income tax returns - bcasonline.org · – the process of electronically filing income tax returns...

Presented by CA B. K. VATSARAJ

Income Tax Returns

@An Overview of the Process

of e-Filing of Returns

• WHAT IS E-FILING?

– The process of electronically filing Income tax returnsthrough the internet is known as e-Filing.

– The returns are not to be accompanied with any form of thedocuments including statutory form or report of audit (otherthan report u/s 92E) which is otherwise required to befurnished before the due date or along with the return formaking any claims.

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E-filing - Mandatory

– It is mandatory for all corporate assessees and partnershipfirms who are liable for audit u/s 44AB of the Income TaxAct to submit the Income tax returns electronically for A.Y.2007-08 & onwards.

– Rule 12 of the Income-tax Rules, 1962, which prescribes theforms for filing of Return of Income had been amended videNotification S.O. No.762(E) dated 14th May, 2007 and newforms of the Returns of Income had been notified.

– The new forms accordingly became applicable w.e.f. A.Y.2007-08.

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E-filing – Not Mandatory– An Individual or HUF or a partnership firm not having Tax

Audit can furnish return of income in paper form or can file inelectronic form with digital signature or in electronic formatwithout digital signature and subsequently submit theverification (acknowledgement) in paper form with physicalsignature.

– The proviso (b) to Rule 12(3) of the Income Tax Rules, 1962,specifically provides that the persons required to furnish returnin ITR-7 shall furnish the return in the manner specified inclause (i).Clause (i) of Rule 12(3) specifies that the return of income is tobe furnished in the paper form.

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– The ITR-7 is applicable to entities that are required to furnish theirreturn of income u/s. 139 (4A) or (4B) or (4C) or (4D).

– Trusts/section 25 companies claiming exemption under section 10or 11 have to file return in paper form with all annexure.

– For Agent of non-residents, within the meaning of section 160 ofthe Act, it has been clarified by CBDT in circular no. 8 dated 22nd

September, 2008, that it will not be mandatory to electronicallyfurnish the returns of non-residents for A.Y. 2008-09.Drawing the same analogy from the circular issued for A.Y. 2008-09, the agents can file paper returns for their non-resident principalfor A.Y. 2010-11.

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Enclosures with the Return of Income;

It is reiterated by CBDT in its Circular no. 3 of 2009 that return of incomefurnished in prescribed forms (except ITR 7) shall not be accompanied by anyattachments. Documents like TDS certificates/tax paid challans/ profits and lossaccount/balance sheet etc. shall be produced before the Assessing Officerwhenever he calls for the same.

Tax Audit Report, is to be obtained before the due date of filing of the return.The same is not required to be attached with the return of income.

Transfer pricing report should not be attached with the return of income, but thesame should be filed separately before the due date of filing the return ofincome.

As provided in section 184 of the Act, In case of first return of a partnership firmor in case of change in the constitution of the partnership firm, certified copy ofthe partnership Deed is required to furnished alongwith the return of income soto get assessed as a partnership firm. Since no enclosures are to be furnishedwith the return, certified copy of the Deed should be furnished separately withthe Assessing officer.

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Scheme of new ITR FormsSelection of the Forms of Income depends on (a) the status of theassessee and also (b) the nature of income of the assessee.

- Forms to be used by different types of assessees:

Saral II (ITR-1): For Individuals having Income from Salary / Pension/ Income from One House Property (excluding lossbrought forward from previous years) / Income fromOther Sources (Excluding Winning from Lottery andIncome from Race Horses)

ITR-2: For Individuals and HUFs not having Income fromBusiness or Profession

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ITR-3: For Individuals/HUFs being partners in firms andnot carrying out business or profession under anyproprietorship

ITR-4: For individuals & HUFs having income from a proprietary business or profession

ITR-5: For firms, AOPs and BOIs

ITR-6: For Companies other than companies claimingexemption under section 11

ITR-7: For persons including companies required tofurnish return under section 139(4A) or section139(4B) or section 139(4C) or section 139(4D)

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Comparison of Saral II (ITR-1) vis-à-vis erstwhile ITR-1S. No.

