Recent directives by CBDT aim to streamline the return-filing process. A quick look at what employers/employees need to do
As the time for filing personal tax returns approaches, taxpayers will do well to keep in mind a recent Central Board of Direct Taxes (CBDT) circular, which makes it mandatory for employers to generate Part A of Form 16 (salary tax deduction at source) from the TDS Reconciliation Analysis and Correction Enabling System (TRACES) portal.
The Part A of Form 16 includes information about the employer, employee details, quarterly statements and monthly tax challans. Part B will be the annexure containing the computations.
Last year, it was made mandatory for individuals with taxable income above R10 lakh to electronically file returns. This year, the CBDT has widened the scope and salaried individuals with taxable income of R5 lakh during FY13 will have to file e-returns. There is, of course, one respite for salaried taxpayers: They will not have to obtain a digital signature for e-filing their returns. After having filed returns online, a hard copy has to be sent to the central processing unit in Bangalore
CBDT?s recent circular has clarified that all employers will issue Part A of the Form 16 to employees by generating and, subsequently, downloading through TRACES Portal in respect of all salary payments on/ after April 1, 2012. Part A of Form 16 will also have a unique TDS certificate number.
The employer will authenticate Part A of Form 16 and verify it by using either manual or digital signature. Part B, which will be the annexure of Form 16, will be prepared by the employer manually and issued to the employee after authentication and verification. All employers will have to issue Form 16 by May 31 and returns filed by July end.
The circular has also clarified that Part A of Form 16, if issued by the employer, will have to contain the unique identification number, which will be valid for compliance under the Income-Tax Act, 1961.
Analysts say tax authorities are trying to streamline the tracking mechanism. Also, these steps will ensure that quarterly returns filed by the employer are accurate. Tax credit can be availed by the employee only if details of the same are available on TRACES portal.
Filing returns online has the advantage of early refund than the offline mode. While filing returns, an assessee has the option of getting direct credit of refund into his savings bank account. The Centralised Processing Centre (CPC), Bangalore, has ensured efficient and speedy processing of tax refunds for electronically filed returns. The government has taken a lot of initiatives to streamline the refund process.
The first step for filing tax returns is to get all relevant documents, such as Form 16 from the employer, Form 16A from the concerned vendors who have deducted tax, bank statements, details of other sources of income and details of tax paid. Form 26AS (consolidated tax statement) should also be collated to find out the amount of taxes that have been deposited in your name in the government records. Once the required documents are compiled, the total taxable income and tax liability should be computed. After adjusting the advance tax paid, if any, the balance tax liability needs to be deposited as self-assessment tax with interest, if any. Thereafter, the tax return can be prepared and filed with the tax authorities in hard copy or electronically, as applicable.
For individuals whose accounts are required to be audited and working partners of firms, the last date of filing returns is September 31. In this category, it is mandatory to file the returns electronically with digital signatures, failing which one will be liable for penal interest of 1% on the amount of tax due from the last date of filing return.
The income-tax department will impose a penalty of R5,000 if the returns are filed after the end of the assessment year. Also, if the returns are filed after the due date, they can?t be revised. To file e-returns, you have to first download Form 26AS from https://incometaxindiaefiling.gov.in,which will give details of all the tax deducted or collected at source.
The form is divided into three parts: Part A and Part B, which include details of taxes deducted/collected at source (TDS/TCS), along with the details of the date on which payment was made, tax was deducted and deposited in the bank. The last part, Part C, displays details of income tax directly paid by the taxpayer like advance tax or self-assessment tax deposited in the bank by the taxpayer. The form also gives details of high-value transactions made in shares, mutual funds and bonds. Along with the details in Form 26AS, the taxpayer will have to file the applicable return form.
Form AS 26 statement shows that the tax deducted has been deposited to the account of the government and the deductor has accurately filed the TDS/TCS statement, giving details of the tax deducted. In fact, the procedure for registration and, then, to view the form online on the National Securities Depository website is quite simple. The system makes it easier for the income-tax department to process returns and the taxpayer need not wait for a long time to get refunds.
