(1) Losses from owning and maintaining of race horses pertaining to A.Y. 2016-17 ` 2,000. (2) Brought forward loss from trading business ` 5,000 relating to A.Y. 2013-14. Compute the total income of Mr. Aditya and show the items eligible for carry forward 3. The following are the details relating to Mr. Srivatsan, a resident Indian, aged 57, relating to the year ended 31.3.2018: Compute the total income and show the items eligible for carry forward. 4.Mr. Rajat submits the following information for the financial year ending 31st March, 2018. He desires that you should: (a) Compute the total income and (b) Ascertain the number of losses that can be carried forward 6. Ms. Geeta, a resident individual, provides the following details of her income / losses for 51 CU IDOL SELF LEARNING MATERIAL (SLM)
the year ended 31.3.2018: (i) Salary received as a partner from a partnership firm ` 7,50,000. The same was allowed to the firm. (ii) Loss on sale of shares listed in BSE ` 3,00,000. Shares were held for 15 months and STT paid on sale and acquisition. (iii) Long-term capital gain on sale of land ` 5,00,000. (iv) ` 51,000 received in cash from friends in party. (v) ` 55,000, received towards dividend on listed equity shares of domestic companies. (vi) Brought forward business loss of assessment year 2016-17 ` 12,50,000. Compute gross total income of Ms. Geeta for the Assessment Year 2018-19 and ascertain the amount of loss that can be carried forward B. Multiple Choice Questions 52 1. Loss under the head of house property: a. can be carry forwarded for 8 years b. can’t be carried forward c. can be carry forwarded for 4 years d. may be carry forwarded. 2. Speculation loss can be carried forward for the maximum of: a. 8 assessment years b. 4 assessment years c. 10 assessment years d. unlimited number of years 3. Loss from house property can be carried forward and set off in the subsequent 8 Assessment years: CU IDOL SELF LEARNING MATERIAL (SLM)
a. Only if return of loss is filed within due date b. Even if return of loss is filed after due date c. It does not matter whether or not return is filed d. Carry forward of loss from house property is not allowed at all. 4. For Carry Forward of loss under various heads the assessee shall file a return of loss under section 139(3) of Income Tax Act, 1961 within the prescribed time limit except: a. Loss under head Capital gain b. Loss under head Profits and Gains from business or profession c. Loss under head House property d. All of these 5. Loss from a speculation business can be set off from: a. Any head of income. b. Profits and gains from any business. c. Profits and gains from any business other than speculation business. d. Income of speculation business. Answers 1-a, 2-b, 3-b, 4-c, 5-d 2.8 REFERENCES References book Set Off & Carry Forward of Losses - Income Tax Book by Yadnya How to eFile ITR1 for FY2019-20 - Income Tax Filing 91 Q&A on Taxation of House Property Taxmann's Direct Taxes Ready Reckoner-As Amended by Taxation Laws (Amendment) Act 2019 (43rd Edition A.Y. 2019-20 & 2020-21) [Paperback] Dr. Vinod K. Singhania Textbook references Set Off and Carry Forward of Losses Paperback – 1 January 2019 53 CU IDOL SELF LEARNING MATERIAL (SLM)
by Ca Kirit S Sanghvi (Author) Steps to e-file ITR1-FY 2018-19 Debt Funds Taxation - Capital Gain & Dividend Website https://www.incometaxindia.gov.in/Tutorials/21- %20MCQ%20set%20off%20and%20carry%20frwrd.pdf\\ https://cleartax.in/s/set-off-carry-forward-losses https://taxguru.in/income-tax/set-off-carry-losses.html 54 CU IDOL SELF LEARNING MATERIAL (SLM)
UNIT - 3DEDUCTIONS UNDER SECTION 80 STRUCTURE 3.0 Learning Objectives 3.1 Introduction 3.2 All deductions under section 80 of Income tax act 1961 3.3 Summary 3.4 Keywords 3.5 Learning Activity 3.6 Unit End Questions 3.7 References 3.0LEARNING OBJECTIVES After studying this unit, you will be able to: Describe the purpose of deductions Understand how to make a deduction State the need and importance of deductions under section 80 List the functions of section 80 3.1 INTRODUCTION Investment deductions from taxable income are allowed under Section 80C. Some of your investments provide you with benefits beyond the anticipated profits. Taxes may be avoided as well. Investments under Section 80C are a prime example of this kind of investment. A Hindu Undivided Family and an individual are both eligible for this deduction (HUF). Deductions are accessible in several of the significant investments, including: Contributions to the Public Provident Fund (PPF) Plans for Unit-Linked Investments (ULIPs) 55 CU IDOL SELF LEARNING MATERIAL (SLM)