Applicability to Assessment year A.Y. 2007-08 to A.Y. 2009-10

A.Y. 2010-11

Nature of Income/Loss covered Erstwhile Form ITR-1

Newly substituted Form Saral-II (ITR-1)

1. Income from salary pension YES YES

2. Exempt income like dividend, L.T.C.G. (STT paid)

NO YES

3. Income from House property (individual having one property)

NO YES

4. Income from other sources (excl. winning from lotttery & income from race horses.

NO YES

5. Income under the head capital gain (not exempt) NO NO

6. Income from House property (individual having two or more properties)

NO YES

7. Loss from House property (one house) during the year & no b/fd. loss from previous year

NO YES

8. Loss from income from other sources NO YES

Due dates of filing the return of income

Sr. No. Person Due date

1. Companies 30th September

2. A person other than company whose accounts arerequired to be audited under this Act or under any otherlaw

30th September

3. A working partner of the firm whose accounts arerequired to be audited under this Act or under any otherlaw

30th September

4. In case of any other assessee 31st July

The due dates by which the return of income should be filed are as under:

CA B. K. VATSARAJ

• TYPES OF e-FILING

There are three ways to file returns electronically

Option 1: Use digital signature in which case no paperreturn is required to be submitted

Option 2: File without digital signature in which caseITR – V form is to filed with the department. This is asingle page receipt cum verification form.

Option 3: File through an e-return intermediary whowould do e-filing and also assist the assessee to file theITR Form

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Part-1

Step 1: Procedure to be followed before going for e-filing:

Log on to the website www.incometaxindia.gov.in to download the ITR forms applicable.

These will be available in excel format.

A check should be kept for downloading the latest version of these forms

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CVO CA ASSOCIATION - TORAL GADA

Step 2: Procedure to be followed before filling up theform:

Before filling up the form it is important to have with you allthe mandatory details required to be filled up.

For that it is advisable to keep a checklist with you alongwith your audit program while on audit.

It is important to have the signed audit report & financialstatements in front of you while filing up the forms.

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A specimen of the checklist is given below:

• General Details :

Full and Correct Name of the assessee

Correct PAN

Full address with city, state and pin-code

Date of formation / Birth

Residential status

Nature of business

Bank A/c. No. & MICR code

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In case of firms, following details in respect of all thepartners

1. Name,

2. Address (with city, state & pin-code),

3. Percentage of share and

4. PAN

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Step 3 : Procedure to be followed for filling up theform:

Whenever the ITR forms in excel format are accessed,one needs to ‘Enable macros’

Enabling Macros in Excel 2003:

1. On the Tools menu, point to Macros >> Security.2. Now select Security Level as low or medium and press OK.3. Restart your Excel Utility, and if asked whether you want to

Enable Macros, select YES.

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Enabling Macros in Excel 2007:

1. Click the Microsoft Office button and then click Excel Options.

2. Click Trust Center, Click Trust Center Settings, and then clickMacro Settings.

3. Click the option ‘Enable Macros’.

4. Restart your Excel Utility.

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Fill up the entire form by picking up all items from the audit report/financialstatements & placing them under their appropriate heads.

General Points to remember while filling up the forms:

• Name of the assessee should be written as per PAN Card

• PAN should be of 10 digits

• Status of assessee should be properly selected

• Date of birth/formation should as per PAN Card

• Section under which return is filed should be correctly mentioned

• Correct Ward No. should be mentioned

• Information about the auditor should be correct i.e. name of the signingauditor, membership no., name and PAN of auditor (proprietary/firmname)

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Special attention to be given, while providing following information in the ITR form:-

1) Information of certain transactions as reported through Annual InformationReturn (AIR).Information of following transactions is to be furnished:

a) Cash deposits aggregating to Rs.10 lakh or more in a year in any savingsaccount.

b) Payment against bills raised in respect of credit card aggregating to Rs.2Lakh or more in a year (if you have more than one credit card, totalpayment for both more than Rs.2 Lakh but each card less than Rs.2 Lakh,then information not required to be furnished.

c) Payment more than Rs.2 Lakh for purchase of units of mutual fund(payment to each mutual fund more than Rs.2 Lakh – information to befurnished).

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d) Payment more than Rs.5 Lakh for purchase of bonds or debenturesissued by a company or institution or RBI Limit of Rs.5 Lakh is quacompany/institution.

e) Payment more than Rs.1 Lakh for acquiring shares issued by aCompany. This refers to initial allotment/right issue by a Company, anddoes not refer to shares purchased in the secondary market.

f) Purchase/Sale of immovable property more than Rs.30 Lakh.

