Not yet filed your tax return? Read this first

If you have missed the last date for filing tax returns for AY 17-18 (5th August), then this article is for you. Others too, though having filed their tax return in time, would do well to know the law as it stands today with respect to filing tax returns after due date. Also for some who may wish to revise their returns, this article will be extremely relevant. First the basics Let’s start with the very basic questions – Who must file a tax return? There has been an amendment to the law with respect to this aspect the sixth proviso to Sec. 139(1) requires a person to furnish his return of income if his total income without claiming any deductions under Chapter VI-A (Sec. 80C, 80D, etc.) and also the exemption u/s 10(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.

The filing of the tax return is obligatory, even if the assessee (particularly the salaried class) has suffered TDS and finds that no extra tax needs to be paid.

All this obviously results in extremely few individuals who need not file tax returns and yet in reality the situation is much different.

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 would be compulsory irrespective of whether such individual has taxable income below the threshold or not.

Employees who are Residents and are the 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 30th September for (i) companies and (ii) assessees as well as working partners of a firm whose accounts are required to be audited. For other assesses, the date is 31st July.

To be able to process the returns within 12 months, the recent 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, a new Sec. 234F has been inserted to provide that a fee for delay in furnishing of return shall be levied if the return is not filed within the specified due dates. The fee applicable shall be ` 5,000 if the return is furnished after the due date but on or before the 31st December of the AY and ` 10,000 in any other case. However, where the total income does not exceed ` 5 lakh, the fee amount shall not exceed ` 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 find that you have difficulty in filing your return on account of not having access or able to locate some data / information, you should nonetheless file a return within the due date and then revise it later with the actual details. 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. Some other recent amendments Normally, the entire income that arises or accrues to a minor is to be included in the income of that parent whose total income (excluding the income includible) is higher.

All the income of a physically or mentally handicapped minor child will be directly assessed in the hands of the child. Similarly, a minor earning income by way of manual work or an activity involving application of his skill, talent or specialised knowledge and experience, is directly assessed in the hands of the child but all the other income of the child suffers clubbing.

Circular # 5/2017 dtd. 29.5.2017 states that in case of minors where both the parents are deceased, the income should be assessed in the hands of the minor and the income tax returns be filed by the minor through his/her guardian. TDS on the interest income accrued to the minor is required to be deducted and reported against PAN of the minor child unless a declaration is filed (by the deductee) under Rule 37BA(2) to that effect.TDS is treated as advance tax paid. Senior citizens are exempt from paying advance tax if they do not have any business or professional income. FA16 has clarified that a return which is otherwise valid would not be treated defective merely because self-assessment tax and interest payable in accordance with the provisions of Sec. 140A, has not been paid on or before the date of furnishing of the return. Penalties: Sec. 276CC Wilful failure to furnish return during the prescribed time resulting in tax evasion exceeding ` 1 lakh attracts a fine and imprisonment that can be from 6 months to 7 years! In other cases, it could be a fine and imprisonment of 3 months to 3 years. Over and above this, Sec. 271F imposes a penalty of ` 1,000 for late furnishing of returns in normal cases.

However, a penalty cannot be levied unless there is substantial evidence of wilful failure. The provisions of ITA are amended so frequently that it is impossible even for tax experts to know all the provisions at any given point of time. Hence, ignorance of law can be taken as an excuse and penalty should not be levied merely on the ground that the assessee ought to have known the correct provisions of law. — ACIT v. Vinman Finance & Leasing Ltd. [C. O. No. 12/Vizag/2004 In ITA No. 03/Vizag/2002]. Aadhaar Card The recent FA17 has introduced a new Sec. 139AA requiring every person eligible to obtain Aadhaar number shall on or after 1.7.17, quote it in his return. However, where the person having a PAN and has applied for Aaadhar and has not been allotted the number, he may quote the enrollment ID of Aadhaar. Failure to do so will render the PAN allotted to the person deemed to be invalid and the other provisions of the Act shall apply as if the person had not applied for PAN. Moreover, 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 who is of age 80 years or more at any time during the previous year from this reqirement.