Securities-Linked Investment Plans (ELSS) Contribution to the Provident Fund made by the employee Savings Bonds of the United States (NSC) payment of a life insurance premium Children's school tuition Principal on a mortgage is repaid Older Americans Savings Program (SCSS) The most you may deduct is $150,000. *The maximum deduction shown above only applies to the specific section. Please be aware that the combined maximum deduction available under Sections 80C, 80CC, and 80CCD(1) is £150,000. In addition, under Section 80CCD, an extra '50,000 may be deducted from taxes for investments made in National Pension Scheme (NPS) accounts (1B) Understanding Section 80C Section 80CCC - Deduction of Pension Fund Contribution Its goal is to lower the income tax owed on the pension plans provided by different governmental and commercial insurers. In order to get a pension (income) from a fund established by an insurer, a person must have paid or deposited money into one of the insurer's annuity plans. You may deduct the premium you paid for the year from your taxable income. 56 CU IDOL SELF LEARNING MATERIAL (SLM)
The most you may deduct is $150,000. *The maximum deduction shown above only applies to the specific section. Also, keep in mind that the total amount that may be deducted under Sections 80C, 80CC, and 80CCD(1) is $150,000. In addition, under Section 80CCD, a tax deduction of an extra '50,000 may be made for investments made in NPS accounts (1B) Section 80CCD - Deduction of payment to pension programme of federal government An person who makes contributions to his or her pension account is eligible for a deduction under Section 80CCD. For salaried persons, the maximum deduction is 10% of the salary; for self-employed individuals, the maximum deduction is 20% of gross total income, or $150,000, whichever is less. An extra deduction of up to $50,000 is offered under Sub-section 1B for individual payments to the NPS. Limit of Deduction: $2,000,000. *The maximum deduction shown above only applies to the specific section. Please be aware that the combined maximum deduction available under Sections 80C, 80CC, and 80CCD(1) is £150,000. In addition, under Section 80CCD, a tax deduction of an extra '50,000 may be made for investments made in NPS accounts (1B) Both of the aforementioned parts are linked to annuity and pension schemes. However, there is a distinction between the two. While Section 80CCC allows the deduction for the sum paid into any insurer's annuity plan, Section 80CCD offers a deduction for the sum paid into the NPS and Atal Pension Yojana pension plans. Section 80D - Deduction of Medical Insurance Premium 57 CU IDOL SELF LEARNING MATERIAL (SLM)
A tax payer may deduct up to $25,000 under section 80D for insurance coverage for themselves, their spouses, and their dependent children. If the insured person is 60 years of age or older, a deduction of up to £30,000 is allowed. A further insurance deduction of up to $25,000 (or $30,000 if the parents are 60 years or older) is permitted for parents (either the father or the mother, or both). Under the aforementioned statutory limit, one may also be eligible for a deduction of up to '5,000 for preventative health examinations. 60,000 is the maximum deduction. Understanding Section 80D Section 80E: Interest paid on loans taken out for higher education is deductible. You may claim a tax deduction under Section 80E if you borrowed money to further your education. It is relevant even if the loan was obtained for the taxpayer's spouse, kids, or a student over whom they have legal custody. For a maximum of 8 years or until the interest is paid, whichever comes first, the deduction is permitted on the loan's interest amount. If the loan is borrowed to pay for international studies, you may still claim the deduction under this. No upper limit on deductions. Eight years were given for the deduction. Section 80GG - Deductions for paying housing rent on taxes When the Home Rent Allowance (HRA) is not given as salary, you may deduct the house rent you paid under Section 80GG. The taxpayer, spouse, or minor child cannot be the owner of a residence at the place of work. Rent should be paid and lived in by the taxpayer. Additionally, the taxpayer should not own any additional self-occupied residential properties. In order to qualify for the deduction under this clause, you must at least: 10% of the total revenue less the amount of rent paid 5,000 monthly 58 CU IDOL SELF LEARNING MATERIAL (SLM)
