IRDA suspends sale of Universal Life policies

The Insurance Regulatory and Development Authority (Irda) has suspended sale of universal life policies (ULPs), which were being promoted as an alternative to unit-linked insurance plans, from October 23.

Sales have been suspended until the final guidelines for ULPs are issued. Irda said it had received several complaints on the sale practices of the insurers regarding ULP. “After examining the complaints, the authority is satisfied that the universal life products need a better regulatory framework for protecting policyholders’ interests,” Irda said.

In a draft issued late evening, the regulator defined the Variable Insurance Product, widely known as universal life policies, as life insurance products that provide death and maturity benefits equivalent to the balance in the savings account.

Under this policy, the regulator has proposed to cap the expenses at 25 per cent in the first year and at 5 per cent from second year onwards. Insurance company sources said the commission to agents may also be capped below 5 per cent.

DRAFT PROPOSALS
* Expenses capped at 25% 1st year onwards, 5% from 2nd year
* Agent commission may fall below 5%
* Single premium products under ULPs to be banned
* Minimum policy term to be 5 years
* Lock-in of 3 years
* No top-up premium, riders allowed
* To follow investment norms under traditional policies

Moreover, single-premium products under ULPs will not be allowed.
Like unit-linked insurance plans, the minimum policy term will be five years, with a minimum life cover of 10 times for those below 45 years of age. Above 45, the life cover will be seven times. The lock-in under the draft is kept at three years. Also, insurers will not be allowed to collect top-up premium or offer riders with ULPs.

Insurance companies like Reliance Life and Max New York Life have launched these products as a combination of Ulips and traditional plans. Now, they have to follow the investment norms of traditional policies. Under this product, however, the policyholder will have the flexibility to change the policy term as well as the minimum sum assured.

Insurers will have to show the premium separately as risk premium, expense, commission and savings components.

Also, the draft has proposed that the policyholder will have 12 months to revive the policy from the date of first unpaid premium, while the life cover will cease.

Similarly, the benefit paid on death and maturity will be comparable to Ulips. The balance in the savings account will be paid at the time of maturity. On death, the sum assured chosen by the policyholder, along with the balance in the savings account will be paid.

Irda Chairman J Hari Narayan had said ULPs were the next focus area for the regulator as they wanted only fair products to be sold. Last week, insurance companies expressed their concern over capping of charges in ULPs, as agents did not push products with lower fees.

INTEREST ON DELAYED PAYMENT OF GRATUITY..says Madurai Bench of Madra HC...

An employee becomes eligible for gratuity on the termination of his employment after he has rendered continuous service for not less than five years, according to Section 4(1) of the Payment of Gratuity Act, 1972. He is also entitled for interest on the gratuity in terms of Section 7(3) and 7(3A).

Making these clear, the Madurai Bench of the Madras High Court directed the Arumuganeri Salt Workers Co-operative Production and Sale Society Ltd, Thoothukkudi district, to pay the amount to its worker, Mr A. Rajan, within 30 days from date of receipt of a copy of this order without further driving him to any other forum.

Mr Justice K. Chandru, hearing a writ petition from the Society challenging the order dated January 27, 2009 of the Appellate Authority under the Act, Madurai (R-2), directing it to make interest payment if gratuity was not paid within 30 days from the date of his order, noted that from the beginning, it was the stand of the petitioner Society that R-1 (Mr A. Rajan) was not eligible for gratuity. If Sections 7(3) and 7(3A) were read together, then there was no difficulty in understanding the eligibility for receiving interest.In the present case, the Appellate Authority had correctly construed the legal provisions and there was no case made out to interfere with the interpretation placed by the Authority. The petitioner contended that payment of interest would arise only when there was delayed payment, and in this case, there was no delay since they had paid gratuity as ordered by R-2, and hence the question of payment of interest would not arise.This Court was unable to accept the said statement, since the entire controversy was with regard to the legal provision. Reading Section 4(1) of the Act it would be clear that the date relevant for determination of interest was the date on which gratuity became payable, which in the present case was when R-1 resigned his job on 1-6-2003. When R-1 issued notice for payment of gratuity, petitioner employer did not honour the notice. On the contrary, it was only when R-1 instituted a claim before the Controlling Authority, the petitioner contended about the irregular nature of his employment and his alleged disqualification from receiving gratuity. In the light of these, the writ petition stood dismissed, the Judge held.

PAYMENT EXCEEDING 20000 40(A)3 EXCEPTIONS RULE 6DD

Section 40A(3)(a) of the Income-tax Act, 1961 provides that any expenditure incurred in respect of which payment is made in a sum exceeding Rs.20,000/- otherwise than by an account payee cheque drawn on a bank or by an account payee bank draft, shall not be allowed as a deduction.However if payment is being made for plying, hiring or leasing goods carriages then Limit for these section is Rs 35000/-,instead Of 20000/-
Section 40A(3)(b) also provides for deeming a payment as profits and gains of business or profession if the expenditure is incurred in a particular year but the payment is made in any subsequent year in a sum exceeding Rs. 20,000/- otherwise than by an account payee cheque or by an account payee bank draft.
Section 40A(3) is an anti tax-evasion measure. By requiring payments to be made by an account payee instrument, it is possible to verify the genuineness of the transaction thereby mitigating the risk of evasion.Person are splitting a particular high value payment to a person into several cash payments, each below Rs.20,000/-. This splitting is also resorted to for payments made in the course of a single day.Courts have also held that the statutory limit in section 40A(3) applies to payment made to a party at one time and not to the aggregate of the payments made to a party in the course of the day as recorded in the cash book.According to the judicial opinion, the words used are ‘in a sum’, i.e., single sum.Therefore, irrespective of any number of transactions, where the amount does not exceed the prescribed amount in each transaction,the rigours of section 40A(3) will not apply.
To overcome the splitting of payments (AS GIVEN IN POINT NO 3)to the same person made during a day as referred above and to increase the efficacy of the provision, an amendment was made through Finance act 2008 and after 01.04.2008, where a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, the disallowance of such expenditure shall be made under the proposed sub-section (3) of section 40A or the payment shall be deemed to be the profits and gains of business or profession under the proposed sub-section (3A) of section 40A,as the case may be. EXAMPLE :To illustrate with an example, let us assume a taxpayer has incurred an expenditure of Rs 40,000/-. The taxpayer makes separate payments of Rs 15,000/-, Rs 16,000/- and Rs 9,000/- all by cash, to the person concerned in a single day. The aggregate amount of payment made to a person in a day, in this case, is Rs 40,000/-. Since, the aggregate payment by cash exceeds Rs 20,000/-,Rs. 40,000/- will not be allowed as a deduction in computing the total income of the taxpayer in accordance with the proposed amendment.EXCEPTION TO ABOVE PROVISION:The provisions of this section are subject to exceptions as provided in Rule 6DD of the Income-tax Rules, 1962.
Payment to Specified payee Rule 6DD(a)- Where the payment is made to

(i) Reserve Bank of India or any banking company as defined in section 5(c) of Banking Regulation Act, 1949;
(ii) State Bank of India or any subsidiary bank as defined in section 2 of SBI (Subsidiary Banks) Act, 1959;
(iii) any co-operative bank or land mortgage bank;
(iv) any primary agricultural credit society or any primary credit society as defined under section 56 of the Banking Regulation Act, 1949;
(v) Life Insurance Corporation of India.
Payment to Government Rule 6DD(b)- Where payment is made to the Government and, under the rules framed by it, such payment is required to be made in legal tender.
Payment by certain modesRule 6DD(c) - Where the payment is made by
(i) any letter of credit arrangements through a bank;
(ii) a mail or telegraphic transfer through a bank;
(iii) a book adjustment from any account in a bank to any other account in that or any other bank;
(iv) a bill of exchange made payable only to a bank;
(v) the use of electronic clearing system through a bank account;
(vi) a credit card;
(vii) a debit card.
Note: “Bank” means any bank, banking company or society referred to in #(i) to (iv) of rule 6DD(a) and includes any bank [not being a banking company as defined in section 5(c) of the Banking Regulation Act, 1949], whether incorporated or not, which is established outside India.
Adjustment in books Rule 6DD(d)- Where the payment is made by way of adjustment against the amount of any liability incurred by the payee for any goods supplied or services rendered by the assessee to such payee.
Purchase of certain productsRule 6DD(e):Where the payment is made for the purchase of -
(i) agricultural or forest produce; or
(ii) the produce of animal husbandry (including livestock, meat, hides and skins)***** or dairy or poultry farming; or
(iii) fish or fish products; or
(iv) the products of horticulture or apiculture, to the cultivator, grower or producer of such articles, produce or products.
Cottage industry Rule 6DD(f)- Where the payment is made for the purchase of the products manufactured or processed without the aid of power in a cottage industry, to the producer of such products.
No bank service Rule 6DD(g) - Where the payment is made in a village or town, which on the date of such payment is not served by any bank,to any person who ordinarily resides, or is carrying on any business, profession or vocation, in any such village or town.
Note: “Bank” means any bank, banking company or society referred to in #(i) to (iv) of rule 6DD(a) and includes any bank [not being a banking company as defined in section 5(c) of the Banking Regulation Act, 1949], whether incorporated or not, which is established outside India.
Terminal benefit to employee - Rule 6DD(h) Where any payment is made to an employee of the assessee or the heir of any such employee, on or in connection with the retirement, retrenchment, resignation, discharge or death of such employee, on account of gratuity, retrenchment compensation or similar terminal benefit and the aggregate of such sums payable to the employee or his heir does not exceed Rs. 50,000.
Temporary posting of employee - Rule 6DD(i) Where the payment is made by an assessee by way of salary to his employee after deducting the income-tax from salary as per section 192, and when such employee
(i) is temporarily posted for a continuous period of 15 days or more in a place other than his normal place of duty or on a ship; and
(ii) does not maintain any account in any bank at such place or ship.
Bank closed - Rule 6DD(j) Where the payment was required to be made on a day on which the banks were closed either on account of holiday or strike.
Payment to agent Rule 6DD(k)- Where the payment is made by any person to his agent who is required to make payment in cash for goods or services on behalf of such person.
Foreign currency Rule 6DD(l)- Where the payment is made by an authorised dealer or a money changer against purchase of foreign currency or travellers cheques in the normal course of his business. Note: “Authorised dealer” or “money changer” means a person authorised as an authorised dealer or a money changer to deal in foreign currency or foreign exchange under any law for the time being in force

