Volume 2, Issue 11

28 May, 2009

Tax Alert
Filing of Returns of Income for the year ended 31st March, 2009

The Central Board of Direct Taxes (CBDT) has issued Circular No.3 of 2009 on 21s t May, 2009 wherein certain clarifications regarding filing of returns of income and fringe benefits by various entities and also the revised system of electronic filing of returns for Assessment Year 2009‐10 have been laid down.

The Government seems to be very serious about its e‐filing initiatives and the process that was begun a few years ago appears to be getting strengthened steadily. Based on recent steps taken by the Government, it appears that there is a move to completely automate the system of processing tax returns which would imply that even the granting of credit for tax payments would be done electronically and without human intervention.

The latest Circular does not contain any major changes in the existing rules relating to filing of returns. However, there are a few important changes that would affect all tax payers. The same are highlighted below.

Clarifications contained in the Circular

  1. Where the existing provisions remain unchanged:

    The CBDT has notified the returns to be filed by different entities based on the status and the nature of income.
    • Companies and firms to which tax audit u/s 44AB applies have to compulsorily file the return electronically (with or without digital signature).
    • The return of income/ fringe benefits in Form ITR‐7 is to be furnished in the paper form only.
    • The returns required to be furnished in above mentioned Forms (except in ITR‐7) shall not be accompanied by any attachments/ annexures.
    • The report as required under section 92E of the Income‐tax Act should not be furnished along with the return. However, it should be separately furnished before the date specified in rule 10E. Other reports that were earlier required
      to be furnished by the assessee should be maintained with the assessee and
      should be produced before the tax authorities if and when called for.
    • In case of returns filed with digital signatures, no verification form has to be sent to the Income Tax Department post uploading the return on the income tax website. However if the return is not filed with digital signature, a verification for the same in form ITR‐V has to be filed with the Income Tax Department.
    • Further, ITR‐V is required to be sent within 30 days of filing the ITR electronically else the electronic return already furnished shall be void and the
      assessee would be required to re‐submit the data.
  • The credit for Tax Deducted at Source (TDS), Tax Collected at Source (TCS), advance tax and self assessment tax shall be allowed subject to the information relating to these prepaid taxes furnished in the relevant schedules of the return forms matching with the information provided by the deductor, collector and the banks.
  • The CBDT has reiterated its policy in no uncertain terms that no annexures are required to be attached with the return of income and directed the Chief Commissioner of Income Tax to observe this policy strictly. Earlier many Income tax offices were insisting for annexures to be attached with the return of income

The following are the ITR forms as notified by the CBDT and as laid down in Rule 12 of the Income Tax Rules, 1962.

ITR Form Entity Particulars
ITR 1 Individuals Income from salary/ pension/family pension and not having any other income except income by way of interest chargeable to income‐tax under the head Income from other sources
ITR 2 Individuals & HUFs Income under all the heads except income under the head of Profits or Gains of Business or Profession
ITR 3 Being partners in firms and not carrying out business or profession under any proprietorship
ITR 4 Having proprietory business or profession
ITR 5 Firms / AOP / BOI Combined form for return of income and fringe benefits
ITR 6 Companies (other than companies claiming exemption u/s 11) Combined form for return of income and fringe benefits
ITR 7 Assessees like Trusts, Political Party, Scientific Research Association, etc. Combined form for return of income and fringe benefits for furnishing return under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D)
ITR 8 All Assessees Return of fringe benefits for persons who are not required to furnish return of income.
  1. Where the existing provisions have been changed:

    • ITR –V is required to be sent within 30 days of filing the ITR electronically. Earlier the time period was 15 days.
    • As per the Circular, ITR‐V must be mailed only at the below mentioned address which is the Centralised Processing Centre (CPC) of the Income Tax Department:
      “Income Tax Department – CPC, Post Box No ‐ 1, Electronic City Post Office, Bangalore ‐ 560100, Karnataka”.
      Earlier ITR‐V was required to be physically filed with the concerned Income Tax Officer whose jurisdiction was applicable to the assessee.
      Thus, now, any tax payer in any part of India filing an e‐return without digital signature would have to mail the ITR‐V in an A‐4 size envelope to above referred address at Bangalore.
    • The acknowledgement in the form of a stamp on the verification form ITR‐V has now been replaced by an e‐mail acknowledgement which will be sent by Centralised Processing Centre upon receipt of the verification form.
      One issue that could arise on account of the new rule is that if the return reaches late to the CPC, Bangalore in case of a delay on the part of the Indian Post or if the verification form is lost in transit then the repercussions are not yet clear.
Assesses must ensure that the deductor and the collector have provided them with separate Unique Transaction Numbers (UTNs) in respect of each TDS and TCS transaction. They must also ensure that the UTN for every TDS and TCS claim in the return is correctly filled in. Similarly, they must ensure that they correctly fill in the Challan Identification Number (CIN) in respect of payments of advance tax and selfassessment tax.  
In view of this, we feel that it would be advisable for all tax payers who are required to file their return of income electronically to obtain a Digital Signature Certificate and efile the return with the Digital