25% of all revenue 60,000 is the maximum deduction. Interest on savings accounts is deductible under Section 80TTA. A deduction may be made for interest income received from a savings account under Section 80TTA. When calculating it, interest from savings bank accounts should be first included under the heading \"other income.\" If there is less than $10,000 in interest generated, a deduction may be taken. This clause does not permit the claim of interest earned on corporate bonds, fixed deposits, or recurring deposits. 10,000 is the maximum deduction. 3.2 ALL DEDUCTIONS UNDER SECTION 80 OF INCOME TAX ACT 1961 You may take advantage of the many exemptions that the government has provided under the different provisions of the Income Tax Act. But in order to achieve so, you must first comprehend what the Income Tax Act's several parts have to offer. Section 80 of the Income Tax Act of 1961 is one of them. A variety of alternatives, including investments, premium payments, loan repayment, etc., are included under Section 80 deductions. If you use these alternatives to their full potential, you may drastically lower your tax obligation. Article 80C The different expenses and investments that may be deducted under Section 80C for the current fiscal year are listed below: EPF (Employee Provident Fund) investments - The majority of paid workers have access to a retirement benefits programme. Typically, your employer will remove 12% of your base salary plus DA from your pay and deposit that amount into your EPF account. However, this 59 CU IDOL SELF LEARNING MATERIAL (SLM)
rate may sometimes alter. This fund is funded jointly by the company and the workers. A worker must get a monthly base income of at least Rs. 15,000. If the employee does not start working for another employer who is protected by the act during the following two months, they may withdraw this amount two months after leaving their current position. EPF has an interest rate of 8.55%. If you take a withdrawal from this sum after five years of continuous service, the whole amount is tax-free. You may deduct the whole amount taken out of an employee's paycheck each year when determining your overall taxable income. Public Provident Fund (PPF): PPF is a government-sponsored programme, and investments you make there are tax-deductible under section 80C. Anyone who lives in India and is employed or unemployed may register a PPF account. This kind of account cannot be opened by a Hindu Undivided Family. The minimum and maximum PPF contributions each year are Rs 500 and Rs 1.5 lakh, respectively. Currently, this account's interest is not taxable and is compounded annually. The interest rate at the moment is 8% annually. PPFs have a 15-year maturity term, but you may increase it by an extra five years. After seven years, you may take partial withdrawals from your account. Although the interest rate is secured and changed every three months, it is not set. Certain mutual fund schemes, such as the equity linked savings scheme (ELSS), were specifically created to save taxes. You may deduct your investments in the Equity Linked Savings Scheme from your taxes under section 80C. Comparing this strategy to other tax-saving investments, bigger returns are possible since it is connected to equity. But this also implies that there are greater hazards associated with it. The amount you may invest in this plan has no maximum limit. The maximum amount of tax advantages you may get is Rs 1.5 lakh. The Equity Linked Savings Scheme has the lowest lock-in term of all the choices available under 80C, at only three years. The long-term capital gains tax is applied to the capital gains you earn from the ELSS. Sukanya Samriddhi Scheme - The Indian government offers the well-known Sukanya Samriddhi Scheme. It strives to improve women's lives in India starting at a very young age. A female child's Sukanya Samriddhi Scheme may be started at any time between her birth date and her tenth birthday. The lowest investment amount in this programme is Rs 1000, while the annual maximum investment amount is Rs 1.5 lakh. When the kid reaches the age of 18, you may take out up to half of the money put early. The Sukanya Samriddhi Scheme's interest rate is now 8.5% and is computed and compounded annually. You may deduct 60 CU IDOL SELF LEARNING MATERIAL (SLM)
interest from your taxes under section 80C. Taxes are not applied to any portion of the Sukanya Samriddhi Scheme's investments, withdrawals, or maturity sum. principal repayment of a mortgage Our home loan repayment EMI is divided into two parts: principle and interest. Under Section 80C, the principle amount qualifies for a tax deduction. Even the interest you pay qualifies under section 80EE and greatly reduces your income tax liability. So, if you have a house loan that you are presently paying down, you may claim the deduction for the principal amount you pay off in a given fiscal year. You do not need to worry about investing in other tax-saving items for the express purpose of tax advantages if you utilize the tax deductions provided by section 80C to their maximum extent in the repayment of your house loan. A tax deduction under section 80C is also available for payments made to development bodies, such as the Delhi