Income Tax on Gifts

 Income Tax on Gifts

-Dr. Lalit Kumar Setia

Are you planning to gift a relative,  to save income tax?

Yes, it is a good option to save income tax. In India, anyone can gift to others for saving taxes in his hands. The money given as a gift is not considered the income of the recipient if he is relative to the person giving the gift.

But it is required to remember that such amount will be clubbed in the taxable income of the person giving the gift as it will not be taxable in the hands of recipients.

For example, the taxable income of Mr. A is Rs. 10 Lacs and he gifted Rs. 2 Lacs to his daughter-in-law or his spouse. Will there be any tax savings?

Since the gift is given to a relative, it will not be taxable in the hands of the recipient, therefore it will not be clubbed in the income of Mr. A and his taxable income will remain Rs. 10 Lacs. There will be no tax implication of giving such a gift in the year in which it is given. But in the following year, the interest earned on such gifted money will be taxable in the hands of the recipient and not in the hands of Mr. A.

Never accept Cash Gift of money above Rs. 2 Lacs

The amount up to Rs. 2 Lacs can be accepted as a gift but the amount above Rs. 2 Lacs in Cash form, cannot be accepted as a gift. If a person accepts that he received an amount in cash as a gift from someone either relative or anybody, the income tax department may impose a penalty up to the amount received as a gift. 

Income tax on gifts received from persons other than relatives

The relatives can give gifts without any limit however the gift should be given either using cheque or electronic fund transfer and cash gifts should be avoided. 

But in case, gifts are given or received for other than relatives, then how to treat in the income tax return? Whether it is an income of the recipient or not?

A person who receives gifts of an amount up to Rs. fifty thousand is not taxable in his hands but if the amount becomes more than Rs. fifty thousand then the whole amount of gift will be taxable and included in income from other sources as per Section 56(2) (x) of the income tax act. 

For example, Mr. A received gifts from nonrelatives, Mr. B and Mr. C and the amount is Rs. 45000 then it will not be included in the taxable income however if the amount of gift is above Rs. 50000, then it will be included in the taxable income of Mr. A.

In case, a person is not including the income of gifts in taxable income in such circumstances, then it will be treated as Tax evasion. 

Who is relative and who is not relative for accepting gifts under the income tax act?

While accepting or giving the gift, the tax implications depend upon the relationship between the tax giver and tax recipient. The relatives cover mother, father, brother, sister, spouse, brother and sister of parents, brother and sister of parents in law, brother and sister os spouse, the person who is lineal ascendant or descendant of person or spouse, and also the spouse of the relatives mentioned as relative above.

It is worth mentioning that the person receiving any gift or giving any gift should maintain a record of it, justifying the source of money given as a gift to others.

It is found in many cases, the money which is not accounted as white money is given as a gift, and the person giving the such gift will be held responsible for it.

Are you interested in an Online Course related to Income Tax?:

1. https://smartinstituterls.blogspot.com/2022/12/income-tax-matters-in-government.html 

2. https://smartinstituterls.blogspot.com/2022/12/computation-of-income-tax-liability.html

 *Copyright © 2021 Dr. Lalit Kumar. All rights reserved. 

This article is written by Dr. Lalit Kumar Setia; a renowned author and trainer. He completed his Doctorate in Commerce from Kurukshetra University Kurukshetra and MBA in Information Technology from GJU, Hisar. He also wrote two books, 15 research papers, and organized more than 200 Training Courses during his working period since 2006 in Haryana Institute of Public Administration, Gurugram. The article was firstly published on 18th October 2021, and last updated on 19th October 2021. The writer can be contacted on lalitkumarsetia@gmail.com 

Read more content:

https://leavesofprogress.blogspot.com/2021/09/parking-of-funds-and-personal-ledger.html (Parking of Funds and Personal Ledger Account - PLA)

https://leavesofprogress.blogspot.com/2021/08/organizing-unorganized-sectors-of-india.html (Organizing Unorganized Sectors of India).

उपहारों पर आयकर

-डॉ. ललित कुमार सेतिया

क्या आप आयकर बचाने के लिए किसी रिश्तेदार को उपहार देने की योजना बना रहे हैं?