Exemption from disallowance is not available
on payment for purchase of livestock, meat,hides and skins from a person who is not proved to be the producer of these goods and is only a trader, broker or any other middleman, by whatever name called [Circular No. 4/ 2006, dated 29-3-2006 (14 CAPJ 201)]
Any person, by whatever name called, who buys animals from the farmers, slaughters them and then sells the raw meat carcasses to the meat processing factories or to the traders/retail outlets is considered as producer of livestock and meat.
Exemption is available subject to furnishing of
(i) declaration from person receiving payment that he is a producer of meat;
(ii) confirmation that payment, otherwise than by account payee cheque/draft, was made on his insistence; and
(iii) a further confirmation from a veterinary doctor certifying that person specified in the certificate is a producer of meat and that slaughtering was done under his supervision [Circular No. 8/2006, dated 6-10-2006 (16 CAPJ 381)].

CLARIFICATION REGARDING THE MEANING OF THE EXPRESSION 'FISH OR FISH PRODUCTS' USED IN SUB-CLAUSE (iii) OF CLAUSE (f) OF RULE 6DD OF THE INCOME-TAX RULES, 1962
CIRCULAR NO. 10/2008, DATED 05-12-2008

Representations have been received from various quarters regarding problems being faced by the seafood exporters mainly on account of provisions of Section 40A (3) of the Income-tax Act, 1961.2. Disallowance of expenditure under the provisions of sub-section (3) of Section 40A of the I.T. Act, 1961 is made in the computation of income in a case where a payment or aggregate of payments exceeding twenty thousand rupees is made to a person in a day, otherwise than by an account payee cheque drawn on a bank or an account payee bank draft. However, payment otherwise than by an account payee cheque drawn on a bank or by an account payee bank draft exceeding twenty thousand rupees does not attract the aforesaid disallowance in certain circumstances as prescribed under rule 6DD of the Income-tax Rules, 1962. Such exceptions, inter-alia, refer to payment made to the producer for the purchase of ‘fish or fish products' under sub-clause (iii) of clause (e) of rule 6DD. [Clause (f) of rule 6DD prior to coming into effect of the I.T. (Eighth Amendment) Rules, 2007 w.e.f. A.Y. 2008-09].3. The following clarifications are, therefore, being issued for proper implementation of rule 6DD of the Income-tax Rules, 1962:—(i) The expression ‘fish or fish products' used in rule 6DD(e)(iii) would include 'other marine products such as shrimp, prawn, cuttlefish, squid, crab, lobster etc.'.(ii) The 'producers' of ‘fish or fish products' for the purpose of rule 6DD(e) of I.T. Rules, 1962 would include, besides the fishermen, any headman of fishermen, who sorts the catch of fish brought by fishermen from the sea, at the sea shore itself and then sells the fish or fish products to traders, exporters etc.4. It is further clarified that the above exception will not be available on the payment for the purchase of fish or fish products from a person who is not proved to be a 'producer' of these goods and is only a trader, broker or any other middleman, by whatever name called.

Status of Challans in a TDS/TCS statement

What are the different statuses of a challan in the TDS/TCS statement?

The following are the various statuses of challans in a TDS/TCS statement:

Booked: Challan / transfer voucher detail in the statement matches with corresponding details received from banks / PAO.

Match Pending: Corresponding challan details not received from the bank.

Match Failed (Challan): TAN and/or amount relating to a challan in the statement do not match with the corresponding details received from banks.

Match Failed (Transfer Voucher): Amount relating to a transfer voucher does not match with corresponding details received from PAO.

Provisionally Booked: In case of Government deductors where TDS/TCS statement is received by TIN and mode of payment of TDS/TCS is through book entry (transfer voucher) and e-TBAF details from PAO is not received by TIN.

What is the significance if the status of challan is ‘Booked’?

If the challan is in Booked status, credit of tax deducted will be reflected in the annual tax statement (Form 26AS) of all the underlying deductees with a valid PAN.

Correction in challan details is not allowed once a challan is booked. Correction can be made on underlying deductee records of a booked challan.

What should I do if the status of challan is Match pending?

A challan is in Match pending status as the CIN is not present in the payment information provided by the Bank. As a result the credit of tax deducted will not be reflected in the Form 26AS of corresponding deductees with valid PAN.
The possible cause could be due to error in quoting CIN details (Challan serial no., BSR code and challan tender date) either in the TDS statement or in the details provided by the Bank. Error in TDS statement can be rectified by filing a correction statement, where as error. What should I do if the status of challan is in status ‘Match failed’?

A challan is in Match failed status as the TAN/challan amount in the statement does not match the details provided by the Bank. As a result the credit of tax deducted will not be reflected in Form 26AS of corresponding deductees with valid PAN.

The possible cause could be error in quoting challan amount. The same can be rectified by filing a correction statement.

Correction in ETDS statement at multiple times FAQs (Freequently Asked Questions)

How many times can I furnish a correction TDS/TCS statement?

A correction TDS/TCS statement can be furnished multiple times to incorporate changes in the regular TDS/TCS statement whereas a regular TDS/TCS statement will be accepted at the TIN central system only once. What are the important points to be kept in mind while preparing correction statement more than once on the same regular statement?
You have to kept in mind, the following points while preparing correction statement more than once on the same regular statement:
The TDS/TCS statement on which correction is to be prepared should be updated with details as per all previous corrections.
Modifications/addition/deletion in correction statements accepted at the TIN central system only should be considered. The first correction filed by me contains three types of correction (three PRNs) and one of the types of correction has got rejected at the TIN central system. What should I do?
The steps as under should be followed:
You have to update modifications as per the accepted corrections in the TDS statement.
Identify the record for which correction was rejected earlier by its sequence no. and fields for identification
Correct the said record.
Correction statement should contain updated values as well as value of identification field as per regular statement. Which provisional receipt number should I quote while preparing correction statement more than once on the same regular statement?
There are two fields for Provisional receipt number (PRN) in a correction statement as under: a. Original Provisional receipt number – PRN of the regular statement should be mentioned in this field.b. Previous Provisional receipt number – PRN of the last accepted correction statement should be mentioned in this field. In case the value in this field is incorrectly mentioned, the statement will get rejected at TIN central system for the reason: “Either Previous Provisional Receipt No. provided is incorrect or combination of Original Provisional Receipt No. and Previous Provisional Receipt No. is not in sequence”ExampleSingle batch correction statement – Only one type of correction in the filea. You have filed a regular statement having PRN 010010200083255 and subsequently filed a single batch correction statement having PRN 010010300074112. While preparing correction statement, you have to mention PRN 010010200083255 in the field original PRN and the PRN 010010300074112 in the field Previous PRN.Multiple batch correction statement – different types of correction in a single fileb. You have filed a regular statement having PRN 010010200083255 and subsequently filed a multi batch correction statement having three batches and corresponding PRNs as 010010300074112, 010010300074123 and 010010300074134. While preparing the correction statement, you have you have to mention PRN 010010200083255 in the field original PRN and check the status of all the three PRNs of correction statement
If all the three PRNs are accepted at the TIN central system, you may mention any of the three PRNs in the field previous PRN
If any of the three PRNs is rejected, then you should mention the PRN which has been accepted at the TIN central system in the field Previous PRN
If all the three PRNs are rejected, then you must mention the PRN of the regular statement, i.e. 010010200083255 in the field Previous PRN. How many times can I update PAN of a deductee/transacting party?
Structurally valid PAN of a deductee in the regular statement can be updated to another structurally valid PAN only once. When does a statement get ‘Partially Accepted’?
A correction statement containing updates in PAN of deductee/employee may get Partially Accepted. This is possible when the PAN in the any of the records being updated by you in the correction statement is invalid, i.e. PAN not present in PAN Master Database. In such a scenario, the said record gets rejected resulting in partial acceptance of the statement. What should I do if the status of correction statement filed by me is ‘Partially accepted’?
In case correction statement is in status ‘Partially accepted’, you have follow steps as under:
You have to update modifications as per the accepted records in the TDS statement.
Identify the deductee/salary record which has got rejected due to invalid PAN.
Rectify the incorrect PAN
Correction statement should contain value of identification keys as per regular statement along with the updated values. What could be the cause of rejection of TDS/TCS statement for the reason “Total Deposit amount of deductees is more than Challan amount actually deposited in bank”?The total tax deposited amount as per challan should be greater than or equal to the total tax deposited amount as per deductee details, else a regular TDS/TCS statement will not get validated through FVU. If you file a correction statement for adding deductee records under a particular challan, the total tax deposited as per challan in regular statement should be greater than or equal to the total tax deposited in deductee details as per regular as well as correction statement. Note: Amount in the fields Interest and others in the challan is not considered in the total tax deposited as per challan.

