Pre-filled returns of revenue might show to be a headache for taxpayers

In her finances speech, the finance minister introduced that pre-filled revenue tax returns, which up to now got here crammed in with particulars of wage, tax funds and tax deducted at supply (TDS), would now come crammed in additionally with particulars of capital good points on listed securities, dividend revenue and curiosity revenue from banks, publish places of work, and so on. To facilitate the pre-filling of such info, guidelines have been notified requiring some entities to furnish sure info to the tax division. What is that this info and what does this suggest for the widespread taxpayer?

All corporations (listed in addition to unlisted) at the moment are required to submit taxpayer-wise particulars of the combination of dividend distributed by the corporate throughout the 12 months. All banks (together with co-operative banks), publish places of work and deposit-accepting registered non-banking monetary corporations are required to report curiosity paid or credited to a taxpayer, the place such curiosity exceeds ₹5,000 for the 12 months. This would come with curiosity on financial savings accounts, recurring deposits, and so on., and the restrict of ₹5,000 applies to the combination curiosity on all such accounts. In case of joint holders, the curiosity is to be reported below the title of the primary holder. In case of minors, it’s to be reported within the title of the guardian.

Depositories must furnish particulars of capital good points on listed securities, taking capital good points on a FIFO (first-in, first-out) foundation, taking price of IPO or off-market transactions at zero, and price and sale value for on-market transactions at day-end charges. Registrars and share switch brokers are required to report particulars of capital good points on mutual funds. All these are required to be reported by 31 May. This implies that until mid-June, your pre-filled returns wouldn’t be obtainable on the tax division’s web site, and it’s possible you’ll not be capable to file your tax return. This info may even be mirrored in Form 26AS in your e-filing account.

These entities are additionally required to offer you a replica of the data filed with the tax division. What occurs if there’s a mistake within the info? In case of capital good points on listed securities, you’re permitted to right the acquisition or sale charges whereas submitting your tax returns. Does this imply that different errors can’t be rectified whereas submitting your returns? While this isn’t clear, you undoubtedly must ask the involved entity to rectify it. You could, subsequently, must cope with a number of entities.

This is certainly going to be an issue for a lot of taxpayers, given the previous expertise in attempting to get errors in TDS returns rectified by such entities, except there may be an environment friendly mechanism in place to make sure that any errors identified by the taxpayer are promptly rectified. If you can not get the errors rectified earlier than the due date, there is no such thing as a provision for extension of the due date for submitting your tax returns on account of such delays attributable to no fault of yours. Therefore, it’s important that taxpayers ought to be capable to right their pre-filled tax returns. How are you able to in any other case maintain taxpayers at fault for giving incorrect info, except the pre-filled info can also be right?

The errors could not solely be on the info suppliers’ finish, but additionally on the tax division’s finish. A consumer who had filed her tax return in February was shocked to obtain an e mail within the final week of March stating that the financial institution curiosity information submitted by her was incorrect. When evaluating the 2, it was seen that the tax division had taken the identical financial institution curiosity twice. On checking with the tax head of the financial institution as to how such a mistake might happen, he clarified that apart from the TDS returns, one high quality day all banks acquired a discover asking them to furnish info of curiosity exceeding ₹5,000 paid to all depositors. Therefore, they’d furnished the identical info twice to the tax division; as soon as within the TDS returns, and as soon as in response to this discover. Apparently, the tax division added each the 2 numbers when evaluating it with the tax return.

Even if you’ll be able to right the data within the tax returns, as a result of mismatch, your case is more likely to be chosen for verification or restricted scrutiny, which is an pointless and avoidable harassment for no fault of yours.

Now, taxpayers won’t solely must compile info for his or her tax returns, however may even must reconcile the pre-filled info with their compiled info, apart from enterprise an analogous train for TDS. In explicit, for capital good points on listed shares, there may be more likely to be a distinction in virtually all of the figures because of day-end charges being adopted and because of the truth that brokerage and different change costs wouldn’t have been factored within the pre-filled info. This will contain rather more effort and time, and as a substitute of creating life simpler for taxpayers as desired, a minimum of within the brief time period, will create extra issues for them.

Gautam Nayak is Partner, CNK & Associates LLP.

Subscribe to Mint Newsletters * Enter a sound e mail * Thank you for subscribing to our e-newsletter.

Never miss a narrative! Stay related and knowledgeable with Mint.
Download
our App Now!!