हां, इनकम टैक्स बचाने का यह एक अच्छा विकल्प है। भारत में, कोई भी अपने हाथों में कर बचाने के लिए दूसरों को उपहार दे सकता है। उपहार के रूप में दिए गए धन को प्राप्तकर्ता की आय नहीं माना जाता है यदि उसका उपहार देने वाले व्यक्ति के साथ पारिवारिक संबंध है।

लेकिन यह याद रखना आवश्यक है कि इस तरह की राशि को उपहार देने वाले व्यक्ति की कर योग्य आय में जोड़ा जाएगा क्योंकि यह प्राप्तकर्ताओं के हाथ में कर योग्य नहीं होगा।

रिश्तेदारों के अलावा अन्य व्यक्तियों से प्राप्त उपहारों पर आयकर

रिश्तेदार बिना किसी सीमा के उपहार दे सकते हैं हालांकि उपहार चेक या इलेक्ट्रॉनिक फंड ट्रांसफर का उपयोग करके दिया जाना चाहिए और नकद उपहार से बचना चाहिए।

लेकिन अगर रिश्तेदारों के अलावा किसी और के लिए उपहार दिया या प्राप्त किया जाता है, तो आयकर रिटर्न में कैसे व्यवहार किया जाए? यह प्राप्तकर्ता की आय है या नहीं?

एक व्यक्ति जो रुपये तक की राशि का उपहार प्राप्त करता है। उसके हाथ में पचास हजार कर योग्य नहीं है लेकिन अगर राशि रुपये से अधिक हो जाती है। पचास हजार तो उपहार की पूरी राशि कर योग्य होगी और आयकर अधिनियम की धारा 56(2) (x) के अनुसार अन्य स्रोतों से आय में शामिल होगी।

उदाहरण के लिए, मिस्टर ए को गैर-रिश्तेदारों, मिस्टर बी और मिस्टर सी से उपहार मिले और यह राशि रु। 45000 तो इसे कर योग्य आय में शामिल नहीं किया जाएगा, हालांकि यदि उपहार की राशि रुपये से ऊपर है। 50000, तो इसे श्री ए की कर योग्य आय में शामिल किया जाएगा।

यदि कोई व्यक्ति ऐसी परिस्थितियों में उपहार की आय को कर योग्य आय में शामिल नहीं करता है, तो इसे कर चोरी माना जाएगा।

आयकर अधिनियम के तहत उपहार स्वीकार करने के लिए कौन रिश्तेदार है और कौन रिश्तेदार नहीं है?

उपहार स्वीकार करते या देते समय, कर के निहितार्थ करदाता और कर प्राप्तकर्ता के बीच संबंधों पर निर्भर करते हैं। रिश्तेदार माता, पिता, भाई, बहन, पति या पत्नी, माता-पिता के भाई और बहन, माता-पिता के भाई और बहन, भाई और बहन ओएस पति या पत्नी, जो व्यक्ति या पति या पत्नी के वंशज या वंशज हैं, और पति या पत्नी को भी कवर करते हैं। उपरोक्त रिश्तेदार के रूप में उल्लिखित रिश्तेदारों की।

यह उल्लेखनीय है कि कोई भी उपहार प्राप्त करने वाले या कोई उपहार देने वाले व्यक्ति को दूसरों को उपहार के रूप में दिए गए धन के स्रोत को सही ठहराते हुए उसका रिकॉर्ड रखना चाहिए।

कई मामलों में ऐसा पाया जाता है कि जो पैसा सफेद धन के रूप में नहीं गिना जाता है उसे उपहार के रूप में दिया जाता है, ऐसा उपहार देने वाले व्यक्ति को इसके लिए जिम्मेदार माना जाएगा।

 *कॉपीराइट © 2021 डॉ. ललित कुमार। सर्वाधिकार सुरक्षित।

Read more content:

https://leavesofprogress.blogspot.com/2021/09/parking-of-funds-and-personal-ledger.html (Parking of Funds and Personal Ledger Account - PLA)

https://leavesofprogress.blogspot.com/2021/08/organizing-unorganized-sectors-of-india.html (Organizing Unorganized Sectors of India).

Income Tax Changes from FY 2021-22

Income Tax Changes from FY 2021-22

In last article, we learned how Fuel Taxation is being used to increase the collection of tax to meet the fiscal deficit. In the Financial Budget 2021, the income tax rates are not increased and the Government projects to have collection from disinvestment, GST, and Fuel Taxation. 

No Change in Income Tax Slabs:

The rates of income tax are same as earlier in both old tax regime and new tax regime. No changes are made.

Relaxation for filing of ITR for senior citizens above age of 75:

The senior citizens who are above the age of 75 and receiving income only from pension and interest as a source of income, will not require to file income tax return. However, for such relaxation it is the condition that their interest income should be from the same bank in which the amount of pension is deposited. It is worth to mention here that in such circumstances; the bank will deduct the tax deduction at source (TDS) as per the taxable liability of the senior citizen after keeping in mind the deductions u/s 80C to 80U and rebate of 87A. It means the filing of ITR will not be required because the tax liability already be deducted at TDS by the bank.