Unique Identification Numbers Bill

The Cabinet today approved the proposal for introducing the National Identification Authority of India Bill, 2010 in Parliament.

The Bill proposes to constitute a statutory authority to be called the National Identification Authority of India and lay down the powers and functions of the Authority, the framework for issuing UID numbers (aadhaar numbers), major penalties and other related matters through an Act of Parliament.

This will involve an expenditure of ` 3023.01 crore which includes project components for issue of UID numbers (called aadhaar numbers) by March 2011, and recurring establishment costs for the entire project phase of five years ending March 2014.

The UID project is primarily aimed at ensuing inclusive growth by providing a form of identity to those who do not have any identity. It seeks to provide aadhaar numbers to the marginalised sections of society and thus would strengthen equity. Apart from providing identity, the aadhaar number will enable better delivery of services and effective governance.
The Bill seeks to establish the National Identification Authority of India for the purpose of issuing aadhaar numbers to individuals residing in India and to certain other classes of individuals, the manner of authentication of such individuals and other related and incidental

matters.

What is UID(unique Identity Numbers)?

Nandan Nilekani, who heads the National Authority for Unique Identity of India aims at provide unique number to all Indians but not smart cards.

Nandan Nilekani said the unique ID number will not substitute other existing numbers a person may have which includes PAN, passport number, ration number. Rather, it will be an additional, unique number to be cited along with existing numbers for different purposes.

This ID cards will help to weed out duplicate cards that are widespread today (notably in BPL ration cards), and, may be, benami bank accounts and property deeds.

Nilekani team will make available a unique ID database to all ministries and other partners, who can then integrate their databases (covering passports, ration cards, job cards, PAN cards) with the unique ID database.

Participation in credit cards is entirely voluntary. This will also be the case with the unique ID scheme. Citizens will not be obliged to get a number. But those that don’t will find it very inconvenient, they will not have access to facilities that require you to cite your ID number.

Notification Income tax Due date extended to 15.10.2010

F.No. 225/72/2010-ITA.IIGovernment of IndiaMinistry of

FinanceDepartment of RevenueCentral Board of Direct Taxes

Dated : September 27, 2010
Order under Section 119 of the Income Tax Act, 1961

On consideration of the reports of disturbance of general life caused due to floods and heavy rains, the Central Board of Direct Taxes, in exercise of powers conferred under section 119 of the Income Tax Act, 1961, hereby extends the due date of filing of returns of income for the Assessment Year 2010-11 from 30.09.2010 to 15th October 2010. Accordingly the due date for Tax Audit report u/s. 44AB of the Income Tax Act is also extended to 15th October, 2010.
(Ajay Goyal)Director (ITA. II)

PROBLEM IN REGISTRATION OF DIGITAL SIGNATURE IN e-FILING

Income Tax Department issued few Clarification and suggestion regarding filling of Income tax Return by Corporate tax payers and other assessees with digital Signature.

It is observed that Corporate users are registering the DSC and immediately trying to upload the I-T Return. This will throw up an Error like "Your DSC is not registered". Therefore, it is requested that whenever the new DSC is being registered or DSC is being updated, the user should first log out and then login again for the registration or updation to take effect, and then only upload the I-T return.

Requirement of encrypted PAN on DSC for non-resident signatories of foreign companies has been relaxed. The signatory may register with a non-PAN based DSC from the CCA, India and use the same DSC while uploading the return. This facility is available ONLY for all foreign companies under the jurisdiction of respective International Taxation wards or circles of the Income Tax Department. Foreign companies still facing any difficulty may send a email to efiling@incometaxindia.gov.in or efiling.administrator@incometaxindia.gov.in giving their name, PAN and jurisdiction.

Receipt number to be quoted in Form 16/16A

Receipt number to be quoted in Form 16/16A will be generated by TIN. Receipt number will be generated for the quarterly TDS/TCS statements pertaining to FY 2010-11 and onwards uploaded to TIN. Receipt number generated will be of eight digits (alphabets) and will be applicable only for statements pertaining to FY 2010-11 and onwards. Eight digit receipt number can be obtained by viewing the status of the quarterly TDS/TCS statement at under Quarterly Statement Status feature available at TIN website (http://www.tin-nsdl.com)./

Receipt number provided by TIN is in addition to the provisional receipt number provided on acceptance/upload of quarterly TDS/TCS statement. Provisional receipt number will be referred as Token no for the statements pertaining to FY 2010-11 and onwards.
to check your receipt number go to tin-nsdl website and check quarterly statement status and the you will found the 8 digit receipt number as shown in picture below:

HOW TO TYPE RUPEE SYMBOL FROM KEYBOARD

The Indian Govt has just Announced the Symbol for Rupee currency and It will take almost one year to implement the same in all over the world as there are many regulatory requirement involved in implementation .However I have found a trick from the net by which you can start using the Rupee symbol from now .It is very easy to use the trick .Trick is developed by Foradian Technologies .steps To Install the Rupee symbol.How to use ?

1. Download the above attached font Rupee.ttf or the new version Rupee_Foradian.ttf

2. Install the font. (It is easy. Just copy the font and paste it in "Fonts" folder in control panel)

3. Start using it. :) download the Rupee Firadian.ttf

How to type the Rupee symbol ?

Rupee symbol mapped the grave acent symbol - ` (the key just above "tab" button in your keyboard) with the new Rupee symbol. Just select "Rupee" font from the drop down list of your fonts in your application and press the key just above your tab button. It will display our new rupee symbol. Try it.
Limitations The "Rupee.ttf" font is necessary to view the currency symbol. So as long as the new symbol is not encoded in to unicode font by default, we cant use the symbol universally.means if you type the symbol in your letter and send to other person but the receiver has not installed the font then he can not see the rupee symbol

TDS defaults!!!! Consequences.

1. Failure to deduct the whole or part of the Tax at source (non-deduction, short deduction or delay in deduction) and Failure to deposit whole or part of the TDS (non-deposit, short deposit or late deposit) and/or

2. Failure to apply for TAN within the prescribed time limit or failure to quote TAN on allotment as required under section 203A.

3. Failure to furnish, in due time, TDS returns or TDS certificates or to deliver or cause to be delivered a copy of declaration in form no. 15H/15G/27C/copy of quarterly statement.

4. Failure to mention the PAN of the deductee in all quarterly statements as well as in all certificates furnished.

5. Consequences of DefaultsThe following chart indicates the nature of default and its consequences which range from penal interest, penalty to prosecution:

Note: Interest Rate u/s 201(1A) has been amended wef 01.07.2010 .Now 1% PM or part thereof interest is applicable where tds is deductible but has not been deducted and 1.5% per month is applicable where tds has been deducted but has not been deposited with in due time.In addition to the above, there are other consequences in certain cases, as enumerated below; Disallowance of specified expenditure (while computing the income of the deductor) if TDS is not deducted from the payment. (Section 40a(ia)).
Where the tax has not been paid after its deduction it shall be charge on the asset of the defaulter to recover the amount of TDS. (section 201(2)).

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SAMPLE REPLY FOR INTIMATION U/S 143(1) RECEIVED FROM CENTRALISED PROCESSING CENTER

For those who have received demand notice from Income-tax department in connection with Income-tax return for the A.Y. 2009-10 [F.Y. 2008-09].
Applicable to those Assessees who have filed their Income-tax Return Online in Form No. ITR-2.

Known Reason for Demand that have come to our notice are as mentioned below:
Reason 1: TDS Mismatch TDS Credit claimed in the Income-tax Return has not been considered by the Income-tax Department. There are various possibilities for this query: Viz. You might have quoted wrong PAN number to your employer Correct PAN number was given to your employer in the mid of the year, which was not updated by your employer in their TDS return that they filed with the Income-tax Department via NSDL. Your employer did not quote the TDS details like Bank Code, like Bank Code, Challan Number etc. properly in their TDS return.

Reason 2: Wrong data in Income-tax Return Wrong data in Income-tax Return (Difference in total Income as per ITR-V and notice of demand) While filing the return you had entered correct details & your tax was also calculated properly and the same details are reflecting on your ITR-V. But due to some mistake the amounts in ITR-V and your Income-tax return differs and therefore the demand.

REMEDIAL ACTION FOR THE ABOVE REASONS

TDS Mismatch

Check the Tax Credit claimed in the Income-tax Return and Credit actually allowed by the Income-tax Department. If you want to cross check your Tax Credit then make an application with TIN Facilitation Centre (TIN FC) for Form No. 26AS (your tax credit statement issued by Government via NSDL). List of TINFC is available on http://tin.nsdl.com. Cross Check TDS details considered by you and that mentioned in the Intimation letter received by the Income-tax Department.

Take photocopy of all the TDS Certificate on which you have relied and submit the copy of the same along with a covering letter (enclosed) to the concerned Income-tax Assessing Officer.

Wrong data in Income-tax Return

Compare your ITR – V and Demand Notice and find the head of Income in which there is a difference

Make a Rectification Application by writing a letter to the concerned Income-tax officer who has raised the demand requesting him to correct the mistake (Sample Letter enclosed). Do remember to give all relevant documents viz. Form 16, ITR-V, Bank statements etc for the corresponding year.

Please Note: This advice is of a general nature only, is not intended to be complete or definitive. It is not a substitute for professional and expert advice, and may not be appropriate or sufficient for your particular case. You should obtain professional advice before taking any action in relation to any matter referred in this letter to address your particular situation.

