under section 80C, 80CCC, 80CCD (1) limited upto an amount of Rs. 1,50,000 and additional benefit for NPS investment of Rs. 50000 in 80CCD(1B); and for expenditures under other sections i.e. 80D to 80U. In 80D, the proof of receipt for payment of Health Insurance Premium for self, spouse and/or children and in 80E, proof for payment of interest on education loan should be maintained. For deduction in 80G, the details of organization come under 80G with name, PAN number, location etc; should be prepared and kept in hand.

(viii) Home Loan Statement with Interest Charged:

In case of home loan taken from Bank or Non-Banking Financial Companies; the statement of home loan principal amount as well as interest amount charged during the year should be taken. The amount of principal amount is counted in 80C for deduction purposes and ‘interest on home loan’ is claimed under the head ‘income from house properties’ under section 24. The maximum amount for self-occupied property for interest is Rs. 2,00,000.

(ix) Income on sale of Capital Asset:

The individuals who sold any capital asset during the financial year, should compute income or loss on the sale of Capital Asset. The details of buyer with PAN number should also be available at the time of e-filing Income Tax Return. In case of sale of mutual funds, equity shares, such details can be taken from the broker.

(x) Details of Bank Accounts:

Before e-filing Income Tax Return, an individual should prepare the list of active bank accounts and it is also required to pre-validate the bank accounts so that the refund (if any) can easily come in the pre-validated bank account. For pre-validation, it is necessary to link the bank account with PAN which is usually linked. For each bank account, the details i.e. Bank Name, Account Number, IFSC Code and type of Bank Account should be ready.

(xi) Aadhaar Details:

An individual should keep the Aadhaar details ready while e-filing Income Tax Return. It is mandatory now to quote Aadhaar number in Income Tax Return; even for e-verification, a message come on Aadhaar linked mobile number for verification of the Income Tax Return at the end of e-filing Income Tax Return.

New portal for e-filing Income Tax Return:

The old portal of incometaxindiaefiling.gov.in has been replaced with new portal incometax.gov.in from FY 2020-21. The ITR forms have also been changed. The process is also changed. What are the major changes, let’s understand in simple words. Firstly, JSON utility is introduced for offline filing of Income Tax Return (ITR) for the convenience of the taxpayers. Secondly, the old return preparation software is replaced with more interactive return preparation software in new online tax payment system, integrated for immediate processing of ITR.

What happens if a taxpayer withdraws amount exceeding a specified limit:

From FY 2020-21, as per the Budget 2020 speech, a new section was introduced i.e. 194N. The taxpayers who have not filed ITR for last three years and withdraw cash in excess of Rs. 20 Lacs, have to pay 2% TDS. For normal taxpayers the limit is Rs. 1 Crore from FY 2019-20, from one bank / post office account. In case, the amount is withdrawn above the limit, 2% TDS is deducted.

Such persons under Income Tax Act, will not be eligible to file ITR-1 and such TDS will also not be carried forward to next year if it is not claimed as refund during the current year.

Tax on Dividend Income in the hands of Recipient:

The Dividend Distribution Tax (DDT) has been abolished from FY 2020-21. If a taxpayer received Dividend from company, it will be taxable in the hands of taxpayers.

Tax Deducted at Source for the payments to Resident Contractors and Professionals:

The contractors with turnover / receipts exceeding Rs. 1 crore and the professionals with turnover / receipts exceeding Rs. 50 Lacs require to get their books audited. The deductors for the taxpayers with audited books, are required to deduct TDS under section 194C and 194J respectively.

In case, the TDS is not deducted u/s 194C and 194J then the TDS at the rate of 5% will be deducted u/s 194M.

In case TDS is deducted u/s 194M, the deductors have to issue Form 16D to the payees / deductees within 15 days of the due date of furnishing the challan-cum-statement in Form 26QD.

Last updated - July 18, 2021

*Copyright © 2019 Dr. Lalit Kumar. All rights reserved.