Pre-filling of ITR forms:

Like earlier, the 26AS tax credit statement data automatically pre-filled by the web-portal of income tax india efiling dot gov dot in. From April 1, 2021; the details of dividend, interest, and capital gains will be pre-filled so that the same cannot be concealed by the taxpayers. Similarly, the details of salary incomes, tax payments, TDS etc. will also be pre-filled on the basis of the information available with the income tax department. It is worth to mention here that the deductors including employers, banks, financial institutions etc. normally communicated the amount of TDS to the income tax department on monthly and quarterly basis; the same will be considered to pre-fill the information.

Interest on part of PF contributions which are exceeding Rs. 2.5 Lacs in a year; will be taxable:

From 1^st April, 2021 if there is interest income earned on the portion of PF contributions which are exceeding Rs. 2.5 Lacs in a year; will be taxable in the hands of recipients. This provision is applicable on all the three PF contributions including GPF, EPF, and PPF. Due to this provision, the high income citizens would like to make investments in NPS instead of PF after the amount be invested up to Rs. 2.5 Lacs in their PF accounts. (How Money Grows in NPS)

No TDS on dividend payments to Real Estate Investment Trusts (REIT) and Infrastructure Investment Trusts (InvITs):

From the year 2020-21, the dividend distribution tax was abolished and the dividend income was made taxable in the hands of shareholders. From the year 2021-22, the dividend payments to REIT and InvITs will be exempt from TDS.

Incorporating Section 206AB for charging TDS on higher rate from the Non-filers of ITR:

The citizens who are still not filing income tax return (ITR), are required to pay more TDS on their incomes. The higher rate of TDS will be either 5% or twice the rate specified in the relevant provision of the Act. This is done to encourage citizens to file the income tax return (ITR).

Capital Gains Tax on returns of Unit Linked Insurance Plans (ULIPs):

The ULIPs issued on or after 01.02.2021 in which an individual is paying annual premium above Rs. 2.5 Lacs will be subject on Capital Gain Tax at the time of redemption.

Reduction in Last date for filing delayed ITR:

Up to 31st March, 2021; the last date for filing delayed ITR was 31^st March, on voluntarily basis; means the return of the FY 2019-20 can be filed up to 31^st March 2021 if delayed. But from FY 2021-22, the last date of filing delayed ITR will be 31^st December, on voluntary basis; means the return of FY 2020-21 can be filed up to 31^st December 2021 instead of 31^st March 2022. It is worth to mention here that u/s 234F, if an individual is filing ITR after the due date but before 31^st December; then maximum penalty is Rs. 5000 (Five Thousands). In case, anyone wants to revise the filed ITR, then it can be revised up to the end of Assessment Year.

How to know Income Tax Refund Status:

Now, it is very easy to view the income tax refund status, just login with your PAN Number and password on the website of incometax dot gov dot in and go to "My Account". Click the command "Refund/Demand Status". The portal will display the status with mode of payment by which it has been credited in your account. 

It is worth to mention here that the income tax refund comes within 20 - 45 days after processing of the income tax return (ITR) by Centralized Processing Centre (CPC), however, it is delayed in few circumstances:

If any query is raised by the Income Tax Department and the reply to that query took times from your side. In such cases, the refund is withheld by Income Tax Department for assessment and to clarify any mismatch between the details submitted by taxpayer and the details already available with the Income Tax Department. 

What can be done for getting delayed Income Tax Refund?

First of all, check your registered email whether there is any query pending from the Income Tax Department or not. If there is any query, then respond as per the directions provided in the email. 

In case, no such email is available, then check dashboard after logging into the account on incometax dot gov dot in. 

In case, the bank account details submitted by the taxpayer during filing ITR are wrong, then also the income tax refund is delayed. In such case, the taxpayer can update the banking details, to get the refund at the earliest. 

The income tax refund status can also be checked upon the website of NSDL. 

*Copyright © 2021 Dr. Lalit Kumar. 

Previous Article

Next Article

Income Tax Changes from FY 2020-21

 Income Tax Changes from FY 2020-21

It is well known that the income tax is levied on income, more the income, more the tax payable. There are different slabs on which basis, the income tax liability is computed in the hands of individuals of India. The budget of the year 2020 revised the tax rates which will be applicable from FY 2020-21. 

The new slabs are:

(i) Up to 2.5 Lacs – NIL (as earlier, no change);

(ii) From 2.5 Lacs to 5 Lacs – 5% (as earlier, the rebate of 87A will make it NIL if the income is up to 5 Lacs).

(iii) From 5 Lacs to 7.5 Lacs – 10% (earlier it was 20%, however if someone opts for 10% then he/she has to give up the exemptions and deductions mentioned below).

(iv) From 7.5 Lacs to 10 Lacs – 15% (earlier it was 20%, however if someone opts for 10% then he/she has to give up the exemptions and deductions mentioned below).

(v) From 10 Lacs to 12.5 Lacs – 20% (earlier it was 30%, however if someone opts for 10% then he/she has to give up the exemptions and deductions mentioned below).