Mutual funds/Banks/Sub-registrar of assurances etc. are required to file Annualinformation return giving details of above transactions. Hence, cases are alsoselected for scrutiny based thereon.Hence, correct details of the above transactions are to be filled up in the returnform.

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2) If refund is to be received by way ECS – MICR code of Bank is to beprovided.

3) Details of brought forward losses i.e. head of loss, year of loss, date offiling a return in that relevant year, setting off such loss during the yearunder various head and carrying forward of balance unabsorbed loss areto be furnished in the return.

4) Name/PAN/relationship of person whose income is clubbed is to befurnished along with nature and amount of income clubbed.

5) Nature and amount of exempt income earned.

6) Details of income taxable at special rate e.g.:•Long Term Capital Gain taxable @20%.•Short Term Capital Gain taxable @15%., etc.

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7) In ITR-3 – Details of Name and PAN of the firm, in which he is a partner,capital balance as on last day, % share of profit, amount of profit share,salary, bonus, and interest received from firm and expenses incurred areto be provided.If the partner earns any other income like Directors Sitting Fee which istaxed under the head “Profits and Gains of Business”, there is no columnprovided in ITR-3 to write this amount and you are forced to reflect thatamount under the head other sources.

7) In ITR-4 – complete details of all items of Profit and Loss, BalanceSheet and Clauses of Tax Audit Report are to be furnished.

9) In ITR 5 and ITR 6 – Complete details of items of Profit and LossAccount, Balance Sheet and Tax Audit information is to be provided.

10) In ITR 7 – inter alia, Details of Trustees, 12A registration, Section underwhich exemption is claimed.

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Step 4 : Validation of the file

Click on the ‘Validate all sheets & generate XML file’ tab tovalidate the data entered into.

An XML file will be created and saved at the opted destination.

If there are any errors in filling up the form, then the error will betraced and displayed on the screen. These errors should be rectifiedand once again validation should be done before generating the XMLfile.

If these errors are not rectified then validation will not be possible.

Note: Filling up the ITR Forms and generating XML file can be doneoffline itself.

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Part 2:

Procedure to be followed after filling up the form and after generating XML file:

Obtain a photocopy of the assessee’s PAN Card for correct detailsof name & date of birth / formation, which are required for creatinglogin user ID.

Log on to the website www.incometaxindia.gov.in.

Click on the ‘e-file your returns’ tab.

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The procedure for e-filing of returns will be displayed which is as follows:

1) Select appropriate type of Return form.

2) Download Return Preparation Software for selected Return Form. (Excel File)

3) Fill your return offline and generate a XML file.

(The above 3 steps have been explained earlier)

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4) Register and create a user id/password:

a) Click on the ‘REGISTER’ option, which appears on the right hand side of the web page.

Here the PAN, First Name, Middle Name & Surname and Date of Birth/Incorporation of the assessee are to be entered.

Then click on the ‘Register’ tab.

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b) Then create User ID/Password. The PAN of the assessee should be used as user id & password may be anything

It is mandatory to fill up the options - Password, Confirm Password, Phone No.& Email address.

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5) Login with the user id & password created.

Once logged in it would display “Logged in as _________(NAME)”.

Click on the relevant form on the left panel and select “SUBMIT RETURN” option.

For making use of digital signature, one needs to download a software named Java Runtime Environment 6 (JRE 6Beta).

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Click on “BROWSE” to select the XML File from the destination where it was saved after generating.Then click on “UPLOAD” button.

7) If your upload is successful, then the acknowledgement of return would be displayed.

Save the acknowledgement at required destination.

Click on “PRINT” to generate printout of the same.

8) In case the return is digitally signed; then on generation of "Acknowledgement" the Return Filing process gets completed.

CA B. K. VATSARAJ

Any return which is digitally signed by the assessee and filedwith an E-Return Intermediary (ERI), who, in turn, submits thereturn to the Income Tax Department under his digitalsignature, will also be deemed to have been filed under a digitalsignature of the assessee and no Form ITR-V is required to besubmitted.

Until now, the digital signature was just to be attached to thexml file prior to uploading the return.Now, the digital signature either in form of USB token or PFXfile has to be registered on the income tax portal before thesame can be attached to xml file for uploading.

