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FAQ’s

1. What is Assessment year and financial year?
Ans : Financial year starts from 1st April and ends on 31st March (wherein there is income pertaining to the whole year or part of the year). Assessment year is the year immediately following the financial year wherein the income of the F.Y. is assessed.

2. What is Permanent Account Number (PAN)? Is it compulsory to obtain and quote PAN?
Ans : Permanent Account Number is a ten character unique number allotted to a person by the Income tax Department. It is compulsory for the following persons to apply for the allotment of PAN if he has not already been allotted one : 

(i) Every person who has taxable income during any previous year (financial year). 

(ii) Every person carrying on any business or profession whose total sales, turnover or gross receipts are or is likely to exceed Rs.5 lakhs in any previous year. 

It is compulsory to quote PAN in all returns of income and every correspondence with Income-tax authorities and in all challans used for the payment of tax. As per recent notification issued by Director General of Foreign Trade and Central Excise Department, PAN is required to be quoted by all holders of Import/Export Code (IEC) and all Central Excise assessees. PAN is also to be quoted in all documents pertaining to the below mentioned transactions :- 

(a) Sale or purchase of any immovable property valued at Rs.5 lakhs or more; 

(b) sale or purchase of a motor vehicle which requires registration by a Registering Authority other than 2 wheelers; 

(c) a time deposit exceeding Rs.50,000 with a banking company; 

(d) a deposit exceeding Rs.50,000 in any account with Post Office Savings Bank; 

(e) a contract of a value exceeding Rs.10 lakh for sale or purchase of securities; 

(f) opening an account with a banking company; 

(g) making an application for a telephone connection including a cellular telephone connection; 

(h) payment to hotels and restaurants against their bills for an amount exceeding Rs.25,000 at any one time.

(i) Payment in cash for purchase of bank drafts or pay orders or bankers cheques from a banking company to which the Banking Regulation Act, 1949(10 of 1949), applies (including any bank or banking institution referred to in section 51 of the Act) for an amount aggregating fifty thousand rupees or more during any one day. 

(j) Deposit in cash aggregating fifty thousand rupees or more, with a banking company to which the Banking regulation Act, 1949(10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act) during any one day. 

(k) Payment in cash in connection with travel to any foreign country of an amount exceeding twenty five thousand rupees at any one time. 

Explanation - for the purposes of this clause,- 
(a) "payment in cash in connection with travel" includes payment in cash towards fare, or to a travel agent or a tour operator, or for the purchase of foreign currency;
(b) the expression "travel to any foreign country" does not include travel to the neighbouring countries or to such places of pilgrimage as may be specified by the Board under Explanation 3 of sub-section (1) of section 139

3. Tax has already been paid (by way of tax deducted at source or advance tax) on the total income and there is also no interest payable or refund due. In such a case, is it necessary to file a return of income?
Ans :    Yes, every person whose total income during the previous year exceeded the maximum amount which is not chargeable to Income-tax should file his return of income in the prescribed form irrespective of whether any tax or interest is payable or refund is due. On his failure to furnish a return before the end of the relevant assessment year, he shall be liable to pay a penalty of Rs.5000/-.


4. Is it compulsory to file a return of income when there is loss?
Ans :    If a person has sustained a loss in the previous year and wishes to carry forward the loss to the subsequent year he should furnish a return of loss in the prescribed form before the due date.

5. Are the incomes of all members of the family to be clubbed together for charging to Income-tax?
Ans :    No, each member of the family will be charged separately on his or her income. There are, however, certain exceptions as stated in Section 64 of the Income-tax Act. Some of these are mentioned below :- 

(i) The income arising to the spouse of an individual directly or indirectly from assets transferred directly or indirectly to the spouse by such an individual otherwise than for adequate consideration or in connection with an agreement to live apart shall be included in the income of the individual. 

(ii) All incomes of a minor child in excess of Rs.1500 (other than income accruing to him on account of any manual work done by him or from any activity involving application of his skill, talent or specialised knowledge and experience) shall be included in the income of that parent of the minor child whose total income excluding the minor's income is greater.

FAQs ON e-FILING OF INCOME TAX RETURN

 

  • What is e-Filing of Returns?

Filing of Income Tax returns is a legal obligation of every person whose total income for the previous year has exceeded the maximum amount that is not chargeable to income tax under the provisions of the I.T Act, 1961. Income Tax Department has introduced a convenient way to file these returns online using the Internet. The process of electronically filing your Income tax returns through the Internet is known as e-filing of returns.

  • How is e-Filing different from the regular filing of returns?

 

E-filing offers convenience of time and place to tax payers. This facility is available round the clock and returns could be filed from any place in the world. It also eliminates/ reduces interface between assessee and tax officials. The procedure of e- filing is explained on the home page of the website.