(vi) From 12.5 Lacs to 15 Lacs – 25% (earlier it was 20%, however if someone opts for 10% then he/she has to give up the exemptions and deductions mentioned below).

(vii) Above 15 Lacs – 30% (as earlier).

Health and Education Cess:

After applying these slabs and computing tax liability, it will be required to levy 4% Health and Education Cess (as earlier, no change).

Which exemptions and deductions will have to be give up, if someone decides to opt new slab rates?

(a) Exemption on House Rent Allowance (HRA): 

Most of the employees claim exemption on HRA. In case, new tax slab rates are opted, the exemption of HRA will not be provided.

(b) Exemption on Leave Travel Allowance: 

It will not be available and it will be fully taxable for the individuals opting new slab rates.

(c) Exemption in Children Education Allowance: 

It will not be available. Those who are taking Children Education Allowance if decides to compute tax in new tax slab rates, their exemption on Children Education Allowance will not be provided.

(d) Standard Deductions on Salary, House Property etc.: 

It will not be provided to the individuals who want to compute their tax liability with new tax slab rates.

(e) No Exemption on ‘Interest on House Loan’: 

The individuals taking house loan for building or purchasing self occupied property are eligible to get deduction on up to Rs. 2 Lacs of amount paid for Interest on House Property and in case, the house is let out, the deduction has no limit while computing income from House Property. But if an individual takes the new slab rates in consideration, then there will be no deduction available for ‘Interest on House Loan’.

(f) Deduction of Section 16: 

The deduction under section 16 which is for entertainment allowance and employment / professional tax will not be available for the individuals opting new tax regime.

(g) Deduction on Family Pension: 

It is presently allowed under section 57 (iia) up to Rs. 15000 which will not be allowed if an individual opts the new tax regime.

(h) Deductions for disability under section 80DD and 80DDB: 

These are available now but the individuals who decides to pay tax as per new tax regime, will not allowed to claim these deductions.

(i) Deduction for Donations under section 80G : 

It will also not be available for those who opt for new tax regime.

(f) Deduction under section 80C, 80 CCD (1B), 80D, 80E etc.: 

The 80C investments and savings will not provide any deduction however these investments are still lucrative keeping in mind the state of economy and the returns from the banking and post office instruments. Further, the medical insurance premium paid and claimed under section 80D will also not be available. However, the contribution by an employer in the account of EPF or NPS up to Rs. 7.5 Lacs in a Financial Year will not be taxable in the hands of employee.

However, deduction under section 80 CCD (1B) can be claimed on 10% of (Basic Pay + Dearness Allowance) if contributed on behalf of employee in Tier – I account of NPS. If contribution is made more than 10% then it will be taxable in the hands of employee and no deduction will be provided on that part of contribution in Tier-I account of NPS. To know how money grows in NPS account, kindly go through "How Money Grows in NPS"

The section 80CCD (2) will also remain available even if the new tax regime is opted by the employee. It is deduction for employer’s contribution in pension funds including NPS.

The deductions provided in Chapter VIA of the Income Tax Act i.e. like section 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, 80EE, 80EEA, 80EEB, 80G, 80GG, 80GGA, 80GGC, 80IA, 80-IAB, 80-IAC, 80-IB, 80-IBA, etc; will not be available for the individuals opting for new tax regime.

*Copyright © 2020 Dr. Lalit Kumar. All rights reserved.

This article is written by Dr. Lalit Kumar Setia; a renowned author and trainer. The article was published on 1^st September, 2021 and last updated on 4^th September, 2021. The writer can be contacted on lalitkumarsetia@gmail.com

Previous Article

Next Article

Details for e-filing Income Tax Return

Details for e-filing Income Tax Return

The Income Tax Return (ITR) is mandatory to be e-filed by every person whose Gross Total Income is more than his Basic Exemption Limit i.e. Rs. 2,50,000 for Individuals who are not senior citizens, Rs. 3,00,000 for senior citizens, and Rs. 5,00,000 for super senior citizens. The individuals before e-filing the Income Tax Return should prepare details and keep in hand so that no problem appears while filling the desired Income Tax Return Form. What documents should be realized for preparing the details of incomes. Why to provide complete details and how to be assured that every financial earning has been detailed as required by Income Tax Department:

(i) Form 16 from Employers:

The salaried individuals should receive Form 16 from their respective employers as it is a proof of the Tax Deducted at Source by the employer and the details provided in Form 16 should be kept in hand so that the same details are filled in Income Tax Return Form under the head ‘Salaries’.

(ii) Form 16A from Deductors other than Employers:

In case, the tax is deducted by others than the employer/s then Form 16A should be realized from them. Generally, banks and post office deduct tax at source on ‘Interest on Deposits’; in such cases, Form 16A should be taken from them and kept in hand while e-filing Income Tax Return.