Development Authority or others of a comparable kind, for the purchase of a home that has been allotted to you under a plan. National Pension System: This pension programme was established by the Indian government and enables retirees from both the organized and unorganized sectors to receive a pension. The maximum amount that may be claimed for tax deductions under 80C for investments made in this system is Rs 1.5 lakh. Anyone who is an Indian citizen and is between the ages of 18 and 60 may register an account with the National Pension System. After 15 years have passed, this account allows partial withdrawals under certain circumstances. The rates of return range from 12% to 14%, and there is no maximum investment amount allowed. National Savings Certificates - One of the most popular tax-saving tools available to Indian people is the National Savings Certificate. The NSC has a 5-year maturity term, and the interest is compounded every year. However, since the interest is still credited to the account, it is seen as a reinvestment. Reinvestments are eligible for an 80C deduction the following year. 8% is the current interest rate. There is no maximum investment amount; the minimum amount is Rs 100. According to Section 80C, the amount you invest in the NSC is free from taxes up to a maximum of Rs 1.5 lakh per year. Elderly Citizen Savings Scheme: The Senior Citizen Savings Scheme is one of the greatest investing options available to senior persons. Interest is paid every three months, and it offers modest returns in comparison to other choices. Under this programme, those over 60 may make long-term investments and qualify for tax advantages of Rs 1.5 lakh under section 80C. This plan is applicable to those who retired via a voluntary retirement programme as well. 61 CU IDOL SELF LEARNING MATERIAL (SLM)
They must open the account within three months of their retirement and be 55 to 60 years old. 8.7% yearly is the interest rate that is now being provided. Unit-linked Insurance Plans: If you're looking for a plan that combines investing with insurance, choose one of them. While the remainder of your investment in a ULIP is placed in the stock market, a part of it is utilized to provide coverage. A person may acquire a ULIP on behalf of themselves, their spouse, or their kid. Due to their connection to the market, interest rates change. You may anticipate a return on your ULIP investment of 12% to 14%. A ULIP provides significant long-term gains. This plan has no maximum investment level. These elements are the reason why these plans have been so well-liked in recent years. Investments, withdrawals, and the maturity amount are all tax-free. NABARD Rural Bonds are provided by National Bank. The BhavishyaNirman Bonds and the NABARD Rural Bonds are two different kinds of bonds for agriculture and rural development. Under Section 80C of the Income Tax Act, taxpayers may deduct expenses related to the NABARD Rural Bond. It is important to keep in mind, however, that the government determines whether these bonds are accessible for purchase and hence qualified for the section 80C tax advantage. Five-year Post Office Time Deposit Program - The fixed deposits provided by banks and post offices are relatively comparable. These plans might last anywhere from one year to five years. The section 80C tax deductions apply to the interest. Although it is compounded on a quarterly basis, it is paid yearly. Each quarter, the government also changes the interest rate. Your interest income is fully taxed. Tax Saving FDs - Savings on taxes Fixed Deposits are similar to conventional fixed deposits, however the lock-in term is 5 years instead. Under Section 80C, you are eligible for tax savings on investments up to Rs. 1.5 lakh. The range of interest rates is 5% to 7.75%. For this kind of investment, a Rs. 1000 minimum investment is required. Children's Tuition Fees - You may deduct any tuition payments you make, whether they are paid at the time of enrollment or later. It must be an Indian school, college, or university, and the gift amount does not include the development fee you pay. According to Income Tax Act Section 80CCC 62 CU IDOL SELF LEARNING MATERIAL (SLM)