 

  • I have forgotten my password. What is to be done to retrieve it?

Click on the forget password link from the login page in ITD e-filing website. In the password reset page, one of the following can be selected by the taxpayers:

  • Enter the answer to the secret question, taxpayer has entered in the registration details. OR
  • Enter the A.Y. and acknowledgement number of any of earlier e-filed return by the taxpayer since A.Y. 2007-08

Enter the new password twice and also the CAPTCHA CODE appearing on the screen. Click on Reset Password to reset the password of your user id.
Further if do not have either, send a email request from registered email-id, which taxpayer has entered in the registration profile, to validate@incometaxindia.gov.in having following details

  1. PAN,
  2. Name of the assessee as appearing in the PAN card,
  3. Date of Birth / Date of incorporation,
  4. Name of the Father as appearing in the PAN card
  5. Address
  6. Mobile number
  7. Registered email id.

The ITD will send its response via email.

 

  •  My Challan of payment of Advance Tax or Self Assessment Tax does not contain correct PAN or Assessment Year. Will the claim be allowed?

No. You are advised to get it corrected by making written request to Branch of Bank from where payment has been made upto 15 days of payment and thereafter to your Assessing Officer. Detailed challan correction mechanism is available at LeftMenu_ChallanCorrectionMechanism_26082011.pdf 

  • How can taxpayer find his Assessing Officer (AO) Code ?

 

 Click on "Know your Jurisdiction" Sub Menu under "Services"menu on the home page of ITD e-filing website.

  • How do I know whether my e-return is being processed at CPC Bangalore or the Assessing Officer.

 

The taxpayer is advised to login to the website using his/her userid and password and select the sub menu option 'CPC Processing Status' under the menu option 'Services' on the homepage of ITD e-filing website to check the status of return for a given assessment year.

  •  Is it mandatory to file return of income after getting PAN?

 

No. The liability to file return of income arises only when you have taxable income.

  • What steps are to be followed when I e-file without using a Digital Signature?

When you e-file without using a Digital Signature, you receive ITR-V as an attachment in the e-mail sent by the Income Tax Department. Since the return you filed was not signed, your filing is still incomplete. To complete the return filing process, follow the below mentioned steps –
• Print and sign ITR-V.
• Do not fold this signed ITR-V. Enclose the same in A-4 size envelope.
•Mail the envelope within 120 days of e-filing to –

       Income Tax Department CPC
       Post Box No.1,
       Electronic City Post Office,
       Bangalore 560100, Karnataka.

•Upon receipt of ITR-V, Income Tax Department will send an e-mail acknowledging the receipt of signed copy of ITR-V. This is your acknowledgement.

•Your filing is now complete..

  • What is an ITR-V?

 

•ITR-V stands for ‘Income Tax Return – Verification’ form.
•This form is received when you e-file without using a digital signature.
•Income Tax Department needs to verify the authenticity of income tax return when filed online without using a digital signature.
•On receipt of ITR-V you have to sign the copy and submit to the Income Tax Department to complete the filing process.

  • Can I submit ITR-V anywhere else in India?

 

No, you cannot. You have to compulsorily mail your ITR-V in a sealed A-4 envelope to the address mentioned above.

  • Is there any time limit for submitting ITR-V to Income Tax Department?

Yes, you should mail your ITR-V within 120 days of e-filing your return.

 

  • What if I do not submit ITR-V within 120 days?

If you miss submitting your ITR-V within 120 days, your e-filing will be considered as null and void. It means that it will be considered that you have not yet filed your return. In such a case you will have to file revised return, get a new ITR-V and submit the same within 120 days.

  • I have not received a copy of ITR-V in my mail id or the ITR-V received in my mail id is not opening, since it is a corrupt file. What should I do?

The assessee is adviced to login to the website using his userid and password and then go to My Account – My Return to get a copy of the ITR-V for the relevant assessment year.

  • What is the password to open ITR-V

The password is a combination of PAN (in lower case) and DOB in ddmmyyyy format for e.g. for PAN : bcmps1106b and dob : 02/10/1980, the password should be entered as bcmps1106b02101980

 

  • What is the Last Date for filing an Income Tax Return?

The Due Date of filing your Income Tax Return for a financial year is 31st July after the end of the financial year. Thus, for financial year ended on 31st March, 2012, the due date of filing Income Tax Return is 31st July, 2012.

  • Does that mean that I cannot file return after the last date mentioned?

 

No, it does not mean so. You can file return after the last date also. However, in such case you will have to pay penal interest @ 1% per month for late filing. In case you have not filed your Income Tax Return for the financial year ended on 31st March, 2012 till 31st July, 2012, still you can file the same till 31st March, 2013. You may be required to pay Interest. Further, in case you have still missed to file your Income Tax Return by 31st March, 2013, you can still file the same till 31st March 2014, beyond which the return will become time barred and you would not be able to file the same. Assessing Officer may require you to pay penalty up to Rs.10,000 for late filing of Income Tax Return.

