Income-tax officers are now demanding annexures with IT returns
May, 26th 2008
The income-tax department in Mumbai appears to be reversing the finance ministry's efforts to simplify the filing of tax returns. Last year, in an effort to reduce the paperwork, the Central Board of Direct Taxes (CBDT) had dispensed with the need to enclose annexures as proof along with the IT returns.
Now, they're back. A notice put up at the Bandra-Kurla Complex office of the income-tax department says that salaried individuals filing their returns for assessment year 2008-09 (i.e. the last financial year, 2007-08) need to attach annexures. The notice is signed by the commissioner of income-tax, central processing unit (DT-01). The notice also says that annexure-less returns will be accepted for assessment year 2007-08 (for financial year 2006-07) only if the tax deduction at source claimed is below Rs25,000.
It seems tax officials in Thane and Kalyan are also on the same trip. "Officers in the Thane and Kalyan income-tax offices have been asking for attachments, while the Vashi office sometimes requires annexures to be filed," says a chartered accountant who files returns for both individuals and corporates. When DNA visited the Bandra-Kurla office of the tax department, a clerk confirmed that tax returns for the 2008-09 assessment year will be accepted only if the annexures are attached.
The law does not require individuals to attach annexures like Form 16 (given by employers to salaried individuals), rent and dividend receipts, or advance tax challans while filing returns. This change was made last year, when the IT department did away with the Saral form and replaced it with Indian Tax Return (ITR) forms, numbering from 1 to 8. Salaried individuals are largely expected to use either ITR 1 or ITR 2 to file their returns.
The ITR forms don't need annexures because they are much more detailed and longer than the earlier Saral form. While unveiling the new ITR forms last year, finance minister P Chidambaram had said the Saral forms were being replaced because they were "anything but simple". "To be very polite, Saral was a euphemism," he had said. The new ITR forms, on the other hand, were "really simple". The idea of introducing annexure-less forms was to enable e-filing of returns in future.
There has been no change in the law since then. Uttam Agarwal, vice-president of the Institute of Chartered Accountants of India, says: "Last year a circular was issued saying that no annexures need to be attached with the ITR form. No other circular has been issued in this regard."
"No Central Board of Direct Taxes circular or notice has been issued asking for compulsory attachment of annexures.
In fact, the law states otherwise - that one shouldn't submit any attachments with the ITR form. In Ahmedabad, for example, we have been submitting returns without any annexures," adds Jayesh Barot, senior partner at the Ahmedabad-based Talati & Talati Chartered Accountants.
So why have Mumbai's income-tax offices been asking for annexures? "Some officers may not have received the circulars issued last year or they may have misinterpreted the last circular, which asked assesses not to attach documents," surmises Agarwal. "Last year there had been disputes in the case of returns filed by salaried employees. Some of them had not been getting Form 16 from their organisations. In such instances, it became difficult to verify the amounts invested in tax-saving avenues. One could claim an insurance investment of Rs40,000, but only Rs20,000 was actually invested. Because of these disputes some officers may be asking for annexures," says Barot.
But whatever the reason, the taxman's objectives appear to be at variance with the finance ministry's.