SAMPLE REPLY
(IN REPLY TO THE INTIMATION U/S 143(1) RECEIVED FROM CENTRALISED PROCESSING CENTER)
Date: _______

From:

To

Income-tax Officer (CPC)
Post Bag 1 Electronic City Post Office
Bangalore - 560100

Sir,

Re: Your notice of demand for the A.Y. 2009-10 Communication Reference number: CPC/0910/_________________________ PAN: __________________- request regarding.

Sub: Request to check the details at your end due to difference in Total Income / Deduction and Tax thereon considered by you and reported by me.

I am in receipt of Demand Notice for Rs. ____________ for the A.Y. 2009-10. In this connection I would like to mention that there appears to be some error in Income considered by you and as reported by me in my Income-tax Return.

The Total income for the said year is Rs. ____________ (which is clearly reflected in my Income-tax Acknowledgement ITR-V) and the total Income considered by you is Rs. _____________.

There seem to be an apparent error in the in the demand raised by your good self. May I therefore request you to kindly rectify the mistake and till then I further request your good self to keep the said demand in abeyance. The income reported by me can be easily verified from ITRV attached herewith.
I once again confirm that I have reported all the Income chargeable to tax during the said year and no Income has remained to be offered for taxation.
I hope that you will take an early and necessary step to rectify the same.
In the ending, I request you to kindly let me know, if I can provide you with any other details for verification and necessary rectification.

Thanking you,

Yours faithfully,

(NAME)

Selection for Scrutiny - Certain guide lines

Guide Lines for selection of cases for Scrutiny During 2010-11
1. Selection of cases for scrutiny during the financial year 2010-11 will be done primarily through CASS this year. Manual Selection for scrutiny this year will be limited only to a few cases listed below
2. List of cases selected during each month in accordance with selection criteria mentioned below shall be submitted by the Assessing officers to their respective Range heads by the 15th of the following month and also displayed on the notice Board of their offices .
3. These guidelines are meant only for the use of officers of the Income Tax Department .These are not to be disclosed even if a request is made under Right to Information Act, In view of the decision of the Central Information Commission in the case of Shri Kamal Vs Director (ITA-II),CBDT(order no CIC/AT/2007/00617 dated 21.02.2008)
Selection criteria Applicable to all return at all stations
a) Value of International transaction as defined in 92B exceeds 15 Crore.
b) Cases involving addition in an earlier assessment year in excess of Rs 10 lacs on a substantial and recurring question of law or fact which is confirmed in appeal or is pending before on appellate authority.
c) Cases involving addition in an earlier assessment year on the issue of transfer pricing in excess of Rs 10 Lakh or more.
d) Assessment in survey cases for the financial year in which survey was carried out. This criteria will not apply if all of the following conditions are fulfilled:
i. There are no impounded books or documents.
ii.There is no retraction of disclosure, if any, made during

the survey.
iii. Declared income, excluding any disclosure made during the survey, is not less than the declared income of the preceding year.
e) Assessment in search & Seizure cases to be made under section 158B, 158BC, 158BD, 153A, 153C & 143(3) of the IT Act.
f) Assessment Initiated under section 147/148 of the IT Act.
g) Assessing officer may select any return for scrutiny after recording he reason and obtaining approval of the CCIT/DGIT. The cases under this category should be selected if, there are compelling reasons and the case is not selected through CASS. These cases should be watched by CCIT/CIT in respect of the quality of assessment.
(F.NO.225/93/2009/ITA.II)

Miss the Tax Deadlines: Don’t Worry You can file the Income tax return till March, 2011

Miss the Tax Deadlines: Don’t Worry You can file the Income tax return till March, 2011

Tax returns are a primary issue for every individual and every individual who is liable to pay tax on income must file their return for the financial year 2009-10 before 31st July, 2010. However, the date has been extended to 4th August, 2010 on the ground of few technical hitches that are being currently faced by the department and the people for e-filing; the problem of poor weather conditions in some places has also added a cause for the extension. The extension was declared by the Central Board of Direct Taxes (CBDT) in a contemporary press conference. The announcement has relieved many tax payers who were unable to file return on time and have an opportunity to rectify their mistakes, but still if one is unable to file his return on time, he has an option to pay his returns till March 2011 provided he complies with certain conditions and pays penalties.

Belated Tax Return:
If an assessee fails to submit the return of income-
Within the time allowed under section 139(1), or
Within the time specified in the notice issued under section 142 (1),
He may submit a return (known as belated return) after the expiry of the said period. But the furnishing must be before the expiry of one year from the end of the relevant assessment year or before the completion of assessment, whichever is earlier. So, in our case one can easily file his return n belated basis by March 2011, but penalty in such a case needs to be paid.
Consequences:

Even if filling of belated return is permitted by the Income Tax Act, the following shall be applicable:

If the return is not furnished on or before the due date as specified under section 139 (1), interest under section 234A will be charged.

If belated return is submitted after the end of the relevant assessment year, penalty of Rs. 5, 000 under section 271F will be imposed.

In case of submission of belated return certain losses cannot be carried forward for set off.

Deduction under section 10A, 10B, 80-IA, 80-IAB, 80-IB and 80-IC will not be available if belated return is submitted.

Revised returns: When an assessee files his returns timely but later on discovers some mistakes in the return filed, he submits a revised return to the Department. The assessee may furnish the 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 year, whichever is earlier.

Defective returns: If the assessing officer considers the return of income furnished by the assessee is defective, he may intimate the defect to the assessee and give him the opportunity to rectify the defect within 15 days from the date of such intimation or within such period as the Assessing Officer may allow on an application made by the assessee.

Thus, from the above explanation me can make a clear judgment that one can file a return of his current year in the next year provided he pays penalty and complies with the requirements but it shall be remembered that once belated return is filed the option for a revised return is closed and the assessee must ensure that his belated return is true and posts a fair view.

Statistics of e-filing upto 4th August 2010

Please see updated "Quick Statistics" for E-Filing of Income Tax Returns upto 4th August 2010. There is increase of 71% overall, however No of ITR-1 Has increased 136% due to availability of New Saral II, Earlier person have to fill ITR-2 in many Income natures .but this year persons can fill return on ITR-1 .

Total 25.Lakh return filed . It is worth to mention here that most of the return Filed was of Voluntary in nature .

Downloading of FVU (Original/updated) available from NSDL now.

How To Download Update Etds FVU File

Deductors are required to file eTDS statement every quarter. Any error/ omission in original statement filed has to be rectified by filing a correction statement.It was possible to file multiple correction statement in respect of one original return, however this was not happening because of the following reasons

Non availability of original statement FVU file
Non availability of updated FVU file after incorporating corrections.

NSDL has now started this facility of downloading latest TDS/TCS consolidated statement , incorporating allupdates done via correction statements Period Consolidated TDS/TCS statement will be available for:
TDS/TCS statements pertaining to F.Y. 2007-08 and onwards.

TDS/TCS statements accepted and existing at TIN central system. Features of consolidated TDS/TCS statement are as below:A. Details as per latest statement: Updated details of deductor/challan/deductee/salary records will be provided.B. Challan matching flag: No updates should be done if the status of the Challan/Transfer Voucher is "Matched". Considering the same the status (matching flag) of the challan / transfer voucher as below is provided:(Flag) (Description) (Correction)
(M) (Matched) No correction to be done for such challans
(U) (UnMatched) Correction can be done .

(P) (Provisionally Booked) No correction to be done for such transfer voucher C. Expected Challan/ Deductee/ Salary detail record number: In correction statement for addition of records, sequence number for record (challan/deductee/salary detail) should be continued from the record number(challan/deductee/salary detail) of earlier regular/correction statement.

Example,
There are 5 challans in regular statement.
1 challan is added by furnishing correction statement
If one more challan is to be added vide another correction statement, sequence of the challan record no. will be 7. To facilitate the deductor/collector in quoting record number in sequence for added records,expected record number for challan, deductee and salary detail (wherever applicable) is incorporated in the consolidated TDS/TCS statement.D. Provisional receipt number (PRN): In correction statement, deductor/collector is required to quote PRN as under to identify the statement in TIN central system for update:

Corresponding regular statement and

Latest accepted/partially accepted correction statement
To facilitate the deductor/collector in quoting correct PRN of Regular and Correction statement, same is provided in the consolidated TDS/TCS statement. Pre-requisite for requesting TDS/TCS statement online.
Online request for TDS/TCS statement can be made only on successful registration of TAN (creating TAN registration account) at TIN website.
Register TAN online at TIN website. For registering TAN click link 'Online TAN Registration' TAN Registration ProcessThe following steps are involved from TAN registration till receipt of login Id and password
Filling up online form on www.tin-nsdl.com at the link Online TAN Registration.
On filling up complete and valid details
Acknowledgement will be generated , which will contain a 12 digit TAN Registration Number
A Confirmation email will be sent to the email ID provided during registration. The email will contain a link .
To verify you will have to enter TAN and TAN registration Number. At this stage you can provide a USER ID of your choice
Another email with a password protected PDF file will be sent to you containing USER ID. This is the same USER ID that you had selected in the previous step.
The password for opening PDF file is your 12 digit TAN Registration Number
Yet another email with a password protected PDF file will be sent to you containing PASSWORD. The password for opening PDF file is your 12 digit TAN Registration Number You can now go to TIN web site and access your TAN registration account under Login>TAN Registration option. Provide the User ID and password sent you in the PDF file. At this stage you will be asked to change the password.Steps to be followed for placing the request of consolidated TDS/TCS statement
Login to TAN Registration Account with user id, password and TAN.
On successful login, under option TDS/TCS, select option "Request- Consolidated TDS/TCS statement".
Request for consolidated TDS / TCS statement can be made for your TAN only.
On clicking the aforementioned option, provide details of statement as below for which consolidated file is required:
Provisional Receipt Number of regular statement
Form no.
Quarter
Financial Year

On successful validation of the above details, two questions related to the TDS/TCS statement requested will be asked as a part of verification.