 

  • If I have paid excess tax, how and when will it be refunded to me?

To claim the excess paid tax, the assessee has to be file returns of income, irrespective of the fact whether the income is taxable or not. The amount of refund will be remitted to the assessee either through cheque or directly to the back account as mentioned in the ITR form after the processing of the return.

  • Whether the address given in the PAN database ( as per ITD e-filing website) is to be quoted or the current address which may be different from the PAN database address, can also be quoted?

 

The assessee has to quote the current address on the return forms. In case, the address on the PAN database is no longer valid, the taxpayer may contact NSDL/UTI for change of address.

  • Can I make rectification or other correspondence with CPC in paper form?

No

  • I am getting error while filing rectification u/s 154, "Input data does not match the records". What should I do ?

Kindly send a mail to efiling@incometaxindia.gov.in with the following details : 
CPC Order No
CPC Order Date
Aggregate Income Tax Liability (As Computed)
Total Tax Credit Allowed (As Computed)

  1. I have filed my e-return by using the utility of wrong Assessment year. Can I correct Assessment Year by revising the return?

Assessment Year is inbuilt in the utility. Once a utility provided by ITD is used, Assessment Year can not be changed. For each Assessment year, right or wrong, a revised return using the valid utility, subject to legal provisions, can be filed for that Assessment year only.

  1. Can an e-return filed with one ITR Form say ITR-1 be revised in any other ITR Form?

Yes. However, the taxpayer should use the form as applicable

  1. My e-return has been processed by CPC raising a demand or with less refund. Whom do I need to approach for rectification?

So long as your processed e-return for relevant Assessment Year is still with CPC, the online rectification application may be made on website. However, in case, your processed e-return has been transferred to your Assessing Officer, then, you need to approach AO with rectification application on paper. For knowing the location of processed e-return (whether with CPC or the AO), the taxpayer is advised to login to the website using his/her userid and password and go to 'Services – CPC Processing Status'. The process status of return can be checked for a given assessment year.

  • I have filed the original return as paper return. Can I file the revised return as e-return?

No

  1. I have filed the original return as e-return. Can I file the revised return in paper-form?

No

  1. How to file a revised return?

If an assessee has filed the original or first return before the due date, then he may revise the original return. In case of revising the original return, the assessee has to choose the option of revise turn in place of original return. On choosing the ‘Revised’ return option, assessee needs to provide the Original efiling acknowledgement number and date of filing the original return. Further, the assessee is required to select the section of return filing as 139(5).

  1. How many times I can file the revised return?

Answer: Legally, a return can be revised any number of times before the expiry of one year from the end of the Assessment Year or before the assessment by the Department is completed; whichever event takes place earlier.

 

SALARY INCOME

33. When arrears of salary pertaining earlier years are received in one year, what is the relief available to the assessee?
Ans :    The arrears of salary are to be taxed in the year of receipt along with the regular salary. However, the employee will be entitled to certain relief under section 89(1) as computed in accordance with Rule 21A.

 

34 . Can the employer take into account the relief admissible under section 89(1) while deducting tax at source from salary?
Ans :    Yes, in respect of Govt. servants or employees in a company, co-operative society, local authority, university, institution, associations or body, the employer may take into account the relief admissible under section 89(1) provided the employee furnishes the particulars in form No.10E to the employer.

 

35. If an employee has also income from other sources apart from salary, can the employer take these into account while deducting tax from salary?
Ans :    Yes, if the employee furnishes the required particulars in form No.12C to the employer. This is subject to the condition that the income under any of the other heads except 'Income from House Property' is not a loss. If the employee has incurred a loss under the head 'Income from House Property', he may furnish details thereof to the employer in form No.12C and the employer may then take into account the said loss while deducting tax from salary.

 

36. Is pension treated as salary ?
Ans :    Yes, pension is also treated as salary and is accordingly entitled to the standard deduction.

 

37. Is family pension also treated as salary?
Ans :    No. As there is no employer-employee relationship between the recipient of the family pension and the payer, family pension is not salary. It is taxed under the head 'Income from Other Sources'. In respect of family pension received from the employer by a person belonging to the family of the employee in the event of the employee's death, a standard deduction of 1/3rd of the family pension or Rs.15,000 whichever is less is allowed as a deduction.

