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ABCD of Income Tax Return Filing

There is a lot of confusion and over-lapping information with regard to who should file Income tax Returns and also what is the due date for filing those returns. This article would try to address all issues relating to Income Tax Return Filing.

Mandatorily required to file Income Tax Returns

  • Every Company or Firm is mandatorily required to file return of his income on or before the due date irrespective of income;
  • Other than Company or Firm, if the total income exceeded the maximum amount which is not chargeable to income tax i.e., Rs 250,000 for FY

Further, such person may file voluntarily return if total income does not exceed the basic exemption limit. However following persons are also required to mandatorily their return of income:

(1) if such person resides in such area as may be specified by the Board in this behalf by notification in the Official Gazette, and who during the previous year incurs an expenditure of Rs. 50,000 or more towards consumption of electricity or

(2) if at any time during the previous year fulfills any one of the following conditions, namely:

  • Is in occupation of an immovable property exceeding a specified floor area; or
  • Is the owner or the lessee of a motor vehicle other than a two-wheeled motor vehicle; or
  • Has incurred expenditure for himself or any other person on travel to any foreign country; or
  • Is the holder of a credit card, not being an “add-on” card, issued by any bank or institution; or
  • Is a member of a club where entrance fee charged is Rs. 25,000 or more

Due Dates for filing of Income Tax Returns

30th September for companies, or a person (other than a company) whose accounts are required to be audited; or a working partner of a firm whose accounts are required to be audited. 30th November for an assessee who is required to furnish a report referred to in section 92E for transfer pricing (international transactions); and 31st July for any other person.

Filing of Income tax returns in case of loss returns

If assessee incurs loss in the previous year then it is not mandatory to file ITR for the same. However, this does not apply to Firms and Companies as they are required to file an income tax return even in case of loss. Following points shall be noted in case of loss return.

Further, if loss arises under the head Capital Gains or Profits and Gains of Business and Profession, filing of return would be mandatory if this loss is to be carried forward to the next year and set-off against future income.

The Income Tax Return showing the loss should be filed on or before the due date if this loss is to be carried forward to the next year and set-off against future income. However,

  • If loss arises under head House Property it would be allowed to be carried forward even if the income tax return is filed after the due date of filing of return.
  • If the loss is to be set-off against some other income arising in the same year, it is allowed to be set-off even if the return is filed after the due date of filing of returns.
  • In case the taxpayer has submitted return of loss in response to a notice under Section 142(1), such loss cannot be carried forward unless it is a loss under head income from house property. However, the unabsorbed depreciation can be carried forward in this case.

Further, if an assessee fails to submit his income tax return on or before the due date mentioned or the income tax officer has issued a notice under section 142(1) directing the taxpayer to file his income tax return within the time specified in the notice and he has not even filed his return as required in the notice is eligible to file his return even after the due date.

What is Belated Income Tax Return?

Such Belated Return shall be filed before the expiry of 1 year from the end of the relevant assessment year or before the completion of assessment whichever is earlier. However, belated Return cannot be revised. If belated return if filed after the due date then, taxpayer shall be liable to pay the tax along with interest @ 1% per month.

Where assessee after filing his return on or before the due date under section 139 (1) realizes that there was any mistake or omission in the return filed then such return can be revised. The revised return can be filed before the expiry of one year from the end of the relevant assessment year or before the completion of assessment, whichever is earlier. Revision is allowed only if the omission was unintentional.

What happens after you file your tax returns online?

Income tax department assess all income tax returns filed online. After successful assessment of tax returns, income tax department issues Intimation u/s 143(1). Such Intimation is an auto-generated letter by the computers of the Income Tax Department without any human interference. Intimation u/s 143(1) should be treated as completion of assessment income tax returns for the year unless there is tax due from the tax payer. Intimation under Section 143(1) is sent only in the following 3 cases:-

1. Where any tax or interest is found payable on the basis of the return after making adjustments referred to in Section 143(1) and after giving credit to the taxes and interest paid; or

2. Where any tax on interest if found refundable on the basis of the return after making adjustments referred to in Section 143(1) and after giving credit to the taxes and interest paid; or

3. Where adjustments referred to in Section 143(1) have been made resulting in increase/reduction of loss declared by the assessee and no tax or interest is payable by the assessee and no tax or interest is refundable to the assessee.

Note: The maximum time period for sending intimation under Section 143(1) is 1 year from the end of the financial year in which the income tax return is filed. Where AO is not satisfied with the details provided in the return, a notice under section 142 (1) is served to call upon documents and details from the assessee. Compliance with this notice u/s 142(1) is mandatory even if the tax payer is of the opinion that the accounts/documents requested are irrelevant.

Generally, most of the returns are self assessed and only small percent of cases are selected through the process of computer assisted scrutiny selection (CASS). For such assessment, notice under section 143 (3) shall be served.

To carry out assessment under section 143(3), the Assessing Officer shall serve such notice in accordance with provisions of section 143(2). Notice under section 143(2) should be served within a period of six months from the end of the financial year in which the return is filed. As per section 153, assessment under section 143(3) shall be made within a period of two years from the end of the relevant assessment year.

Please feel free to write to us at info@makeyourtax.com for any assistance on filing of income tax returns.

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