On successful verification of answers to the aforementioned two questions, request number will be generated and the consolidated TDS/TCS statement will be e-mailed to the user on the email ID provided on TAN registration within 24 hours.

Consolidated TDS/TCS statement will be available only if correct answers are provided to the questions for verification.

Two attempts within a day will be provided to correctly answer the verification questions.

In case of two unsuccessful attempts within a day for the same statement, request for such statement can be placed on next day.

In case of large number of records in the TDS/TCS statement requested, the statement will be split in multiple files owing to restriction of mail size.

In case TDS/TCS statement is split in multiple files then each file will be sent by separate e-mail. Merging the split TDS/TCS statement

In case of multiple files, Merge the files using "File Merge Utility" (FMU)

and then extract the contents.
"File Merge Utility" can be downloaded from TIN website under the option "TAN Registration" in download section. Procedure to merge split file
Copy all the split files in the single folder at the desired location.Open the “File Merge utility” by double clicking the file “FMU.bat”.
Click on “Browse” button of “Input file path” and provide path or navigate to path of the folder where all split files are copied Example: files are copied at D drive and the folder name is TDS_TCS_statement.
On navigating to the folder where all the split files are copied, only one file i.e., the first file will be visible

Select the visible file and click on button “Open”

Click on “Browse” button of “Output file path” and provide path or navigate to path of the folder where merged consolidated TDS/TCS file is to be created

On successful merging of split files message “File merged successfully at xxxxxxxxxxx (desired location)” will be provided and a merged file in compressed form will be created at the output path.
Merged file created is password protected.

For extracting the contents of the merged file follow the procedure as provided in the mail received for consolidated statement Using Consolidated TDS/TCS statement for preparing correction statement.

Consolidated TDS/TCS statement provided will be in compressed form.
Extension of the consolidated TDS/TCS statement will be .tds
In case of single file, extract the content of the file by providing password to the file.

In case of multiple files, merge the files using FMU and then extract the contents of the merged file by providing password.

After extracting the consolidated TDS/TCS statement, import the same in the return preparation utility for making any correction. ConclusionThe facility provided by NSDL will go a long way in helping deductors file correction statements in organized and better manner. The process of registration is simple but considering security every mail attachment from NSDL comes with password protection. This will require deductor to keep track of TAN registration number till it is activated. The process of placing request for consolidated statement , again is little complex for the sake of security. We placed one request and we were asked two questions . One was to fill up PAN and deductee amount in respect of 5 deductees. Second question was to fill up Challan Sr No , date and amount.

INCOME TAX RETURN DATE EXTENDED TO 4TH AUGUST 2010

The CBDT has decided to extend the due date of filing of Income Tax returns from 31st July 2010 to 4th August 2010.

All paper returns or e-returns filed on or before 4th August, 2010 would be considered as filed within the due date.

Press Release

The Central Board of Direct Taxes (CBDT) has decided to extend the due date of filing of income tax returns to 4th August 2010 for taxpayers for whom the due date ends today, which is 31st July 2010. All paper returns or e-returns filed on or before 4th August 2010 will be considered as filed within the due date.The decision was taken in view of some technical snags in the e-filing computer system, and inclement weather at various locations, due to which taxpayers have reported difficulties in filing or uploading income tax returns.

Permanent Account Number (PAN) Mandatory...!!! DEMAT Accounts will be suspended w.e.f. 16-08-2010.

Mandatory requirement of Permanent Account Number (PAN)

Circular No. MRD/DP/22/2010, dated 29-7-2010

1. Please refer to SEBI circular No.MRD/DoP/Cir-05/2007 dated April 27, 2007 making PAN mandatory for all transactions in the securities market.

2. As you are aware, the demat accounts for which PAN details have not been verified are “suspended for debit” until the same is verified with the Depository Participant (DP). However, it has come to our notice that despite follow up, investors are not furnishing the PAN details.

3. In order to ensure better compliance with the Know Your Client (KYC) norms it has been decided that with effect from August 16, 2010 such PAN non-compliant demat accounts shall also be "suspended for credit" other than the credits arising out of automatic corporate actions. It is clarified that other credits including credits from IPO/FPO/Rights issue, off-market transactions or any secondary market transactions shall not be allowed into such accounts.

4. The Depositories are advised to:-

a) make amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision immediately, as may be applicable/necessary ;

b) bring the provisions of this circular to the notice of their DPs and advising them to also communicate the same to all the Beneficial Owners (BOs); and

c) disseminate the same on the website.

5. This circular is being issued in exercise of the powers conferred by Section 11(1) of Securities and Exchange Board of India Act, 1992 and Section 19 of the Depositories Act, 1996 to protect the interests of investors in securities and to promote the development of, and to regulate, the securities market.

Kindly note that SEBI has decided to penalise errant investors for not furnishing PAN details. The regulator has decided that PAN non-compliant demat accounts would be suspended for credit from IPO, FPO, rights issue, off-market transactions or secondary market transactions with effect from August 16,2010. This suspension, however, would not apply for credits arising out of automatic corporate actions. Depositories have been advised to amend relevant bye-laws, rules and regulations, for implementing the decision immediately.

GOOD NEWS - YOU CAN CHECK YOUR ITR-V/ E FILING PROCESSING STATUS ONLINE NOW

Those assessees who have filed their Income Tax return online(e filing ) without digital signature have to furnish the ITR-V form within 120 days from date of uploading of the Income tax return (xml File) to the Central processing cell at Bangalore .Further Income Tax deptt has issued Press release that ITR -V should only be send through ordinary post only and speed post, registered post and courier will not be received .Then, How person will be know whether The ITR-V has reached at the Bangalore office or not? and some confirmation should be there in e-filing portal or person should be informed through email about the ITR-V status .

Good news is that Income tax deprt has now added a link in e filing site by name "e filing processing status" under My Account Menu.To know your e filing Processing status.To know your ITR-V/E filing return processing status follow this steps as Given below .

Login to the e filing site with your pan and password.

Go to the "My Account " tab

In drop down menu under My account Tab click " e- filing processing status"

In next screen -- fill you ITR-V acknowledgement Number and Select your assessment year.

You will get status of your return/ITR-V processing status in next screen.

Further Income tax department clarified that copy of ITR-V sent by them to CPC Bangalore will be scanned after stamping receipt number and date of receipt and the same shall be made available to taxpayers on request through email shortly.

Please await further information on procedure for the same.

Department has now started emailing the Acknowledgement as token of receipt for ITR -V on reaching at Bangalore office but due to rush it will take time.

This is a welcome step by the Income tax Department. Yah we are in digital age know....

(Curtesy: Simple tax)

Is your Gross Total Income More than Exemption Limit ? Income Tax Return Compulsory !!!

Every person/Individual thinks that he need not file an I.T.Return if there is no recovery of IT from his salary or below the exempted limit. But while carefully studying the statue, we can arrive at a conclusion that we have to file ROI if....

For Assessment year 2010-11 Exemption Limit for Individual is given below

For Male Resident =160000
For Female resident=190000
For senior citizen resident =240000
For Huf=160000
For other Individuals =160000

Let us see the statue:

"Provided also that every person, being an individual or a Hindu undivided family or an association of persons or a body of individuals, whether incorporated or not, or an artificial juridical person, 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, without giving effect to the provisions of section 10A or section 10B or section 10BA or Chapter VI-A exceeded the maximum amount which is not chargeable to income-tax, 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."

As per section 139(1) proviso ,income tax return is to be filed if person gross total income not net taxable income , is More than exemption limit means if you have earned 2,50000 in Fy 2009-10 and saved 100000(u/s 80C) and your net taxable income is 250000-100000=150000 Rs even then as per Income tax act,you have to file return as your Gross total income(250000) is more than 160000 .So as per above rule to check whether Income is more than exemption limit or not for Income Tax return filing purpose ,we should consider income before giving effect to deduction under Chapter VIA ie deduction u/s 80C to 80U.More over while considering income for Income tax tax return purpose person should not give effect to exemption under section 10A and 10B and 10BA.

So be ready for filing of return if your Gross total Income Is more than exemption limit or even your employer has deducted due tds on your income. As it is mandatory to file retrun of income to such persons .

Due date to file Income tax for Non -audit cases for assessment year 2010-11 is 31.07.2010.

No disallowance u/s 40(a)(ia) if TDS paid before due date of filing ROI

The assessee made payments to sub-contractors during the previous year and though s. 194C requires TDS at the stage of payment/credit, did not do so. The tax was, however, deducted on 31st March and paid over in Sept before the due date for filing the return. The AO took the view that while the payment made to the sub-contractor for March was allowable, the payments for the earlier months was disallowable u/s 40(a)(ia). This was confirmed by the CIT (A). On appeal by the assessee, HELD allowing the appeal:
Failure to deduct or deposit tax as per s. 194C or Chapter-XVII makes the assessee liable to the consequences provided under the said Chapter-XVII. However, s. 40(a)(ia) is in addition to Chapter XVII. S. 40(a)(ia)(A) provides that if tax is deducted during the last month of the previous year and paid on or before the due date of filing of return as per s. 139(1), then such sum shall be allowed as deduction. In cases where tax is deducted other than the last month of previous year but is deposited before the last day of the previous year, then it will be allowed as deduction. Therefore, the conditions for allowability of deduction are prescribed u/s 40(a)(ia) itself and Chapter-XVII and s. 194C are not relevant. If the condition of deduction and payment prescribed u/s 194C / Chapter XVII are held applicable for dis-allowance of deduction u/s 40(a)(ia), then s. 40(a)(ia) will be rendered meaningless, absurd and otiose. Since the assessee had (belatedly) deducted tax in the last month of the previous year i.e. March 2005 and deposited the same before the due date of filing the return u/s 139(1), deduction had to be allowed u/s 40(a)(ia) (A).
Bapushaeb Nanasaheb Dhumal vs. ACIT (ITAT Mumbai)

Note: S. 40(a)(ia) has been amended by the FA 2010 w.e.f. 1.4.2010, to provide that in all cases if TDS is paid before the due date of filing the ROI, no disallowance shall be made.

