The due date to file your income tax return (ITR) for financial year (FY) 2015-16 has been extended to 5 August 2016, from 31 July. However, even if you were smart enough to file your return before the due date, here are a few things you may still need to do.
Revise the return: After filing your tax return, if you discover any mistakes, you can correct them by filing a revised return, under section 139(5) of the Income-tax Act, 1961. But a revised return can only be filed if the original return was filed before the due date, which is 5 August this year.
Under this Act, you can revise this year’s return up to one year after the relevant assessment year (AY), i.e., 2016-17. So, if you file the return for FY 2015-16 on or before 5 August, you can revise it till 31 March 2018, or before the assessment of return by the tax department (about which the department will send you a communication), whichever is earlier. “Therefore, taxpayers should file the revised return immediately once they discover any omission or wrong statement in the originally filed return,” said Kuldip Kumar, partner and leader, personal tax, PwC.
However, if you change the income declared, you could incur additional tax and interest on it. “While revising a return, it is important to keep in mind that any additional tax liability on account of change in income reported or change in tax deducted at source (TDS) credit claimed, would attract an interest liability at 1% per month,” added Kumar.
Do note that a return can be revised any number of times, as long as conditions mentioned earlier are fulfilled. However, “if you filed your original return through the physical mode then you can revise it only by filing a physical form,” said Vaibhav Sankla, director, H&R Block India. Similarly, an e-return can only be revised electronically.
The process, and the forms, for a revised return are similar to those for filing of the original return. However, while filing a revised return “a taxpayer should specify in the ITR form that it is a revised return,” said Neeraj Agarwala, partner, Nangia & Co. Also, “once a return is revised, the original or previous return is deemed to be withdrawn,” he added.
Watch your mailbox: Once you file your return, the tax department assesses your return to check for mistakes before sending it for processing. It does so by matching the data in your ITR with the in-house data. At this point, the department will send you a mail, under section 143(1). It is not necessary to reply to all the intimations. Such communication show you two things: a column showing the return filed by you, and another that shows the return compiled by the tax department. Three scenarios can arise:
1. There’s no difference between your return and the one computed by the department.
2. There is a mismatch and more tax is demanded.
3. You can expect a refund.
In the first scenario, nothing needs to be done. In the second, if you don’t agree with the department, you can file a rectification request. If you agree, just pay the tax demanded. In the third, you can choose how to celebrate.
The department usually flags a discrepancy if it finds any of the following in your ITR:
Respond to the taxman: If you receive an intimation under section 143(1) of the Act, it may indicate a mismatch between your tax return and the department’s computations.
You can file a rectification application under section 154 of the Act, challenging the computation by the Central Processing Centre (CPC). “Rectification application for a tax return can be filed only against an order issued under section 143 (1) (i.e., an intimation of processing your return), or any other order,” said Sankla. If you filed your return online, the rectification request too will be online. For offline returns, file it offline.
“The rectification application can be filed up to four years from the end of the financial year in which the assessment order was passed,” said Sankla.
For an online request, log on to the income tax e-filing portal, click on ‘My Account’ and choose ‘Rectification Request’ from the drop-down menu. Enter the CPC reference number and order date from the intimation letter. Then enter your clarifications to the department’s intimation.
“The tax officer is bound to dispose the rectification application within six months, from the end of the month in which the application was received, either accepting or rejecting the claim of the tax payer,” said Agarwala. If the rectification request is not resolved to your satisfaction, you appeal before the Commissioner of Income Tax (Appeal) as per section 246A(1)(a) of the Act.
Keep the documents safely: The ITR is an attachment-less form, hence you are not required to attach any documents such as proof of investment or TDS certificates (whether filed manually or electronically). But these documents must be retained as they need to be produced before the tax authorities in situations like assessment, inquiry or fulfilment of any orders.
Remember that legal proceedings under the Act can be initiated up to six years prior to the current financial year. Therefore, you must maintain these documents at least for that long. However, in certain cases, proceedings can be initiated even after six years, hence, you should preserve a copy of the tax return and the documents for as long as possible. “Where tax authorities suspect that income has escaped assessment, they can go back to the last six years, and 16 years where non-disclosure relates to overseas income or assets... this is the minimum period for which you must preserve the records,” said Kumar.
Besides income and investment proofs, you should also maintain documents relating to high-value transactions. “You should preserve the records relating to important financial transactions such as new loans or their extension; giving or receiving any gift, particularly jewellery; and purchase of real estate, car, equity and mutual funds,” said Kumar.
Also, if details of any assets and liabilities are disclosed in the return, related documents need to be maintained. “With an assets and liabilities schedule being introduced this year for high net-worth individuals, it is even more relevant to meticulously maintain records of assets disclosed in the return,” said Kumar. “If a tax return is selected for audit, these will help,” he added.
However, in certain cases, the authorities can ask for documents pertaining to any of the previous years. “Recently, the Central Board of Direct Taxes (CBDT) issued a set of FAQs on the Income Declaration Scheme, 2016, wherein... any undisclosed income or asset can be questioned by the authorities even if these are beyond six years. In other words, if tax authorities ask any questions about financial transaction, you may still need supporting documentation to explain those transactions,” said Kumar.
Track your refunds: With online filing of returns, the refund process has improved. Where it used to take months, in some cases even years, now most people can get it within two or three months. If there is delay, you can check its status either on the tax department’s website or at the National Securities Depository Ltd. (NSDL) site. If your refund is denied, these websites also give you the reason. For instance, if you mentioned a wrong bank account number, you will not get the refund. If the refund was allowed and has not reached, you can raise a request for it to be re-issued online. You can track your refund and file the reissue request from your e-filing account. Click the ‘My Account’ tab to find options for both.
Register your grievances: If you have any grievances against the CPC, you can register them online.
You can also check the status of your complaints and their resolution online. These issues could relate to issues such as difficulties in processing the ITR-V, processing of return, rectification application, refund or any other communication.