(iii) Form 16B from the Buyers:

Sometimes, properties are sold during the financial year and buyers deduct Tax Deduction at Source from the amount to be paid by them. In such case, the buyer deposits such TDS to Income Tax Department and generate Form 16B. Therefore, in such cases, Form 16B should be taken from the Buyers (if any).

(iv) Form 16C from Tenants:

In case, an individual is getting rent form the tenants and it is more than Rs. 50000 per month; in such cases, the tenants are directed to deduct Tax Deduction at Source from the payment of rent to the individual (landlord). Then the tenants deposit the TDS in Income Tax Department and realized Form 16C to be provided to the landlord. Such Form 16C should also be realized and kept in hand while e-filing Income Tax Return.

(v) Tax Credit Statement 26AS / Annual Information Statement - AIS from website of Income Tax:

Apart from Form 16, 16A,16B, and 16C from the Deductors, an individual should also download Tax Credit Statement 26AS / Annual Information System - AIS, from the website of Income Tax Department and match the details of deductions at source with the Tax Credit Statement before e-filing Income Tax Return. In case of mis-match, it should be decided which details are accurate and accordingly the return should be filed. In case, there is any mismatch, the individual should ask the deductor to rectify the mistake and e-file rectified TDS statement so that accurate amount be reflected in Tax Credit Statement / Annual Information Statement. In case, the mismatch is not corrected, then the individual will receive a notice from the Income Tax Department for clarification of mismatch.

(vi) Statement of interest on Deposits:

The amount of interest earned on deposits in Post Office, Banks, and other Financial Institutions should be prepared from the Statement of Interest taken from them.

(vii) Collection of proofs to claim Deductions:

There are a lot of deductions available to be claimed under section 80C to 80U for the individuals and there are a lot of exemption available under section 10 which may be taken into consideration while quantifying the taxable portion of incomes earned during the financial year. An individual should keep all the records relating to claimed exemptions, deductions in separate file as the proofs may be asked by the Income Tax Officers at any time in future.

Generally, tax savings are claimed for investments under section 80C, 80CCC, 80CCD (1) limited upto an amount of Rs. 1,50,000 and additional benefit for NPS investment of Rs. 50000 in 80CCD(1B); and for expenditures under other sections i.e. 80D to 80U. In 80D, the proof of receipt for payment of Health Insurance Premium for self, spouse and/or children and in 80E, proof for payment of interest on education loan should be maintained. 

How to claim 80G deduction for contribution in Haryana Chief Minister Relief Fund:

For deduction in 80G, the details of organization come under 80G with name, PAN number, location etc; should be prepared and kept in hand.

(viii) Home Loan Statement with Interest Charged:

In case of home loan taken from Bank or Non-Banking Financial Companies; the statement of home loan principal amount as well as interest amount charged during the year should be taken. The amount of principal amount is counted in 80C for deduction purposes and ‘interest on home loan’ is claimed under the head ‘income from house properties’ under section 24. The maximum amount for self-occupied property for interest is Rs. 2,00,000.

(ix) Income on sale of Capital Asset:

The individuals who sold any capital asset during the financial year, should compute income or loss on the sale of Capital Asset. The details of buyer with PAN number should also be available at the time of e-filing Income Tax Return. In case of sale of mutual funds, equity shares, such details can be taken from the broker.

(x) Details of Bank Accounts:

Before e-filing Income Tax Return, an individual should prepare the list of active bank accounts and it is also required to pre-validate the bank accounts so that the refund (if any) can easily come in the pre-validated bank account. For pre-validation, it is necessary to link the bank account with PAN which is usually linked. For each bank account, the details i.e. Bank Name, Account Number, IFSC Code and type of Bank Account should be ready.

(xi) Aadhaar Details:

An individual should keep the Aadhaar details ready while e-filing Income Tax Return. It is mandatory now to quote Aadhaar number in Income Tax Return; even for e-verification, a message come on Aadhaar linked mobile number for verification of the Income Tax Return at the end of e-filing Income Tax Return.

New portal for e-filing Income Tax Return:

The old portal of incometaxindiaefiling.gov.in has been replaced with new portal incometax.gov.in from FY 2020-21. The ITR forms have also been changed. The process is also changed. What are the major changes, let’s understand in simple words. Firstly, JSON utility is introduced for offline filing of Income Tax Return (ITR) for the convenience of the taxpayers. Secondly, the old return preparation software is replaced with more interactive return preparation software in new online tax payment system, integrated for immediate processing of ITR.