Individuals may deduct taxes from their investments in pension plans provided by public or commercial insurers under Section 80CCC. Payments paid to such a fund are tax deductible, whether a new insurance is purchased or an old one is renewed. It's important to note, however, that the final pension amount you get as well as the interest and bonuses are taxable and cannot be deducted from your income for tax purposes. Section 80CCC allows for a maximum tax deduction of Rs. 1.5 lakhs. Combining this amount with Sections 80C and 80CCD. Who may deduct expenses under Section 80CCC? Individual taxpayers who have paid into an annual pension plan made available by reputable insurance providers. The Section 80CCC deduction is not available to HUFs, or Hindu Undivided Families. Both NRIs and Indian residents are subject to the aforementioned regulations. Facts to keep in mind about Section 80CCC deductions Only after a contribution has been made toward the purchase or renewal of a pension plan is it possible to claim the section 80CCC deduction. According to Section 10 (23AAB) of the Income Tax Act, the pension fund must be paid out of the accumulated funds. Section 80CCC allows for a maximum deduction of Rs. 1,50,000. This is a total sum that also includes Section 80C and Section 80CCD deductions. If the policyholder surrenders the insurance for whatever reason, the full sum received is subject to tax. All interest and incentives from the insurance are taxed. According to Income Tax Act Section 80CCD 63 CU IDOL SELF LEARNING MATERIAL (SLM)
Contributions paid to pension programmes provided by the Central Government are eligible for tax deductions under Section 8CCD of the Income Tax Act of 1961. These are the Atal Pension Yojana and the National Pension Scheme (NPS) (APY). Who is qualified to use Section 80 CCD tax deductions? Both paid and self-employed residents may claim tax deductions under this clause. Under this programme, all Indian citizens, including NRIs, are eligible to receive tax advantages. Section 80CCD does not allow HUFs (Hindu Undivided Families) to obtain tax deductions. NPS is optional for everyone else, while it is required for central government personnel. Individuals must deposit a minimum of Rs. 6000 per year or Rs. 500 per month to qualify for a tax deduction under the NPS tier-1 account. Individuals must contribute a minimum of Rs. 2000 per year or Rs. 250 per month to qualify for a tax deduction under the NPS tier-2 account. In order to clarify the tax deductions that may be claimed under Section 80CCD, subdivisions are included: The individual's contribution to the NPS is covered under Section 80CCD (1). Whether a person works for the government, a private company, or is self-employed, the provisions of this section nonetheless apply to them. NRIs are likewise subject to these restrictions. The maximum deduction allowed by this provision is 10% of the individual's gross income or 10% of their wage. For those who are self-employed, this cap has been raised to 20% starting in FY 2017–2018. 64 CU IDOL SELF LEARNING MATERIAL (SLM)
The employer's contribution to the NPS on behalf of the employee is covered under Section 80CCD (2). In addition to the contributions paid to PPF and EPF, the employer is also making this contribution. Employers may provide an equal or greater contribution than the employee. Employees may deduct up to 10% of their gross income, which includes their basic pay and a dearness allowance, from taxes, or they may match their employer's NPS contribution. Individuals and Hindu Undivided Families (HUFs) may claim tax deductions on long-term infrastructure bonds issued by the government under Section 80 CCF of the Income Tax Act. Up to Rs. 20,000 may be claimed under this clause. Tax deductions are available for investments made in government-issued equity savings schemes under Section 80 CCG of the Income Tax Act. The most you may be reimbursed under this provision is Rs. 25,000. The income tax code's Section 80 D allows you to deduct the cost of your medical insurance premiums up to a maximum of Rs. 25,000 every fiscal year. These insurance plans may be for you, your partner, or your kids. The tax deducted may be recovered up to Rs. 30,000 in cases where one of the insured members is 60 years of age or older. A further tax deduction of up to Rs. 25,000 may be made for parental health insurance. If your parents are at least 60 years old, you may be eligible for up to Rs. 30,000. Section 80D allows for a maximum deduction of Rs. 60,000. You may utilize the subdivisions of Section 80D to seek deductions if they apply to you. These are the subdivisions: If you pay for the treatment of dependents who have a disability, you may deduct up to Rs. 1.5 Lakh from your taxes in situations of severe disability and up to Rs. 75,000 in cases of lesser disabilities, according to Section 80DD. The Income Tax Act contains provisions for deducting costs associated with treating a specific disease under Section 80DDB. This provision allows for a maximum deduction of Rs. 40,000. If a senior person is receiving treatment, a deduction of up to Rs. 60,000 may be requested. 65 CU IDOL SELF LEARNING MATERIAL (SLM)