The text of the same is reproduced hereunder for ready reference:

The existing provisions of section 40(a)(ia) of Income-tax Act provide for the disallowance of expenditure like interest, commission, brokerage, professional fees, etc. if tax on such expenditure was not deducted, or after deduction was not paid during the previous year. However, in case the deduction of tax is made during the last month of the previous year, no disallowance is made if the tax is deposited on or before the due date of filing of return.

It is proposed to amend the said section to provide that no disallowance will be made if after deduction of tax during the previous year, the same has been paid on or before the due date of filing of return of income specified in sub-section (1) of section 139.

This amendment is proposed to take effect retrospectively from 1st April, 2010 and will, accordingly, apply in relation to the assessment year 2010-11 and subsequent years.

RELATED CLAUSE REPRODUCED HEREUNDER

12. In section 40 of the Income-tax Act, in clause (a), in sub-clause (ia),—
(a) for the portion beginning with the words “has not been paid,—” and ending with the words “the last day of the previous year”, the words, brackets and figures “has not been paid on or before the due date specified in sub-section (1) of section 139” shall be substituted;

(b) for the proviso, the following proviso shall be substituted, namely:—

”Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted during the previous year but paid after the due date specified in subsection (1) of section 139, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid.”.

(Curtesy : Simple tax)

Funny joke on Taxes - Enjoy

1) Qus. : What are you doing? Ans. : Business. Tax : PAY PROFESSIONAL TAX!
2) Qus. : What are you doing in Business? Ans. : Selling the Goods. Tax : PAY SALES TAX!!
3) Qus. : From where are you getting Goods? Ans. : From other State/Abroad Tax : PAY CENTRAL SALES TAX, CUSTOM DUTY & OCTROI!
4) Qus. : What are you getting in Selling Goods? Ans. : Profit. Tax : PAY INCOME TAX!
5) Qus. : How do you distribute profit ? Ans : By way of dividend Tax : Pay dividend distribution Tax
6) Qus. : Where you Manufacturing the Goods? Ans. : Factory. Tax : PAY EXCISE DUTY!
7) Qus. : Do you have Office / Warehouse/ Factory? Ans. : Yes Tax : PAY MUNICIPAL & FIRE TAX!
8) Qus. : Do you have Staff? Ans. : Yes Tax : PAY STAFF PROFESSIONAL TAX!
9) Qus. : Doing business in Millions? Ans. : Yes Tax : PAY TURNOVER TAX! Ans : No Tax : Then pay Minimum Alternate Tax
10) Qus. : Are you taking out over 25,000 Cash from Bank? Ans. : Yes, for Salary. Tax : PAY CASH HANDLING TAX!
11) Qus.: Where are you taking your client for Lunch & Dinner? Ans. : Hotel Tax : PAY FOOD & ENTERTAINMENT TAX!
12) Qus.: Are you going Out of Station for Business? Ans. : Yes Tax : PAY FRINGE BENEFIT TAX!
13) Qus.: Have you taken or given any Service/s? Ans. : Yes Tax : PAY SERVICE TAX!
14) Qus.: How come you got such a Big Amount? Ans. : Gift on birthday. Tax : PAY GIFT TAX!
15) Qus.: Do you have any Wealth? Ans. : Yes Tax : PAY WEALTH TAX!
16) Qus.: To reduce Tension, for entertainment, where are you going? Ans. : Cinema or Resort. Tax : PAY ENTERTAINMENT TAX!
17) Qus.: Have you purchased House? Ans. : Yes Tax : PAY STAMP DUTY & REGISTRATION FEE !
18) Qus.: How you Travel? Ans. : Bus Tax : PAY SURCHARGE!
19) Qus.: Any Additional Tax? Ans. : Yes Tax : PAY EDUCATIONAL, ADDITIONAL EDUCATIONAL & SURCHARGE ON ALL THE CENTRAL GOVT.'s TAX !!!
20) Qus.: Delayed any time Paying Any Tax? Ans. : Yes Tax : PAY INTEREST & PENALTY!
21) INDIAN :: Can I Die Now?? Ans :: Wait a while, Pronobda is about to launch the funeral tax!!!

Penalty on late filing of Returns

Specific penalty for late filing of return is prescribed u/s 271F which reads as:

"If a person failure to furnish return of income as required by section 139 before the end of relevant assessment year, the assessing officer may impose a penalty of Rs 5000/-"

so this section says end of relevant assessment year,as for previous year 2009-10, assessment year is 2010-11 and its end on 31.03.2011 ,means there is no liability for late filing of income tax return up to 31.03.2011 and after that assessing officer can impose a penalty of 5000,and that is also his(AO) power which he may or may not exercise after giving due hearing to the assessee.


Now you would like to know why people are so much worried about the due date, the reason is that as due date has been linked with various other section of the income tax act,so it is significant in that manner .


so we have to see the impact of late filing of the Income tax return and issues related to due date of income tax.

Impact of late filing of Income tax return & issue related to due date (This is illustrative and not exaustive).

Interest u/s 234A: If there is tax due after deducting advance tax ,TDS and self assessment tax than interest will be applicable @1% per month and part thereof up to the date of filing of the return besides interest applicable u/s 234B or 234C. Means this interest is applicable only if there is any tax payable in your return.

Loss of Interest on refund: You may loose interest on refund u/s 244A as delay in filing is attributable to assessee for the period by which you have filed late return.

Audit Report: Person who are liable to get their accounts audited should get the audit report on or before the due date of filing return i.e 30.09.2010. Audit repot is only to be prepared and not to be filed any where.In simple word or boldly we can say that if audit report has been signed before 30.09.2008 that is enough, you can file return late and report particulars will be filled when ever you filed your income tax return.This is as income tax circular no 5/2007 point no 6 (read full circular)

Revised return :Late /belated return can not be revised .
Some of deduction under subsection 80 are not available for late return.
Due date of income tax return is related to TDS deposite and disallowance u/s 40A(ia).

Due date of Income Tax return is related to tax saving u/s 54,54B,54F and some other issues in capital gain saving account deposit scheme.

Not able to carry forward the losses under various heads:

you are not able to carry forward following type of losses if file return after due date
Speculation loss
business loss excluding loss due to unabsorbed depreciation and capital exp on scientific research
short term capital loss
long term capital loss
loss due to owning and maint. of horse races
However there is no impact on following type of losses even if return is furnished after the due date
loss from house property
business loss on account of unabsorbed depreciation and capital expenditure on scientific research.

(though delay can be condoned as per circular 8/2001 DT 16.5.2001 on fulfilling of certain condition)

so if you are ambit of the above points then you should furnish your return up to 31.07.2010 or 30.09.2010 as the case may be without any penalty.


Person who can afford to file late return


If you have
already deposited due tax or due taxes has been deducted by your employer and nothing is due or
you are not claiming a Major amount as refund or
you have no losses to be carried forward
then you can fill return up to the end of the assessment year ie 31.03.2011 without any penalty.

Person who should file return on time.


If you have
balance tax to be deposited or short fall of tax or
huge amount of refund due to you or
you have losses to be carried forwarded as explained above
then rush to the department asap so that return can be filled on time.

TDS Refund without matching upto 3 lakh -FY 2009-10

Instruction No. 5/2010 [F.No.225/25/2010-ITA-II], dated 21-7-2010

The issue of processing of returns for Asst. year 2009-10 and giving credit for TDS has been considered by the Board. In order to clear the backlog of returns, the following decisions have been taken:

(i) In all the returns filed in ITR-1 and ITR-2, for the Asst. Year 2009-10, where the aggregate TDS claim does not exceed Rs. Three lakh (3 lacs) and where the refund computed does not exceed Rs. 25,000; the TDS claim of the tax payer shall be accepted at the time of processing of the return.

(ii) In all the returns filed in forms other than ITR-1 and ITR -2, for the Asst. Year 2009-10, where the aggregate TDS claim does not exceed Rs. Three lakh (3 lacs) and the refund computed does not exceed Rs. 25,000 and there is 10% matching of TDS amount claimed, the TDS claim shall be accepted at the time of processing of the return.

(iii) In all remaining cases, TDS credit shall be given after due verification .


As per new rules,Tds claimed in the income tax return must be matched with data uploaded by the Deductor and data posted in form 26AS i.e, PAN ledger. Due to these instruction, many refund orders are pending without any fault of assessee. Moreover Income tax rule has not empower deductee to enforce deductor to file revised return or upload the original return so that mismatching can be removed .So department has issued a Internal Instruction to their officer to settle the small cases of refunds without matching the 100% tds details. New rules are reproduced hereunder.
Processing of returns of Assessment Year 2009-10 - Steps to clear backlog

(Thanks to Simpletax blog)


Similar instructions were issued for the FY 2008-09 also.

The Instruction reference is "Instruction No. 1/2010, dated 25-2-2010".

