Income tax returns (ITR) filing: One needs to take stock of all the sources of income and categorise them under the various heads of income. For instance, reconciling salary income to the Form 16 is always the best practice since the details are shared with the income tax department on a quarterly basis and any mismatch may result in a notice.

Income tax returns (ITR) filing: The change in rules on filing belated and revised tax returns in Finance Acts 2016 and 2017 has resulted in some confusion in the minds of individual taxpayers. Here are some pointers which may help answer some of the basic questions being raised, considering that only a few days are left for the March 31, 2018, deadline.

Why file a revised return or a belated return?

Tax returns not filed within the prescribed due date can be filed along with the applicable interest penalty as a belated return. This provides a final opportunity to file the tax returns if the original return was not filed due to any reason.

In case of omission or wrong statement in the original tax return filed within the prescribed due date, a revised return may be filed. It is advisable to review the tax return already filed and make applicable changes or amendments if required within the timelines for revised return.

Things to keep in mind for filing the revised and belated returns

Determining the ITR form– As a first step, the correct income tax return (ITR) form has to be uploaded as per the specific instructions (considering the income, residential status etc.) prescribed in the Income Tax Rules

Actions resulting from demonetisation – Cash deposits of Rs 2 lakh or more made during the demonetisation period, i.e. November 9, 2016, to December 30, 2016, are to be accurately reported in the belated return for FY 2016-17.

Points to remember

Form 26AS should be downloaded in advance and a reconciliation of various income sources, taxes deducted and taxes deposited through advance tax or self-assessment route etc. should be done. A quick re-check of the e-filing login credentials is advisable to avoid last minute hiccups.

One needs to take stock of all the sources of income and categorise them under the various heads of income. For instance, reconciling salary income to the Form 16 is always the best practice since the details are shared with the income tax department on a quarterly basis and any mismatch may result in a notice.

House property income/losses is another area where the provisions related to deemed let-out property, notional rent, co-ownership etc. are frequently overlooked and need to be carefully examined.

The complexity in capital gains arises in the determination of the type of asset (short-term or long-term), the rate of tax, deductions/tax reliefs available subject to conditions etc. Apart from these, any other source of income has to be reported with utmost caution since insignificant amounts and exempt income are commonly disregarded.

Documents to be kept handy

It is worthwhile to note that documents such as Form 16, Form 16A, rental agreement, municipal tax paid receipts, housing loan certificates, purchase deed, sale deed, brokerage receipts, transaction statements for shares, bank statements, proofs for deductions claimed etc. must be kept handy. Each income stream should be backed by relevant documents to substantiate the quantum of income and taxes paid to enable speedy responses to tax authorities, should the need arise.

Recently, the Hon’ble Supreme Court indefinitely extended the deadline for mandatory linking of the Aadhaar, until a verdict is reached. However, it’s important to note that belated tax returns for FY 2016-17 cannot be filed without an Aadhaar, except where an exemption has been provided specifically.

It is observed that individuals assume that tax-deducted-at source by the employer or other deductors is sufficient compliance with tax obligations and equivalent to the filing of tax returns. This is untrue. All individuals whose taxable income exceeds Rs 250,000 (Rs 300,000 for senior citizens) have to mandatorily file the India tax returns.

Special note must be made to the section on disclosure of India assets and liabilities for all individuals if total income exceeds Rs 50 lakh and disclosure of foreign assets for ROR individuals. Reporting inadvertently, one may fall foul of the provisions of the Black Money Act for individuals qualifying as Resident and Ordinarily Resident in India.

Internationally mobile employees – Globally mobile individuals, for instance, employees on international transfers or assignments, are likely to have a tax obligation as per the domestic laws of the home as well as the host country. There is a need to apply the provisions of the Income Tax Act or Double Taxation Avoidance Agreements to avoid dual taxation. Revision of tax return may be required due to tax year difference and unavailability of overseas tax return while filing the original India tax return.

The analysis and computation of the relief or exemption is a critical aspect in this regard and a considerable amount of disclosure is required on the tax return if such reliefs are availed. A thorough examination of the overseas tax return and obtaining supporting documentation e.g. tax residency certificate / Form 67 is the key to claiming the exemption for the reliefs to be allowed by tax authorities.

Considering recent actions undertaken by the tax department, non-compliance and defaults may result in tax notices and investigations. A little bit of caution goes a long way to avoid these.