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Tax Deduction at Source - TDS

 Tax Deduction at Source - TDS

-Dr. Lalit Kumar*

The income tax is sometimes deducted at source, by the person who is making payment to another person for whom, it is an income. The payer deducts the tax and then deposit into the Income Tax Department and it is known as Tax Deducted at Source. This system is incorporated by Income Tax Department to reduce the theft of tax. In Income Tax Department, all types of payments on which it is required to deduct the TDS, are detailed and accordingly the person making payment (known as Deductor), required to deduct the TDS and remit the same in Income Tax Department. The payments include salaries, interests, commissions, brokerages, professional fees, royalties etc.​

Registration as Tax Deductor in Income Tax Department:

The persons who are required to deduct the TDS, also required to firstly take the Tax Deduction Account Number i.e. TAN which is of 10 characters. 3 characters of Jurisdiction code, 4^th for initial of the name of person followed by 6 characters generated by system including 5 numeric and 1 alphabet.

The TAN number can be obtained by applying on the website of NSDL-TIN. It’s fee is only Rs. 55 plus GST as processing fee.

Quoting of TAN:

Whenever a deductor deducts the TDS, it is required to be deposited in the Income Tax Department quoting the TAN Number. Thereafter, a return is required to be filed by the deductors, quoting the TAN number and details of challans through which the payments were made. It is also required to generate TDS Certificate and provide it to the person on whose income, the TDS was deducted and deposited in the Income Tax Department.

Penalty for not realizing TAN or not quoting accurate TAN Number:

Rs. 10,000 penalty is imposed upon a person who have not applied for TAN and making the payments without deducting TDS or if the person has obtained TAN but not quoting the same accurately in the TDS returns and certificates.

*This article is contributed by Dr. Lalit Kumar, an Expert on Financial Management accessible on https://wa.me/919416382720 

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Tier I and II Accounts of NPS

Tier I and II Accounts of NPS 

The National Pension System (NPS) investments can be done in two types of accounts i.e. Tier I and Tier II accounts. Both types of accounts can be maintained in a single allotted Permanent Retirement Account Number (PRAN). What is difference between Tier I and Tier II account? Where to invest and why? What are the advantages and disadvantages of investing in Tier I and II accounts?

Tier I Account:

The contribution in Tier I account cannot be withdrawn at any time, however it can be partial withdrawal for specific purposes. The investment or contribution in Tier I offers the following tax benefits:

Income Tax Benefits on Tier I contribution of NPS:

Under section 80 CCD (1):

Every citizen is provided deduction for making contribution to his or her pension account. Since National Pension System is a pension account; an employee is provided deduction up to 10% of his salary for contribution in Tier I account. In case of self-employed person, such contribution is allowed up to 20% of the gross total income. However, the maximum deduction under section 80CCD (1) cannot be more than Rs. 1.5 lac.

Under Section 80 CCD (2):

In case, the employer contributes in employee’s NPS account then such contribution is deductible from taxable income of the employee. The contribution can be made up to 10% of the salary i.e. Basic Pay and Dearness Allowance. This deduction is additional to Rs. 1.5 lac of 80 CCD (1).

In case of government organizations making such contribution, the amount is not included in taxable income under the head salary and the government directly deposit into the PRAN number of employee. There is no maximum limit of such contribution.

In case of private organizations making such contribution, the amount is sometimes provided to the employees and counted in their salary; in such cases, deduction is shown under section 80 CCD (2) from the salaries in Form 16.

The organizations are also allowed to claim such contribution under section 80 CCD (2) in employee’s NPS account as business expense in their profit and loss account. There is no monetary limit for such contribution.

Under Section 80 CCD (1B):

Apart from 80 CCD (1), 80 CCD (2); deduction under section 80 CCD (1B) is also allowed for additional amount of Rs. 50000 contributed by the employee in his or her Tier I account. However, in this section, the contributions of Atal Pension Yojana (APY) can also be counted for the purposes of deduction.

Section 80 CCE states that the deduction under sections 80 C, 80 CCC and 80 CCD (1) cannot be more than Rs. 1.5 Lacs. But the deductions under section 80 CCD (2) and 80 CCD(1B) are in addition to this limit of Rs. 1.5 Lac.