COST INFLATION INDEX FOR FY 2010-11 DECLARED

Cost Inflation Index for Financial year 2010-11 has been notified by CBDT vide his circular 59/2010 dated 21.07.2010. This New index figure is to be used to calculate Long term capital gain on the sale of capital assets during Financial Year 2010-11.Further I have complied Cost inflation index from 1981-2011 in sheet shown below ,which can also be downloaded in pdf format from the link given in the sheet.

Section 48, Explanation (v) of the Income-tax Act, 1961 - Capital gains - Computation of - Notified Cost Inflation Index for financial year 2009-10 - Amendment in Notification No. S.O. 2292(E), dated 9-9-2009

Notification No. 59/2010 [F.No.142/11/2010-TPL], dated 21-7-2010

In exercise of the powers conferred by clause (v) of the Explanation to section 48 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes the following amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), Central Board of Direct Taxes number S.O. 2292(E), dated the 9th September, 2009, namely:-

In the said notification, in the Table, after serial number 29 and the entries relating thereto, the following serial number and entries shall be inserted, namely :-



FOR FINANCIAL YEAR 2010-2011 is "711"

TDS Recovery of Employees who do not have PAN Numbers

An expert opinion by Dr. Vinod K. Singhania

Some of our employees may not have PANs, Under section 206AA. Tax is deductible at a minimum rate of 20 per cent as per their slabs. Know the quantum of TDS under section 192 in the following cases
1. In some cases, salary income is just Rs. 10,000 per month (Rs. 1,20,000 per annum). It is less than Rs. 1,60,000. Should we deduct tax at the rate of 20 per cent?
2. In some cases, salary is more than Rs. 1,60,000 but after deductions under Chapter VI-A, the resulting income is below Rs. 1,60,000. Is it necessary to deduct tax under section 206AA in such cases? In such cases, tax is deductible at the rate of 20 per cent or 20.6 per cent of the total payment or of taxable salary exceeding Rs. 1,60,000.
3. In the case of some foreign nationals working for our company (but not having PAN), salary income is more than Rs. 25,00,000 per annum. The normal tax rate is more than 20 per cent. Is it possible to deduct tax at the rate of 20 per cent or 20.6 per cent by applying the provisions of section 206AA.

Tax is deductible under section 192 as follows –
1.Find out estimated taxable salary.
2.Include other incomes disclosed by income. Losses cannot be disclosed except loss from house property.
3.Give deductions under Chapter VI-A.
4.Find out taxable income.
5.Find out normal tax (by applying slab rate of 0% up to Rs. 1,60,000, 10% between Rs. 1,60,000 and Rs. 5,00,000, 20% between Rs. 5,00,000 to Rs. 8,00,000 and 30% above Rs. 8,00,000). Add education cess at the rate of 3%.
6.Find out tax for the purpose of section 206AA at the rate of 20% of taxable salary (i.e., estimated taxable salary after deducting house property loss and
deductions under Chapter VI-A). There is no provision to add education cess in the ca
se of section 206AA.

If the employee has not intimated his PAN, tax deductible under section 192 will be either the amount computed under Step 5 or Step 6, whichever is more. This rule is applicable in all cases narrated by you in your query.

Specific questions raised in the query –

1.Even if, taxable salary income (i.e., after allowing deductions under Chapter VI-A) is lower than exemption limit, tax will be deductible at the rate of 20%, if the employee does not intimate his PAN. If an employee (not intimating PAN) gets Rs. 10,000 per month (suppose there is no deduction), his taxable salary income is Rs. 1,20,000 and tax deductible will be Rs. 24,000. It is incorrect to state that in such case taxable income is zero (as it is below the exemption limit) and tax should not be deducted under section 206AA.

2.As stated earlier, taxable income would be calculated after allowing deductions under Chapter VI-A. Even if such income is below Rs. 1,60,000, tax will be deducted at the rate of 20% under section 206AA if PAN is not intimated by the employee.

3.If normal rate is higher than 20%, tax will be deducted at the normal rate. For instance, if taxable salary income is Rs. 25,00,000, normal tax will be Rs. 6,22,120. Normal tax rate will be 24.88% (i.e., Rs. 6,22,120 ÷ Rs. 25,00,000). Tax will be deducted at the normal rate. In such a case, section 206AA will not have any role to play, even if recipient has not intimated his PAN to the payer.

Dr.Vinod.K.Singhania

The era of e-Returns.... More than 1 Crore Returns

The online filing of income tax returns could touch one crore-mark in the current financial year from 55 lakh in the last fiscal with the government making it mandatory for certain professionals and business entities as well apart from corporates.


The finance ministry said that professionals, including doctors, lawyers and chartered accountants, earning over Rs 10 lakh annually will be required to file income tax returns electronically.


Besides, all business entities and Hindu undivided families (HUFs) with a business income of over Rs 40 lakh per annum will also be required to mandatorily file income tax returns in the electronic format, the ministry said.


"With the addition of Hindu undivided families and individuals, the e-file returns are likely to touch one crore," an official with the Finance Ministry said.


Under the Income Tax Act, the individuals and HUFs are required to get their accounts audited if the turnover or gross receipts from business exceeds Rs 40 lakh (Rs 60 lakh from assessment year 2011-12) or receipts from the profession exceeds Rs 10 lakh (Rs 15 lakh from assessment year 2011-12).


"Now all individuals and the Hindu undivided families (HUFs), who are required to get their accounts audited...are also required to file their income tax returns electronically with or without digital signatures," the official said.


Earlier, this condition was applicable only to companies and partnership firms.


Further, the ministry made it mandatory for all companies to file income tax returns electronically with digital signatures, a move that will facilitate faster filing of I-T returns by India Inc.


The government had introduced the system for mandatory e-filing of income tax returns by corporates from assessment year 2006-07. The due date for submitting income tax returns for assessment year 2010-11 is July 31, 2010 for the clients who file without Tax Audits, and 30th September,2010 is for the clients with Tax Audit.

FREE Income-tax e-Filing Gateway - Skorydov Gift

Skorydov introduces FREE Income-tax e-Filing Gateway for Chartered Accountants, Tax Practitioners, TRP and Corporate clients.

Click here to login to myITreturn.com https://myitreturn.com/StartNow.aspx?Type=P
Select the Professional Login from the link below)

It is a tedious task to maintain username and passwords for all assessees. Using this service you can file XML files for all your clients / companies using a single login.

Try it. It is easy, fast and secure. The feature also validates your XML file and prompts for confirmation before e-filing.

A quick point that we would want you to know:
The ITR-V that you would get by filing from myITreturn.com can be obtained from any of the three ways mentioned below:

* The Income-tax Department website (PAN login at http://incometaxindaiefiling.gov.in) - immediately
* Email that is mentioned in your XML almost immediately.
* myITreturn.com login

So you do not have to worry!

Go ahead and try!

MY HEARTIEST CONGRATULATIONS AND THANKS FOR THE GIFT.

e-Filing ITR in audit cases u/s 44AB Mandatory.

e-Filing ITR in audit cases u/s 44AB Mandatory. Digital Signature is mandatory for Corporate Assessess.

CBDT has issued a notification 49/2010 vide which few changes has been made in the process of filing of Income tax return from Assessment year 2010-11. Now every person (including Individual and HUF) who is covered under section 44AB audit case is liable to file his return through e filing mode only .However in e filing, person can file return through digital signature or otherwise. However for companies, e filing of Income tax return is mandatory through digital signature only.

New rules is given here under for your ready reference

Income-tax (Seventh Amendment) Rules, 2010 – Amendment in rule 12

Notification No. 49/2010[F.No.142/15/2010-TPL], dated 9-7-2010


In exercise of the powers conferred by section 295 read with section 139 of Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely : -

1. (1) These rules may be called the Income-tax (7th Amendment) Rules, 2010.
(2) They shall come into force from the date of their publication in the Official Gazette.

2. In the Income-tax Rules 1962, in rule 12, in sub-rule (3), in the proviso, for clause (a), the following clauses shall be substituted, namely :-

“(a) a firm required to furnish the return in Form ITR-5 and to whom provisions of section 44AB are applicable shall furnish the return in the manner specified in clause (ii) or clause (iii);

(aa) an individual or HUF required to furnish the return in Form ITR-4 and to whom provisions of section 44AB are applicable shall furnish the return for Assessment Year 2010-11 and subsequent Assessment Years in the manner specified in clause (ii) or clause (iii);

(ab) a company required to furnish the return in Form ITR-6 shall furnish the return for Assessment Year 2010-11 and subsequent Assessment Years in the manner specified in clause (ii)

NEW RUPEE SYMBOL FINALISED

AFTER A long period of time, the Union government of India approved the new Indian rupee symbol which is a mix of Devanagri ‘Ra’ and Roman symbol ‘R’. India rupee will be the fifth currency in the world to have a distinct identity. With its own distinct identity or symbol Indian rupee will join the elite club of US dollar, British pound-sterling, Euro and Japanese yen.

The symbol is designed by an IIT post-graduate student D Uday Kumar and later was approved by the Union Cabinet on Thursday (July 15, 2010).

A competition was organised for design of the currency symbol. There were more than 3000 entries of the designs among which Kumar's entry was chosen. Kumar will receive an award of Rs 2.5 lakh for his design.


Information and Broadcasting Minister Ambika Soni told reporters after the cabinet meeting that the symbol will be printed or embossed on currency notes or coins.

Soni also stated that the symbol will be featured on the computer key and software so that it can printed and displayed in electronic and print media.

The Information and Broadcasting Minister said that the symbol will be adopted within six months and gradually will be permanently seen globally within two years.

