Changes you must know while filing tax returns this year
July, 17th 2013
The tax filing process for financial year 2012-13 differs from previous years in more ways than one, more so for businesses. Central Board of Direct Taxes (CBDT) has brought in many changes that need to be kept in mind while e-filing tax returns. Some of these are listed below:
Tax Audit Report and Transfer Pricing Report to be e-filed
Businesses having revenue of 1 Crore (Rs. 25 Lacs for professionals) need to get their account books of audited by a practising chartered accountant (CA) under the laws of the Income Tax Act. Also, the details of such Tax Audit Report (Form 3CD) were required to be disclosed in the returns of such businesses along with the details of CA signing such report.
From financial year 2012-13, Income Tax Department has made it mandatory to e-file tax audit reports prior to filing of income tax returns. E-filing of Transfer Pricing Reports under section 92E (Form CEB) has also become mandatory for businesses with respect to entering into international transactions.
Immediate impact of this change would be escalated compliance cost for businesses since this would be an additional requirement. We feel that this change would be good for accounting practice eco-system at large in our country and would create more value to the practice for obvious reasons.
Disclosure of Assets and Liabilities in ITR Form
This is another major change one needs to know while filing tax returns for financial year 2012-2013, the objective of which seems to gather as much information as possible. Law says that every individual and Hindu Undivided Family (HUF) having total income Rs 25 lakhs is required to disclose complete details of assets and liabilities in Schedule AL in the ITR form to be e-filed.
MAT Report (Form 29B) to be E-Filed
A report under section 115JB ( Form 29B) of the Income-tax Act, 1961 is required to be obtained from a practicing chartered accountant for computing book profits of the company in accordance of the law. The Income Tax Department has made it mandatory from financial year 2012-13 (AY 2013-14) to e-file such Form 29B within the stipulated time.
New Method of issuance of Form 16 (Salary Certificate)
The Income Tax Department has introduced new a method to issue Form 16/ Salary Certificate to the employees. This system mandates that Part A of Form 16, which contains total income and tax deduction details for a particular financial year needs to be generated using the TRACES portal and Part B ( personal details of the employee) needs to be prepared by the employers. This method is a step in the right direction, since now there would be lesser chances of discrepancies in the Form 16 vis-Ã -vis Form 16AS (Tax Deduction) details on the portal of IT Department. However, since this is the first year of its implementation, there ought to be some operational issues.
Mind you there is a penalty of Rs. 100 per day prescribed on the company for delayed issuance of Form 16 to the employees. Many companies would have delayed the issuance of Form 16, mainly due to this new system, thus the government may look to be lesser stringent on the penalty front.
Other changes in Online Income Tax Returns for FY 2012-13 (AY 2013-14) • The IT Department has brought in stringent rules for ITR applicability for various assessees, specifying forms for set of income and also assessees. Now, ITR (Sahaj) can not be filed in case of losses from Other Sources exceeding Rs 5000 (winning from horse race, lottery etc), or if there is a double taxation avoidance agreement exemption, also applicability of ITR 4 and ITR4S. • E-filing has become mandatory for assessees having income more than Rs 500,000 in FY 2012-13. It is a step in the right direction, which will bring transparency in the system. • A new section 80TTA has been introduced, wherein interest upto Rs 10,000 is exempt from taxes, if earned from a savings bank account, or co-operative bank/post office. • There is no need for senior citizens to pay advance taxes if they don't have business income.