Tax Benefits during withdrawal of amount from Tier I of NPS:

As per NPS withdrawal rules notified in 2018, after meeting the following conditions, a subscriber can withdraw up to 25% accumulated corpus of Tier I account of NPS. Such withdrawal is known as partial withdrawal and there is not tax on such withdrawal, if:

(i)        Such withdrawal is after completion of 3 years in NPS

(ii)  Such withdrawal can be maximum up to thrice during the tenure of subscription

(iii)  Specified form along with necessary documents is submitted for the withdrawal claim i.e. for the following purposes:

a)   For higher education of self or children

b)  For setting up or acquiring a new business

c)   For the marriage of children

d)  For constructing or purchasing residential house or flat (only if no residential house is earlier owned)

e)   For treatment of subscriber or spouse or dependent parents suffering from specified illness including Cancer, Kidney Failure, Multiple Sclerosis, Heart Valve Surgery, Coma, Paralysis, serious accident, and other treatments specified in NPS Withdrawal Rules 2018.

In case, the amount of accumulated corpus is withdrawn for purchase of Annuity, then it will not be taxable.

Further, at the time of subscriber attaining the age of 60, if he withdraws amount in lump sum; then 40% of the total corpus amount will be exempt from tax. Remaining 60% which is taxable, can be used to purchase the annuity and in such case, no income tax will be payable at final withdrawal of the NPS amount.

However, if a subscriber desires, he or she can continue the NPS account up to the age of 70.

Tier II Account:

The contribution in Tier II account has more flexibility in terms of withdrawal and it can be withdrawn at any time. However, no income tax deduction is allowed in its contribution. It is considered as savings of a subscriber and the amount can be transferred to Tier I account whenever required. In Tier II contribution, the subscriber can select different investment pattern i.e. choice than the Tier I account. For example, if in Tier I, he opted Auto Choice then here he may opt Active Choice. In Tier II, there is no minimum contribution required to be made and there is minor maintenance cost or exit load levied on the subscriber.

 Drawback of investing in NPS:

The major drawback of investing in NPS account is that there are no assured returns from the NPS account neither in case of Tier I account nor in case of Tier II account. The benefit of Tier II is that the amount can be withdrawn at any time but the drawback of this account is, no tax benefit is available on this account.

But instead of its drawbacks, the NPS has become a preferable investment by the citizens due to its tax benefits:

A.  The Subscriber' contribution under NPS (Tier I) is eligible and qualify for deduction u/s Sec. 80 CCD (1) & Sec. 80CCD (1B) of the Income-Tax Act, 1961. However; the deduction u/s 80CCD (1) is subject to the limit and conditions specified in Sec. 80CCD (1) read with Sec. 80CCE. 

And

The deduction under Sec. 80CCD (1B) is an additional deduction for amount paid in NPS up to Rs. 50000. However, the same amount cannot be claimed both under sub-section (1) and sub-section (1B) of section 80CCD.

B. The contribution made by the employer up to 10% of the salary qualifies for deduction u/s Sec. 80 CCD (2) of the Act. 

सरकारी कर्मचारियों के लिए बड़ी खुशखबरी! NPS को छोड़कर पुरानी Pension स्कीम का ले सकते हैं फायदा

NPS and Old Pension System: केंद्रीय कर्मचारियों (Central Government employees) की पेंशन को लेकर एक बड़ा ऐलान किया गया है. सरकारी कर्मचारी अब National Pension System (NPS) को छोड़कर पुरानी पेंशन स्‍कीम (OPS) का फायदा 31 मई 2021 तक ले सकते हैं.
डिपार्टमेंट ऑफ पेंशन एंड पेंशनर्स वेलफेयर (DoPPW) ने ये जानकारी एक नोटिफिकेशन के जरिए दी है. 