Interest paid on student loans taken out for higher study is deductible under Section 80E of the Income Tax Code. Therefore, you may claim a tax credit on the interest you've paid towards the repayment of the education loan you took out for yourself, your spouse, or the further education of your children. This deduction is valid for eight years from the day the loan was obtained or, if paid in full sooner, until the interest is paid. You may also deduct any loans you have incurred for international schooling under Section 80E. Deductions for paid house rent are available under Section 80GG of the Income Tax Act. You may deduct paid housing rent if HRA is not included in your income. However, you cannot possess a residence at the place of work if you, your spouse, or your children do. The person seeking the deduction must be the one paying rent and residing in a rental unit. The maximum deduction allowed by this provision is Rs. 60,000. The National Poverty Eradication Fund and contributions to advance social, scientific, or educational research are eligible for tax deductions under Section 80GGA of the Income Tax Act. You may deduct the amount you paid for this donation from your taxes. Indian corporations may deduct their tax payments for contributions they make to political parties or electoral trusts under Section 80GGB of the Income Tax Act. Taxpaying people who make donations or contributions to political parties or electoral funds are eligible for tax deductions under Section 80GGC of the Income Tax Act. Tax deductions are available under Section 80 IA of the Income Tax Act for profits made from different industrial operations such as electricity production, communications, SEZs, industrial parks, etc. You may find further information about the types of tax deductions that can be claimed under this section in a number of subsections of this act. Developers of Special Economic Zones (SEZs) may deduct expenses from profits made from SEZ development under Section 80 IAB of the Income Tax Act. Tax deductions are available under Section 80 IB of the Income Tax Act for earnings made by theatres, cold storage facilities, ships, conference centres, hotels, scientific research & development, etc. 66 CU IDOL SELF LEARNING MATERIAL (SLM)
Residents of certain states are eligible for tax deductions under Section 80 IC of the Income Tax Act. Manipur, Himachal Pradesh, Tripura, Mizoram, Arunachal Pradesh, Nagaland, Uttarakhand, Assam, and Meghalaya are among these states. If a hotel or convention centre is located in a certain area, Section 80 ID of the Income Tax Act allows for tax deductions on such earnings. All people who have projects in India's northeastern states are eligible for tax deductions under Section 80 IE of the Income Tax Act, subject to a number of restrictions. The Income Tax Act's Section 80 JJA permits deductions on earnings from firms that process or treat biodegradable waste to create goods like bio-pesticides, bio-fertilizers, and biogas, among other things. Deductions are available under Section 80 JJAA of the Income Tax Act for profits made from the sale of commodities and items produced in factories. According to this clause, businesses may deduct up to 30% of new full-time employees' salaries for a three-year assessment period. These accounts must be audited by a chartered accountant, who must also produce a report outlining all of the company's profits. According to Section 80 LA of the Income Tax Act, Scheduled Banks with offshore accounts in Special Economic Zones, Entities of International Finance Centres, and banks established abroad are eligible to deduct 100% of their foreign-based income taxes for the first five years and 50% of their foreign-based transactional income taxes for the following five years. Cooperative societies are eligible for tax deductions under Section 80 P of the Income Tax Act. These cooperative societies are eligible for tax deductions if they generate money through cottage industries, fishing, the selling of agricultural produce, the production and sale of milk, etc. It is important to remember that the following tax deductions are available to all cooperative societies: earnings from renting out the society's warehouses income derived from interest on loans made to other organizations 67 CU IDOL SELF LEARNING MATERIAL (SLM)
