INCOME
TAX IN INDIA
Government of India needs money for its
expenses and development activities which is collected in the form of taxes and
Income Tax is probably the biggest source of revenue of government of India.
As per Press Release dated 07.11.2017,
the provisional figures of Direct Tax collections up to October, 2017 show that
net collections are at Rs. 4.39 lakh crore which is 15.2% higher than the net
collections for the corresponding period of last year. Net Direct Tax
collections represent 44.8% of the total Budget Estimates of Direct Taxes for
F.Y. 2017-18 (Rs. 9.8 lakh crore). Gross collections (before adjusting for
refunds) have increased by 10.7% to Rs.5.28 lakh crore during April-October,
2017. Refunds amounting to Rs. 89,507 crore have been issued during April, 2017
to October, 2017.
TAXABLE
INCOME
In India, Income of the whole financial
year is clubbed together under following five heads, i.e.
1.
Income from Salary,
2.
Income from House Property,
3.
Income from Business/Profession,
4.
Income from Capital Gains and
5.
Income from Other Sources (For those
income/s not covered in above 4 heads).
INCOME
TAX RETURN-FILING REQUIREMENTS
Under the provisions of Indian Income
Tax Laws, if the income of a person exceeds the basic exemption limit, filing
of Income Tax Return (ITR) is required. However, In those cases where a person
have an asset or financial interest in an entity located outside India or
he/she is signing authority in a foreign bank account, then filing of Income
Tax Return (ITR) is mandatory even if income is below exemption limit.
Section
139 of the Income Tax Act, 1961 provides that;
139.
[(1) Every person,—
(a)
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being
a company or a firm; or
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(b)
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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,
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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.
It
further provides that a person, being a resident other than not ordinarily
resident in India, who is not required to furnish a return under this
sub-section and who at any time during the previous year,—
(a)
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holds,
as a beneficial owner or otherwise, any asset (including any financial
interest in any entity) located outside India or has signing authority in any
account located outside India; or
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(b)
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is
a beneficiary of any asset (including any financial interest in any entity)
located outside India,
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shall
furnish, on or before the due date, a return in respect of his income or loss
for the previous year in such form and verified in such manner and setting
forth such other particulars as may be prescribed.
LIST
OF INCOME TAX RETURNS APPLICABLE FOR AY 2017-2018 (FY 2016-2017)
S. NO.
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ITR
FORM
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APPLICABLE
FOR THE CATEGORY
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1.
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ITR 1
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For Individuals having Income from Salaries,
one house property, other sources (Interest etc.) and having total income
upto Rs.50 lakh.
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2.
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ITR 2
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For Individuals and HUFs not carrying
out business or profession under any proprietorship.
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3.
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ITR 3
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For individuals and HUFs having income
from a proprietary business or profession.
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4.
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ITR 4
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For presumptive income from Business
& Profession.
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5.
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ITR 5
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For
persons other than:-
(i) Individual, (ii) HUF, (iii) Company and (iv) Person filing Form ITR-7. |
6.
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ITR 6
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For Companies other than companies claiming
exemption under section 11.
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7.
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ITR 7
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For persons including companies
required to furnish return under sections 139(4A) or 139(4B) or 139(4C) or
139(4D) or 139(4E) or 139(4F).
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TIME
LIMIT FOR FILING INCOME TAX RETURN
S. No.
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Type of Assessee
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Time Limit
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1.
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Company
or a person whose accounts are required to be audited or a working partner of
a firm whose accounts are required to be audited (Tax Audit cases).
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30th
September
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2.
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In
the case of an assessee who is required to furnish a report referred to in section 92E
(Cases involving Transfer Pricing provisions).
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30th
November
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3.
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In case of any other assesse.
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31st
July
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FILING OF BELATED RETURN
The
last date for filing Income Tax Return is July 31 of each year (with few
certain exceptions as provided above) which can be belatedly filed up to March
31. For example, Income Tax Returns for
Assessment Year 2017-18 (Financial Year 2016-2017), can be filed
belatedly till 31st March 2018.
Section
139 (4) (w.e.f. 1-4-2017) provides that:
Any
person who has not furnished a return within the time allowed to him under
sub-section (1), may furnish the return for any previous year at any time
before the end of the relevant assessment year or before the completion of the
assessment, whichever is earlier.
REVISION OF INCOME TAX RETURN
Section
139 (5) (w.e.f. 1-4-2017) provides that:
If
any person, having furnished a return under sub-section (1) or sub-section (4),
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.
DEFECTS IN INCOME TAX RETURN
As
per sub-section (9) of Section 139, Where the Assessing Officer considers that
the return of income furnished by the assessee is defective, he may intimate
the defect to the assessee and give him an opportunity to rectify the defect
within a period of fifteen days from the date of such intimation or within such
further period which, on an application made in this behalf, the Assessing
Officer may, in his discretion, allow; and if the defect is not rectified
within the said period of fifteen days or, as the case may be, the further
period so allowed, then, notwithstanding anything contained in any other
provision of this Act, the return shall be treated as an invalid return and the
provisions of this Act shall apply as if the assessee had failed to furnish the
return :
Provided that where the assessee
rectifies the defect after the expiry of the said period of fifteen days or the
further period allowed, but before the assessment is made, the Assessing
Officer may condone the delay and treat the return as a valid return.
CONCEPT
OF BLACK MONEY
The income which is taxable but not
disclosed in proper Income Tax Return and due taxes have not been paid, is
considered Black Money.
REFUND
OF EXCESS TAX
Although filing Income Tax Return is a
legal requirement with a consequential penalties etc. for non-compliance, one
can claim refund of excess taxes (TDS), after adjusting the final tax with the
same.
SPECIAL
POINTS FOR NRIs
Although the provisions mentioned above
are applicable for NRIs also, there are certain points which are of special
significance for NRIs and while filing Income Tax Returns in India, NRIs should
consider the same, for example;
1.
Finding out Residential status,
2.
Taking benefits of Double Tax Avoidance
Agreement (DTAA),
3.
Special Deductions
and Exemptions for NRIs etc.
Author:
CA. Brijesh Baranwal
The Author is a Mumbai
based, Practicing Chartered Accountant. In case of queries and suggestions,
please contact: cabrijesh@yahoo.co.in
Disclaimer- This write up is only for awareness
purpose and professional opinion may be required depending upon the particular
facts.