Old Pension Scheme के लिए 5 मई तक आवेदन 

सरकार ने कहा है कि जो भी कर्मचारी इसका फायदा लेना चाहते हैं 5 मई तक आवेदन कर सकते हैं. जो कर्मचारी आवेदन नहीं करेंगे उन्हें National Pension System का फायदा मिलता रहेगा. जो भी कर्मचारी 1 जनवरी 2004 से 28 अक्टूबर 2009 के बीच में नियुक्त किए गए हैं उनको CCS Pension के तहत ही पेंशन का लाभ मिलेगा.

पुरानी पेंशन योजना ज्यादा फायदेमंद!

इस फैसले पर एक्सपर्ट्स का कहना है कि पुरानी पेंशन स्कीम NPS से ज्यादा फायदेमंद है, क्योंकि पुरानी स्कीम में रिटायरमेंट के बाद पेंशनर्स के साथ ही परिवार वालों को भी सिक्योरिटी मिलती है. 

किन कर्मचारियों को मिलेगा योजना का फायदा

पुरानी पेंशन योजना का फायदा उन्हीं केंद्रीय कर्मचारियों को मिलेगा, जो रेलवे पेंशन रूल्‍स या CCS (पेंशन) रूल्‍स, 1972 के तहत राज्य सरकार के किसी विभाग या स्वायत्त संस्‍थाओं में 1 जनवरी, 2004 से पहले नियुक्‍त किए गए थे. इसके बाद अगर उन्होंने राज्य सरकार के पेंशनभोगी विभाग की नौकरी से इस्तीफा देकर केंद्र सरकार के पेंशनभोगी विभाग या केंद्रीय स्‍वायत्‍त संस्‍था में नियुक्ति हासिल की. 

क्या है NPS 

नेशनल पेंशन सिस्टम में 18 से 60 साल तक की उम्र के लोग इसमें निवेश कर सकते हैं. सभी सरकारी और निजी बैंकों में अकाउंट खोल सकते हैं. कर्मचारियों को सेक्शन 80CCD का सब सेक्शन 80CCD (1) के तहत पेंशन स्कीम में जमा पर टैक्स में छूट मिलती है.
सैलरीड कर्मचारी अपनी सैलरी का 10 परसेंट तक और नॉन सैलरीड कर्मचारी अपनी कुल इनकम का 20 परसेंट तक पेंशन अकाउंट में जमा कर सकते हैं. इस पर इन्हें 1.5 लाख रुपये तक टैक्स छूट मिलती है. 

*Copyright © 2018 Dr. Lalit Kumar. All rights reserved. 

You might also be interested in learning from the following:

1. How Money Grows in NPS   

2. Tax Deduction at Source for Deductors  

3. Tier I and II Accounts of NPS  

Duties of DDOs in Taxation Matters

Duties of Drawing and Disbursing Officers in Taxation Matters

Purpose:

The course was designed to sharpen the financial skills of Government Officers particularly in relation with taxation issues for ensuring compliance of taxation rules at their workspace.

Who participated in the course?

The course received overwhelming response from the departments and 33 officers participated in the course. The participants including District Employment Officers, District Statistical Officers, Block Education Officers, Principals, Executive Engineers, Sub-Divisional Officers, and Women & Child Development Project Officers; get their concerns resolved by interactions during the course. The greater emphasis is provided upon processing and submission of Tax Deduction at Source (TDS).

What has been covered in this course:

At the end of the course, the participants became able to (i) describe the provisions of Income Tax with latest amendments, (ii) compute Income Tax as per latest amended rules for the Financial Year 2018-19 for ensuring accurate deduction of tax at source, (iii) submit e-TDS return (24Q) as per Government Instructions.

*Copyright © 2018 Dr. Lalit Kumar. All rights reserved. 

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Workshop on Taxation Matters

Workshop on Taxation Matters

By Dr. Lalit Kumar Setia |  @drlalitsetia  |  drlalitsetia@gmail.com  |  Created October 10, 2018

Updated April 6, 2019

Purpose:

The course is designed to sharpen the financial skills of officers particularly dealing the taxation issues for ensuring compliance of taxation rules.

Who participated in the course?

The course always receive overwhelming response from the organizations and last time 33 officers participated in the course. Last time, the participants were District Employment Officers, District Statistical Officers, Block Education Officers, Principals, Executive Engineers, Sub-Divisional Officers, and Women & Child Development Project Officers; and their concerns were resolved by interactions during the course. 