income from properties or other assets that bear interest Indian writers may claim tax deductions on royalties received from the selling of books under Section 80 QQB of the Income Tax Act. The highest deduction allowed is Rs. 3 lakhs, and only Indian writers are permitted to claim it. Books that are regarded to be works of literature, art, or science are free from taxes, while books that are textbooks, journals, diaries, etc. are not. Indian citizens may claim tax deductions on revenue received from royalties on their patent under Section 80 RRB of the Income Tax Act. They are permitted to deduct up to Rs. 3 Lakhs. If you get a royalty on a patent from another nation, you must bring that money into the country within a certain period of time to be eligible for tax deductions. Individual taxpayers and Hindu Undivided Families (HUFs) may claim deductions of up to Rs. 10,000 annually on the interest received on their investments in domestic savings bank accounts under Section 80 TTA of the Income Tax Act. Individual local taxpayers with disabilities may claim tax deductions of up to Rs. 75,000 annually under Section 80 U of the Income Tax Act. A certificate of Person with Disability (PwD) given by a medical authority will be required as identification for these people. If you have a serious disability, you may be eligible for deductions up to Rs. 1.25 lakhs, however there are a number of restrictions imposed by the government. Section 80 Deductions Summary 68 CU IDOL SELF LEARNING MATERIAL (SLM)
69 CU IDOL SELF LEARNING MATERIAL (SLM)
Conclusion Reducing your taxable income is considerably simpler if you have a thorough grasp of all the tax deductions that are available to taxpayers under the Income Tax Act. Plan ahead and begin investing as soon as possible. With the help of the list above, you may easily determine all the ways in which your money is spent, calculate the amount, and utilize whatever falls under one of the categories listed above to make a deduction claim. 3.3 SUMMARY When HRA is not received, a Section 80GG deduction is possible for rent paid. The taxpayer should not possess a residence near their place of work, nor should their spouse or small kid. The taxpayer should not own any other self-occupied residential property. The taxpayer must pay and live in a rental. Everyone is eligible for the deduction. Only homeowners (individuals) with a single residence on the day the loan was approved are eligible for the deduction under section 80EE. The house loan must be for less than Rs 35 lakh, and the property value must be less than Rs 50 lakh. The financial institution's loan must have been approved between April 1, 2016, and March 31, 2017. Section 80D allows you (as a person or HUF) to deduct Rs. 25,000 for insurance for yourself, your spouse, and your dependent children. If your parents are under 60, you may also deduct an extra Rs 25,000 for their insurance. In the 2018 Budget, this sum was doubled from Rs 30,000 to Rs 50,000 for parents who are older than 60. 3.4 KEYWORDS 70 Asessee- CU IDOL SELF LEARNING MATERIAL (SLM)
Any person whose interest is being talked about is referred as assesseeIn simple words, if you are filing a return of any person, then that person will be called assessee by the Income Tax Department, not you. Employee- a person employed for wages or salary, especially at non-executive level. Income- money received, especially on a regular basis, for work or through investments. Wage- a payment usually of money for labour or services usually according to contract and on an hourly, daily, or piecework basis Tax- A tax is a mandatory fee or financial charge levied by any government on an individual or an organization to collect revenue for public works providing the best facilities and infrastructure. 3.5LEARNING ACTIVITY 1. Define Deduction ___________________________________________________________________________ ___________________________________________________________________________ 2. State the principles of deductions under section 80 ___________________________________________________________________________ ___________________________________________________________________________ 3.6 UNIT END QUESTIONS A. Descriptive Questions Short Questions: 1. What is section 80CCD (2)? 2. What is section 80TTB? 3. Who is eligible for rebate u/s 87a? 4. What is 80GG in income tax? What is rent paid under 80GG ? 5. How to calculate 80GG? How to claim 80GG? 71 CU IDOL SELF LEARNING MATERIAL (SLM)
Long Questions: 1. How to calculate 80GG? How to claim 80GG? 2. Who can claim deduction in 80GG? 3. Can you claim HRA under section 80? 4. What is section 80CCD (1) ? 5. How to calculate deduction u/s 80c? B. Multiple Choice Questions 1. Income tax is treated as: a. Direct expenses b. Indirect expenses c. Business expenses d. Personal expenses 2. When was income tax levied in India for the firsttime? a. 1961 b. 1860 c. 1947 d. 1960 3. Perquisites or benefits or any other remuneration received from other than the employer, would betaxable under the head: a. Income from Salaries. b. Income from House Property. c. Income from Other Sources. d. Income from industries 4. Which of the following income is exempted from tax? 72 a. Agricultural income b. Sum received by a member from HUF CU IDOL SELF LEARNING MATERIAL (SLM)