What happens if a taxpayer withdraws amount exceeding a specified limit:

From FY 2020-21, as per the Budget 2020 speech, a new section was introduced i.e. 194N. The taxpayers who have not filed ITR for last three years and withdraw cash in excess of Rs. 20 Lacs, have to pay 2% TDS. For normal taxpayers the limit is Rs. 1 Crore from FY 2019-20, from one bank / post office account. In case, the amount is withdrawn above the limit, 2% TDS is deducted.

Such persons under Income Tax Act, will not be eligible to file ITR-1 and such TDS will also not be carried forward to next year if it is not claimed as refund during the current year.

Tax on Dividend Income in the hands of Recipient:

The Dividend Distribution Tax (DDT) has been abolished from FY 2020-21. If a taxpayer received Dividend from company, it will be taxable in the hands of taxpayers.

Tax Deducted at Source for the payments to Resident Contractors and Professionals:

The contractors with turnover / receipts exceeding Rs. 1 crore and the professionals with turnover / receipts exceeding Rs. 50 Lacs require to get their books audited. The deductors for the taxpayers with audited books, are required to deduct TDS under section 194C and 194J respectively.

In case, the TDS is not deducted u/s 194C and 194J then the TDS at the rate of 5% will be deducted u/s 194M.

In case TDS is deducted u/s 194M, the deductors have to issue Form 16D to the payees / deductees within 15 days of the due date of furnishing the challan-cum-statement in Form 26QD.

Conclusion:

It is mandatory to file the return on time with correct particulars. Suppose a person is working in an organisation and his source of income is Salary. Similarly a person is working in private sector as a professional. The major source of income will be Salary in first case and Business or profession in second case. For Salaried persons, TDS is deducted by employers and on the basis of TDS a certificate is issued known as Form 16. For other source of income, the Deductors other than employers, issue a certificate known as Form 16A. After getting such certificates, download the 26AS or Annual Information Statement from login of income tax. How much money was received from the employers, how much TDS deducted, and how much taxes already paid either by person or on behalf of person, each information is gathered and written on plain paper. All these things are filled in the return.  Keep in mind that the information usually provided by a person in ITR should match with Form-16 / Form 16A. Otherwise the notice comes from the income tax department. 

Last updated - July 29, 2021

*Copyright © 2019 Dr. Lalit Kumar. All rights reserved.

Previous Article

Next Article

Duties of DDOs in Taxation Matters

Duties of DDOs in Taxation Matters  

 Introduction:

In the Financial Year 2020-21, the new regime of income tax rates be available as an option to the taxpayers. Why Government brought this new regime as an option? After analysing the data it was found that during last two decades due to a great number of deductions and exemptions available to the taxpayers, instead of 62% rise in the number of individuals filing income tax returns; there was only 22% rise in number of individuals paying income taxes. Rest 40% increased return filers were able to prove 'nil' tax liability.  It's easy to detect the wrong deductions and exemptions claimed by the salaried individuals because their incomes are credited in their bank accounts but in case of self-employed and businessmen, it is very difficult. Therefore, this option is provided to easily curb the wrong practices of non-salaried individuals.

In Government Departments, a Drawing and Disbursing Officer (DDO) is responsible to ensure the compliance of taxation laws and he is expected to not only submit the tax returns but also to guide and suggest other officers for taking care of various provisions of taxation. The DDO adopts participatory approach and include Accounts Section to enforce the taxation rules. The Government ensure the compliance of financial rules, taxation rules through DDOs. The workshops are generally organized on taxation issues. There are three types of major duties related with taxation matters:

(i) Income Tax Return (ITR):

Who should file Income Tax Return and How:

The DDOs are expected to guide the Government employees with regard to accurate procedure of filing Income Tax Return. Most of the Government employees are salaried individuals, in case their salaries and other incomes exceed Rs. 2,50,000 (Basic Exemption Limit); it becomes mandatory to file Income Tax Return by 31^st July of the Assessment Year. The Income Tax Return can easily be filed either is physically mode or electronic mode. The individuals with total income less than 5 Lacs can file their return in physical form by downloading the Income Tax Return Form from website of Income Tax Department i.e. incometaxindia.gov.in.

Filing of Income Tax Return:

Go to http://incometaxindia.gov.in/ and open the menu ‘Forms/Downloads’ and click upon ‘Income Tax Returns’. Thereafter, download Income Tax Return-1 and its instructions provided along with it. Even if the total income becomes equal or more than 5 Lacs, an individual should download this form and fill it as a preliminary work before filing Income Tax Return in electronic mode. Thereafter, in case of income less than Rs. 5 Lacs, the form may also be submitted in the Income Tax Department. For individuals with income more than Rs. 5 Lacs, it is required to fill the same details by accessing the website https://www.incometaxindiaefiling.gov.in/

Type of Income Tax Return Forms:

Every DDO should be equipped with the knowledge of various types of Income Tax Return Forms i.e. ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6, and ITR-7.