The greater emphasis is provided upon processing and submission of Tax Deduction at Source (TDS). The next course is scheduled from 8th to 10th May 2019. 

What has been covered in this course:

At the end of the course, the participants became able to (i) describe the provisions of Income Tax with latest amendments, (ii) compute Income Tax as per latest amended rules for the Financial Year 2018-19 for ensuring accurate deduction of tax at source, (iii) submit e-TDS return (24Q) as per Government Instructions.

Taxation in Managerial Administration:

The managerial administration requires proper planning to ensure effective implementation of various provisions of the income tax. The income tax and goods and services tax (GST) are required to be implemented in organizations. The most of the work is done by accounts branch with the help of chartered accountants. Why to ensure compliance of taxation rules? Income Tax is basically a percentage of income of person required to be paid to the government which further used by government in the development of the nation. Goods and Services Tax (GST) and Income Tax are levied on the basis of concerned laws. The taxes form significant part of revenues of the government. The revenue function is directly related to Finance Department and the Drawing and Disbursing Officers (DDOs) represent Finance Department in the Government offices.

Who pays Income Tax?

The income tax is required to be paid by persons and the definition of person in Income Tax Act 1961 includes individuals, Hindu Undivided Family (HUF) or sole traders, Association of Persons (AOP) or Body of Individuals (BoI) or partnership firms, corporate entities, and other organizations including local authorities. The collection of taxes, recoveries of taxes if not paid, and maintenance of records for effective administration of the taxes require proper training and deployment of manpower in the whole nation. In India, the Finance Ministry’s department of revenue is entrusted to perform these functions. Every year tax laws and financial acts are passed in the union budget presented by the finance minister in the parliament. For effective regulation, the department of revenue through Central Board of Direct Taxes (CBDT) administers the functions and ensure proper compliance with the help of Prinipal Accounts Officers (PAOs) and Drawing and Disbursing Officers (DDOs).

Changes in Income Tax (from FY 2017-18):

While preparing the income tax return for the Financial Year 2017-18; the changes were kept in mind: (i) the tax rate for the slab ‘upto 250000’ became from 10% to 5% and surcharge of 10% and 15% were imposed for the slab ’50 Lacs to 1 Crores’ and ‘Above 1 crore’ respectively. (ii) The deduction for investments under ‘Rajiv Gandhi Equity Saving Scheme’ was stopped. (iii) A provision for penalty of Rs. 5000 was introduced in case income tax return (ITR) is not filed by 31^st Decemeber of the Assessment Year however, persons in slab upto Rs. 5 lac income were provided relaxation with penalty upto Rs. 1000. (iv) The persons paying rent were asked to deduct 5% TDS in case Rs. 50000 paid as monthly rent. (v) The provisions were made for withdrawl of 25% of own contribution in ‘National Pension System’ for emergencies and specific needs.

The cess of 3% was applicable in Financial Year 2017-18 on ‘Income Tax + Surcharge’ payable.

How to pay income tax?

The persons came under the definition of income tax, can make payment of income tax through (i) Advance Tax, (ii) Self Assessment Tax, (iii) Tax Deduction at Source, and (iv) Tax Collection at Source. For filing of Self Assessment Tax purposes, various Income Tax Return (ITR) forms are used.

*Copyright © 2019 Dr. Lalit Kumar. All rights reserved. 

You would also like to learn from the following:
1. Corruption and Governance - Tools in the hands of Ruler   

2. Advance Tax and How to Avoid Interest on Advance Tax  
3. Implications on Income Tax on Formation and Dissolution of Hindu Undivided Family   4. Payment and Status of Income Tax   

5. Income Tax Return   

6. Tax Deduction at Source  

7. Tax Planning to Have More Take-Home Salary   

8. Tax Deduction at Source for Deductors  

9. How to save money from being covered under taxes (Tax Saving Options)?   

10.  Duties of DDOs in Taxation Matters (Income Tax and Goods and Services Tax)