INCOME FROM HOUSE PROPERTY

38. On what basis is income from House Property taxed?
Ans :    The annual value of house properties owned by a person other than those which are occupied by him for the purpose of any business or profession carried on by him is charged to Income-tax as 'Income from House Property'. Annual value of a property is defined as 'the sum for which the property might reasonably be expected to let from year to year'. If the property is in the occupation of the tenant, the taxes levied by any local authority in respect of the property shall, to the extent such taxes are borne by the owner should be deducted in determining the annual value of the property of that previous year in which such taxes are actually paid by the owner.
If the property is let and if the rent received or receivable is in excess of the sum mentioned above, the rent so received or receivable shall be taken to be the annual value.

39. How is the annual value of a self-occupied property computed?
Ans :    The annual value of a house or part of a house shall be taken to be NIL if

(i) it is in the occupation of the owner for the purposes of his own residence and

(ii) it is not actually let during any part of the previous year and no other benefit therefrom is derived by the owner.

Where two or more houses are in the occupation of the owner for the purposes of his own residence, then the annual value shall be taken to be Nil only in respect of any one house of his choice. The annual value of the remaining house/houses will be computed as if the said house/houses were let.

40. What are the deductions admissible while computing income from House Property?
Ans :    The following deductions are to be made from the annual value while computing income from house property :-

(a) 30% of the annual value, in respect of repairs and collection charges;

(b) interest payable on loan taken for acquisition, construction, repair, renewal or re-construction of the property;

In respect of a self-occupied property whose annual value is taken as Nil, no deduction is admissible except deduction for interest payable on loan as mentioned at (b) above, subject to a ceiling of Rs.30,000/- ( if the property is acquired or constructed with capital borrowed on or after 1.4.1999 and if the acquisition or construction is completed before 1.4.2003, the interest allowable as deduction will be Rs.1,50,000/- instead of Rs.30,000/-).

41. If there is a loss under the head 'Income from House Property', can it be adjusted against other income?
Ans :    Yes, any loss under the head 'Income from House Property' can be adjusted against income under any head in the same year.

Q5. Can the loss under the head 'House Property'be carried forward to the subsequent assessment years?
Ans :    Yes, from A.Y.1999-2000 and onwards loss under the head 'House Property' which cannot be wholly set off against income from any other head in the same assessment year can be carried forward and set off against income from House Property for immediately succeeding 8 assessment years.

42. The property is owned by two or more persons and their respective shares are definite. Will the income from such property be assessed in the hands of the association of persons?
Ans :     No, the income from such property will not be assessed in the hands of the association of persons. The share of each person in the income from the property shall be included in his total income.

CAPITAL GAINS


43. What are capital assets?
Ans :    Capital assets mean properties of any kind held by a person whether or not connected with his business or profession. Certain properties are, however, excluded from the definition of capital asset. For details of such properties Section 2(14) of the I.T.Act may please be referred to.

 

44. What are Long Term and Short Term capital assets?
Ans :    Capital assets are classified as Long Term or Short Term with reference to the period of holding of the assets till it is transferred. The classification is made on the following basis :-

Nature of Asset

Short Term Capital Asset

Long Term Capital Asset

(i) Shares in a company or any other security listed in a recognised stock exchange in India or a unit of a Unit Trust of India or a  unit of a mutual fund specified under section 10(23D).

Held for not more than 12 months.

Held for more than 12 months.

(ii) Assets other than assets mentioned in (i) above. 

Held for not more than 36 months.

Held for more than 36 months.

 

45. How is capital gain computed ?
Ans: Subject to certain exceptions, capital gain is computed in the following manner :-

Capital Gain = ( Full value of consideration received or accrued on transfer of capital asset) - ( Cost of acquisition of capital assets + Cost of improvement of capital assets + Expenditure incurred wholly and exclusively in connection with the transfer of capital asset such as stamp duty, registration charges, legal fees, brokerage etc.)

46. How is capital gains on bonus shares to be computed ?
Ans: The cost of bonus shares is to be taken as Nil and the net sale proceeds of the bonus shares is to be treated as the capital gains. The period of holding of the bonus shares will be counted from the date of the allotment of bonus issue.

 

47. How is tax on capital gains to be computed ?
Ans: Short term capital gains are taxed in the same manner as income under other heads. Barring certain exceptions, long term capital gains are taxed at the flat rate of 20%. For full details of computation of tax where the total income includes long term capital gains, Section 112 of the Income-tax Act may please be referred.

 

48. What are the exemptions available in respect of capital gains ?
Ans: Depending upon the nature of the capital asset and the manner of utilisation of the consideration received on transfer, various exemptions are available. For full details, Sections 54, 54B, 54D, 54EA, 54EB,54EC, 54F, 54G and 54H of the Income-tax Act may please be referred. The provision of 54EA and 54EB has been withdrawn with effect from 1.4.2000 and new section 54 EC has been inserted.
Under Section 54EC investments should be made in: National Highways Authority of India & Rural Electrification Corporation Limited.

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