Income Tax Return Form No. ITR-1:

This form is suitable only for individuals being a resident (other than not ordinarily resident) having total income up to Rs. 50 lacs, having Income from Salaries, one house property, other sources (Interest etc.), and agricultural income up to Rs.5 thousand. The Government employees who have ownership of more than one house property or who have ownership of agricultural land with agriculture income more than Rs. 5000 should not file Income Tax Return Form No. 1. They should file Income Tax Return Form No. 2.

Income Tax Return Form No. ITR-2:

The ITR Form No. 2 is for Individuals and HUFs not having income from profits and gains of business or profession. This form is used only if an individual’s sources of incomes are only Salary but also house property or capital gains. In case, the individual is also earning from business or profession, then he should file Income Tax Return Form No. 3.

Income Tax Return Form No. ITR-3:

The ITR Form No. 3 is for individuals and HUFs having income from profits and gains of business or profession.

Income Tax Return Form No. ITR-4:

This form is suitable only for Individuals, HUFs and Firms (other than LLP) being a resident having total income up to Rs.50 lacs and having income from business and profession which is computed under sections 44AD, 44ADA or 44AE

Income Tax Return Form No. ITR-5:

This form is not filed by individuals. It is suitable for persons other than, - (i) individual, (ii) HUF, (iii) company and (iv) person filing Form ITR-7.

Income Tax Return Form No. ITR-6:

This form is suitable for Companies other than companies claiming exemption under section 11.

Income Tax Return Form No. ITR-7:

This form is suitable only for persons including companies required to furnish return under sections 139(4A) or 139(4B) or 139(4C) or 139(4D) only.

(ii) Tax Deduction at Source:

A Drawing and Disbursing Officer is also ‘Tax Deductor’ on behalf of Income Tax Department and he is also required to take Tax Deductor’s Account Number (TAN) from the Income Tax Department. Thereafter, he should register on https://tdscpc.gov.in/ with the TAN Number by clicking upon ‘Register as a new user’.

As per the provisions of Income Tax Act, 1961, the DDOs are responsible for tax deduction at source on specified types of payments made by the Government offices. The tax deducted at source should not be less than its requirement and it should be deposited in the Income Tax Department through using appropriate form and thereafter the details of the same should be submitted within the prescribed time. Apart from DDOs, the electronic TDS (e-TDS) return is also required to be filed by Companies, Persons required to get their accounts audited u/s 44AB of the Income Tax Act, 1961; and the deductors reporting more than 20 deductee records for any quarter of the financial year. The Government of India prepared and operate an integrated platform for providing various services to deductors known as TRACES (TDS Reconciliation Analysis and Correction Enabling System). The DDOs and Deductors can easily view the status of challans and TDS-TCS credit for a PAN on this portal. They can also download Conso File, Form 16 / 16A and Justification Report from this portal.

(iii) Goods and ServicesTax:

Every Drawing and Disbursing Officer should be aware of Section 51 of Goods and Services Tax Act 2017 and get registered as a deductor under the Act. Whenever a payment is made or credited to a supplier of taxable goods or/and services it is required to deduct Tax Deduction at Source on GST.

TDS on GST:

As per section 24(vi) of GST Act, a DDO will register himself by using TAN Number at the portal of GST i.e. www.gst.gov.in, and in case, he enters into a contract for purchase of goods or/and services with total value of taxable supply (excluding GST) more than Rs. 2.5 Lacs; he will deduct TDS on GST @2%. After deducting the TDS on GST, the same will be paid to the Government within 10 days after the end of the month in which deduction was made. Thereafter, he will also submit return in the Form GSTR-7 and furnish system generated TDS certificate in Form GSTR-7A to the deductee within 5 days of crediting payment of TDS to the Government (i.e. date of furnishing GSTR-7).

Penalties may be levied upon DDOs under GST:

In case, a DDO fails to make payment of deducted tax within prescribed time limits, he will have to pay the same along with interest imposed by the GST portal at the time of depositing payment of deducted tax with delay.

In case he failed to furnish Form GSTR-7 within 10 days after the end of the month in which deduction was made; late fees will be payable under section 47(1) i.e. Rs. 100 + Rs. 100 per day (maximum up to Rs. 5000) under each CGST and SGST means upto Rs. 10000.

In case he failed to furnish Form GSTR-7A; late fees will be payable under section 51(4) i.e. Rs. 100 + Rs. 100 per day (maximum up to Rs. 5000) under each CGST and SGST means upto Rs. 10000.

Further, in case, an excess payment of GST is deducted by mistake; a refund may be claimed by the DDO or Deductee as the case may be. However, in case excess tax gets credited to the deductee then the DDOs shall not be granted the refund.

*Copyright © 2019 Dr. Lalit Kumar. All rights reserved.