Check list for filing Income Tax Return Asst.Year 2010-11

While filingincome-tax returns, necessary precautions must be taken to avoid litigation at a later date. Filing income-tax return is a yearly ritual followed by all taxpayers. While filing the return, necessary precautions are to be taken to avoid confusion and litigation at a later date. Here are some key points to be taken into consideration for a hassle-free filing of tax return.

Traditionally filing of Income Tax Return is seen as a complicated and tiresome task, and therefore, most people keep putting it off till the last possible moment. But in the recent years, thanks to the initiatives taken by the government in simplifying the rules and the filing process, the task has become less daunting. With increasing prosperity and higher income levels, larger numbers of people have become eligible for filing Income Tax Returns.
What is Income Tax and who is liable to pay Income Tax?
Income tax is a tax paid to the central government on personal income. It is the direct tax paid on income by an individual or a company/firm within a given financial year (April-March). The Indian Income Tax department is governed by the Central Board for Direct Taxes (CBDT) and is part of the Department of Revenue under the Ministry of Finance, Government of India.

The Income Tax Act, 1961 as amended by Finance Act 2010, under Section 139 makes it obligatory upon any person to file return if the person's 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.

Provided that a person referred to, who is not required to furnish a return under this sub-section and residing in such area as may be specified by notification in the Official Gazette, and who during the previous year incurs an expenditure of fifty thousand rupees or more towards consumption of electricity or at any time during the previous year fulfils any one of the following conditions, namely: is in occupation of an immovable property exceeding a specified floor area, whether by way of ownership, tenancy or otherwise, as may be specified; or is the owner or the lessee of a motor vehicle other than a two-wheeled motor vehicle, whether having any detachable side car having extra wheel attached to such two-wheeled motor vehicle or not; 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 twenty-five thousand rupees or more.
The tax liability to be computed for Assessment Year 2010 - 2011 is as per the under:-
(i) In case of individuals (other than women and individuals who are of the age of 65 years or more at any time during the financial year 2009-10)

Upto Rs. 1,60,000 : Nil
Between Rs. 1,60,001 - Rs. 3,00,000 : 10% of income in excess of Rs. 1,60,000
Between Rs. 3,00,001 - Rs. 5,00,000 : Rs. 14,000 + 20% of income in excess of Rs. 3,00,000
Above Rs.5,00,000 : Rs. 54,000 + 30% of income in excess of Rs. 5,00,000

(ii) In case of women (other than women who are of the age of 65 years or more at any time during the financial year 2009-10)

Upto Rs. 1,90,000 : Nil
Between Rs. 1,90,001 - Rs. 3,00,000 : 10% of income in excess of Rs. 1,90,000
Between Rs. 3,00,001 - Rs. 5,00,000 : Rs. 11,000 + 20% of income in excess of Rs. 3,00,000
Above Rs.5,00,000 : Rs. 51,000 + 30% of income in excess of Rs. 5,00,000
(iii) In case of individuals who are of the age of 65 years or more at any time during the financial year 2009-10
Upto Rs. 2,40,000 : Nil
Between Rs. 2,40,001 - Rs. 3,00,000 : 10% of income in excess of Rs. 2,40,000
Between Rs. 3,00,001 - Rs. 5,00,000 : Rs. 6,000 + 20% of income in excess of Rs. 3,00,000
Above Rs.5,00,000 : Rs. 46,000 + 30% of income in excess of Rs. 5,00,000.

It is mandatory to file a return, irrespective of the fact that tax has been deducted at source by your employer or not, and whether you are eligible for a refund or not.

Availability of details:

The taxpayer must keep all the details required for filing the return with him before resorting to actual filing work. Though the tax returns are annexure-less, keeping all the details in hand and filling-in the tax return form meticulously could make return filing a simple single stroke work.
By registering with www.incometaxindiaefiling.gov.in, taxpayers may also know the amount of tax deducted at source or collected at source standing to their credit and accordingly adjust the tax liability or make a claim for refund.

Quantum and eligibility for deduction under Sections 80C, 80D, 80DD, 80DDB, 80E, 80G, 80GGC and 80U in the light of any recent changes may also be kept in mind for utilising the correct deduction. A wrong claim might result in slapping of penalty and a non-claim could be set right only by filing revised return later.
Filing the return on or before the ‘due date' would mean no interest under Section 234A of the Act. Even if the assessment is made subsequently with upward revision of income, the levy of interest under Section 234A would not be possible if the return is filed on or before the due date.
E-based return:
Recent experiences in return filing has shown that e-filing of tax returns has been efficient, effective and trouble-free for taxpayers.
Though intimation in respect of those returns have been trickling in only over the last few weeks, the experience shows that e-filing is worth the waiting time for getting response in the form of intimation under Section 143(1) of the Act. A first hand experience of obtaining refund for e-returns might also motivate many more taxpayers to opt for e-filing of returns.
AIR data:
For filing the tax return, relevant and accurate data is to be keyed in. The taxpayers must also remember that high value transactions are liable for disclosure by various authorities under ‘Annual Information Report' (AIR).

It is necessary to fill in the relevant columns of the tax return correctly. In the event of mismatch between the return filed and AIR, the case might be selected for scrutiny under computer aided scrutiny system adopted by the tax department.
Scope for revision:
July 31 is the ‘due date' for filing returns by all taxpayers except those whose accounts are liable for audit under the income-tax law or any other law. Filing return before the ‘due date' entitles the taxpayer to file a revised return in the event of any error or omission therein. Whereas a return filed beyond the ‘due date' is not eligible for such revision.

Supporting Documents:
Supporting documents that you require to calculate tax liability while preparing IT Returns are:
Form No. 16 (received from the employer): Form 16 is the Annual Salary Statement issued by your employer and provides details about the income earned and tax deducted during the year.

Form No. 16A (received from all the payers who have got their tax deducted): This form needs to be collected from the parties who have deducted the tax while making payment to you during the year. This includes banks and companies (with whom you have kept fixed deposits and so on).
Form No. 26AS
The Income Tax Department through the National Securities Depository Limited (NSDL) sends taxpayers a document called the 'Annual Tax Statement' or Form 26AS. This statement gives information about tax deducted and collected at source by entities such as employers and banks for your permanent account number (PAN) in a certain year. It also lists information about advance tax/self assessment tax/regular assessment tax deposited by you in the bank. You may view the status of tax credit online by registering at the NSDL website

Summary of account: It is important to have a summary of all bank accounts that you operated in the last fiscal year. The bank statements have details of the interest income earned and the expenditures incurred during the year.

Details of property owned: If you own some property or bought a new one during the last fiscal year, keep receipts of property tax paid during the year and rent received (if any).
Details of sale & purchase with respect to investments or assets sold during the year.
Details of any other tax payments made during the year.It is also mandatory to quote the Permanent Account Number (PAN) while filing the return.
Manual Filing
In case you prefer to file your return manually, you would need to take the following steps:-
Download and complete the appropriate ITR form.

File the return with the concerned ward in the Income Tax Department of your jurisdiction.

Obtain receipt for your return
There is no need to attach any supporting documents with your return. However, you must have these available in case called for.
E-Filing
There was a time when people had to travel miles and wait in long queues outside the Tax Department to file their Income Tax returns. But a few years ago, the Income Tax Department introduced a convenient way to file these returns online. The process of electronically filing your Income Tax Returns through the Internet is known as e-filing of returns . It offers convenience of time and place to tax payers and is available round the clock to taxpayers located in any place in the world.

Electronic filing, or e-filing, of tax returns first began in India as part of a proposal for Internet-based electronic tax administration system for service tax. The Central Board of Excise and Customs's efforts made the introduction of e-filing of tax returns possible for the first time in India in April 2003, but its benefit was available only to a few service tax providers.
Considering the comfort for taxpayers across the country and also technology lending a helping hand, both the Central and State governments decided to extend e-filing of tax returns to the other types of taxes, including Income Tax, Excise and VAT.
Under the Income Tax law, this facility was introduced by the Central Board of Direct Taxes (CBDT) for the first time during assessment year 2006-07, wherein corporate assessees had to mandatorily e-file their income-tax returns.
At present, it is mandatory for companies and firms requiring statutory audit under Section 44AB to e-file their Income Tax Returns. Also, the e-filing benefit has been extended to all assesses except for trusts.
Steps for E-filing
Login to the official website for Income Tax e-filing
Read the instructions given on the website
Select and download the appropriate Income Tax Return form
Download Return Preparation Software for selected Return Form.
Fill your return offline and generate XML file.
Register and create a user id/password.
Login and click on relevant form on left panel and select "Submit Return".
Browse to select XML file and click on "Upload" button.
3 ways to file returns electronically
Option 1: Use digital signature , in which case no further action is required.

Option 2: File without digital signature, in which case ITR-V form is to be filed with the department. This is a single page receipt-cum-verification form.
Option 3: File through an e-return intermediary who would do eFiling and also assist the assessee file the ITR -V Form
.
On successful upload acknowledgement details would be displayed. Click on "Print" to generate printout of acknowledgement/ITR-V Form

In case the return is digitally signed, on generation of "Acknowledgement " the Return Filing process gets completed. Assessee may take a printout of the Acknowledgement for his record. All corporate returns have to be digitally signed by director.

In case the return is not digitally signed, on successful uploading of e-
Return, the ITR-V Form would be generated which needs to be printed by the tax payers. This is an acknowledgement cum verification form. The tax payer has to fill-up the verification part and verify the same. A duly verified ITR-V form should be submitted with the local Income Tax Office within 120 days of filing electronically. This completes the Return filing process for non-digitally signed Returns.