CA B. K. VATSARAJ

9) Incase the return is not digitally signed, on successful uploading of e-Return; the ITR-V Form would be generated.

This is an acknowledgement cum verification form.

This form has to be verified and signed & should be submitted with centralized processing unit at Bengaluru.

This completes the Return filing process for non-digitally signed Returns.

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Dos and Dont's for printing and submitting of ITR-Vs to ITD-CPC Bengaluru

1.Please use Ink Jet /Laser printer to print the ITR-V Form.

2.The ITR-V Form should be printed only in black ink.

3.Do not use any other ink option to print ITR V.

4.Use of Dot Matrix printer should be avoided.

5.Ensure that print out is clear and not light print/faded copy.

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6. Please do not print any water marks on ITR-V. Theonly permissible watermark is that of "Income taxDepartment" which is printed automatically on eachITR-V.

7. The document that is mailed to CPC should be signedin original.

8. Photocopy of signatures will not be accepted.

9. The signatures or any handwritten text should not bewritten on Bar code.


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10. Bar code and numbers below barcode should be clearly visible.

11. Only A4 size white paper should be used.

12. Avoid typing anything at the back of the paper.

13. Perforated paper or any other size paper should be avoided.

14. Do not use stapler on ITR V acknowledgement.


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15. In case you are submitting original and revised returns, donot print them back to back. Use two separate papers forprinting ITR-Vs separately.

16. Please do not submit any annexures, covering letter, prestamped envelopes etc. along with ITR-V.

17. The ITR-V form is required to be sent to Post Bag No.1,Electronic City Post Office, Bengaluru, Karnataka-560100,by ordinary post.

18. ITR-Vs that do not conform to the above specifications mayget rejected or acknowledgement of receipt may get delayed.


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e-Filing Process – At a glance1 Select appropriate type of Return Form

2 Download Return Preparation Software for selected Return Form.

3 Fill your return offline and generate a XML file.

4 Register and create a user id/password

5 Login and click on relevant form on left panel and select "Submit Return“

6 Browse to select XML file and click on "Upload" button

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7 On successful upload acknowledgement details would be displayed. Click on "Print" to generate printout of acknowledgement/ITR-V Form.

8 In case the return is digitally signed, on generation of"Acknowledgement" the Return Filing process gets completed.You may take a printout of the Acknowledgement for yourrecord.

(Contd..)

e-Filing Process – At a glance

CA B. K. VATSARAJ

In case the return is not digitally signed, on successful uploading ofe-Return, the ITR-V Form would be generated which needs to beprinted by the tax payers.

This is an acknowledgement cum verification form.The tax payer has to fill-up the verification part and verify thesame.

A duly verified ITR-V form should be mailed to“Income Tax Department – CPC, Post Bag No - 1, ElectronicCity Post Office, Bengaluru - 560100, Karnataka, ”BY ORDINARY POST ONLY ” within 30 days after the date oftransmitting the data electronically.


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9 ITR-V sent by Speedpost, Registered Post or Courier will not be accepted.No Form ITR-V shall be received in any other office of the Income-tax Department or in any other manner.

In case, Form ITR-V, is furnished after the above mentioned period, it will be deemed that the return in respect of which the Form ITR-V has been filed was never furnished and it shall be incumbent on the assessee to electronically re-transmit the data and follow it up by submitting the new Form ITR-V within thirty days.

This completes the Return filing process for non-digitally signed Returns.

10 For any assistance in filing the ITR-V please contact the Public Relations Officer of the local Income Tax Office.


CA B. K. VATSARAJ

Relevant Notifications, Circulars & Instructions

• CIRCULAR NO. 03 / 2009, DATED 21-5-2009• CIRCULAR NO. 8/2008, DATED 22-9-2008• CIRCULAR NO. 6/2008, DATED 18-7-2008• CIRCULAR NO. 5 / 2007, DATED 26-7-2007• CIRCULAR NO. 3/2007, DATED 25-5-2007• CIRCULAR NO. 9/2006, DATED 10-10-2006• NOTIFICATION NO. 75/2009, DATED 30-9-2009• NOTIFICATION NO. 70/2009, DATED 22-9-2009• NOTIFICATION NO. 210/2007, DATED 27-7-2007

CA B. K. VATSARAJ

THANK YOU

@CA B. K. VATSARAJ