You might also be interested in the following:

Introduction to Income Tax Matters

Advance Tax and How to Avoid Interest on Advance Tax

Implications on Income Tax on Formation and Dissolution of Hindu Undivided Family

Payment and Status of Income Tax

Income Tax Return

Tax Deduction at Source

Tax Planning to Have More Take-Home Salary

Tax Deduction at Source for Deductors

How to save money from being covered under taxes (Tax Saving Options)?

Tier I and II Accounts of NPS

Tax Saving Under Section 80C

Tax Deduction Under Section 80C

11 Must Claim Exemptions and Deductions

Income Tax Return

Income Tax Return

Income Tax Return (ITR) is submitted annually, every year up to 31^st July. There are prescribed forms to file the income tax return available on the web portal of the income tax department. In order to carry forward losses or to claim a refund of excess deducted TDS; it is must submit the income tax return within the desired stipulated time i.e. up to 31^st July in the case of the individual.

A Course on e-filing Income Tax Returns (ITR) for Salaried Persons is organized in online mode for specific training for accurately e-filing Income Tax Return specifically ITR-1.

Forms to submit Income Tax Return (ITR):

The most popular ITR form is SAHAJ which is also known as ITR-1; it is used by individuals having income from salary, house property, and other sources. The ITR-2 form is submitted by individuals or HUF with income from sources except for Business or Profession. The ITR-3 form is submitted by individuals or HUF with income from Business or Profession. The ITR-4 form is known as SUGAM and it is used by individuals or HUF or Firm with presumptive income from business or profession. The ITR-5 form is submitted by firms or companies or other organizations except those who claim an exemption under section 11 or who file returns under section 139 (4A… to … 4F). The organizations who require to claim an exemption under section 11, use the ITR-6 form and the organizations who file returns under section 139 (4A… to … 4F) use ITR-7 to submit their return.

During the submission of returns (ITR-1 to ITR-7); there is no need to attach any document or paper with the return. The documentary proof or evidence of the figures stated in the submitted ITR are required to be maintained by the assessee and the same can be demanded at any time by the income tax department. It is required to maintain such evidence for at least six years, in case any legal proceeding is initiated by Income Tax Department during this period; then maintain it till such legal proceeding is not closed.

In case of any query relating to filing of ITR, there is a toll-free number of the income tax department i.e. 18001801961.

Penalty in case of non-filing of Income Tax Return:

In case, the income of an assessee is taxable and the ITR is not filed within the stipulated time frame then the penalty is imposed by the income tax department. In case of individuals, the due date of submitting ITR is 31^st July and in case, it is not submitted then the following late filing fees is applicable under section 234F:

(i)  Rs. 1000 (One Thousand) for individuals having income less than Rs. 5 lac

(ii)  Rs. 5000 (Five Thousand) or Rs. 10000 (Ten Thousand) for returns submitted up to 31^st December or after 31^st December of the Assessment year respectively.

What to do if inaccurate information is submitted in ITR:

In case of any mistake or omission, an assessee is required to resubmit the ITR known as the revised ITR before the end of the Assessment Year. It can be submitted by both means i.e. on paper or online as per the mode of the original ITR submitted earlier.

What happened if someone files ITR after the stipulated time frame:

There are a number of losses to an assessee if the ITR is not submitted on or before the due date. The ITR submitted after the due date is known as a belated return and in such case, the following things affect negatively:

1.   The Assessee is required to pay interest on the due amount of income tax under section 234A.

2.   The losses which can be carried forward usually, cannot be forwarded if ITR is not submitted on or before the due date except for the loss from House Property.

3.   Late fees on default is charged under section 234F amounting to Rs. 1000 or Rs. 5000 or Rs. 10000.

4.   Exemptions under sections 10A and 10B cannot be claimed.

5.   A few deductions are also not be claimed like 80-IA to IE.

Keep in touch with the latest updates. It is well said, "Self-education will make us think outside of the box. It transforms us into a new person through reading, observing, and experimenting on our own with a self-crafted syllabus, curriculum, and timetable. When we start self-educating ourselves, our brains will get out of the narrow mindset. And it will start to expand our mindset". 

*Copyright © 2018 Dr. Lalit Kumar. All rights reserved.

You would also like to learn from the following:
1. Corruption and Governance - Tools in the hands of Ruler   

2. Advance Tax and How to Avoid Interest on Advance Tax  

3. Implications on Income Tax on Formation and Dissolution of Hindu Undivided Family  

4. Payment and Status of Income Tax   

5. Income Tax Return   

6. Tax Deduction at Source  

7. Tax Planning to Have More Take-Home Salary   

8. Tax Deduction at Source for Deductors  

9. How to save money from being covered under taxes (Tax Saving Options)?   

10.  Duties of DDOs in Taxation Matters (Income Tax and Goods and Services Tax)