c. Share of profit of a partner from a firm d. All of these 5. Which of the following is not taxable under the head income from other sources? a. Rent received from letting business building b. Sum received under Keyman insurance policy c. Gift received from unrelated persons d. Gift of shares received by firm or a closely held company Answers 1-d, 2-b, 3-c, 4-d, 5-a 3.7 REFERENCES Reference books Chaturvedi and Pithisaria Income Tax Law Volume Sampath Iyengar’s law of Income Tax The law and practice of Income Tax by Aravind P Datar Direct taxes law practice by Vinod Singhania Textbooks Commercial's Direct Taxes Law & Practice by Dr. Girish Ahuja &Dr. Ravi Gupta – 13th edition IIBF's Micro, Small and Medium Enterprises – Covering all important aspects of MSMEs in India, including setting-up of MSME, MSME policy, regulatory legal & institutional framework, Taxmann's Direct Taxes Ready Reckoner (DTRR) | A.Y. 2022-23 & 2023-24 – Illustrative Commentary on all Provisions of the Income-tax Act for 40+ years with Focused Analysis | 46th Edition Paperback – 27 March 2022 Taxmann's Income Tax Act – Covering Amended, Updated & Annotated text of the Income-tax Act, 1961 [amended by the Finance Act 2022 & Taxation Laws (Amendment) Act 2021] | 67th Edition Website https://cleartax.in/s/80c-80-deductions 73 CU IDOL SELF LEARNING MATERIAL (SLM)
https://www.bankbazaar.com/tax/income-tax-deductions-under-section-80c-to-80u.html https://economictimes.indiatimes.com/all-the-investments-expenditures-you-can-claim- as-tax-break-under-section-80c/tomorrowmakersshow/69425794.cms 74 CU IDOL SELF LEARNING MATERIAL (SLM)
UNIT - 4FILING OF RETURNS STRUCTURE 4.0 Learning Objectives 4.1 Introduction 4.2 Filling of Return u/s 139(1), 139(3), 139(4), 139(5) 4.3 Summary 4.4 Keywords 4.5 Learning Activity 4.6 Unit End Questions 4.7 References 4.0LEARNING OBJECTIVES After studying this unit, you will be able to: define federal and state tax returns explain the process of filing a tax return describe how tax brackets are determined To Equip Students with the specialized knowledge in the field of Taxation System. 4.1 INTRODUCTION The government created India's income tax laws. All individuals, Hindu Undivided Families (HUFs), businesses, LLPs, associations of people, groups of people, municipal governments, and other artificial juridical entities are subject to taxation on their taxable income. These statutes provide that a person's tax burden is determined by his residency. Every person who meets the requirements to be an Indian resident must pay tax on their worldwide income. Taxpayers must adhere to a set of standards each fiscal year when submitting their income tax returns (ITRs). What is a tax return of income? A document known as an income tax return (ITR) is used to submit data about your earnings and taxes to the income tax division. A taxpayer's tax obligation is determined by factoring in 75 CU IDOL SELF LEARNING MATERIAL (SLM)
their income. If the return reveals that too much tax was paid in a given year, the taxpayer will be entitled to an income tax refund from the Income Tax Department. A person or corporation that receives any income during a financial year is required by law to submit a return each year. The revenue may come from a wage, company earnings, rental income from real estate, dividends, capital gains, interest payments, or other sources. Either a person or a firm must submit tax returns by a certain deadline. A penalty must be paid by the taxpayer if the deadline is missed. Is filing an income tax return required? If your income exceeds the basic exemption level, it is required that you submit income tax returns under Indian tax regulations. Taxpayers are given advance notice of the income tax rate. In addition to incurring late filing fines, submitting taxes late will reduce your ability to get a loan or a travel visa. Who has to submit income tax returns? The Income Tax Act states that only people or firms that fall under certain income bands are required to pay income tax. Entities or businesses that must compel fully file their ITRs in India are listed below: Anyone under the age of 59 whose annual income exceeds Rs 2.5 lakh is subject to this tax. The maximum rises to Rs. 3 lakh for senior persons (aged 60 to 79), and to Rs. 5 lakh for super senior citizens (aged 80 and beyond). It is critical to remember that the income amount should be determined prior to taking into account Sections 80C through 80U deductions and additional Section 10 exclusions. regardless of whether they have generated a profit or not during the year, all registered businesses. those who seek to get a refund for any overtaxes deducted or income taxes paid. 76 CU IDOL SELF LEARNING MATERIAL (SLM)
individuals with assets or financial interests in organizations based outside of India. foreign businesses that profit from treaty advantages on transactions conducted in India. NRIs who generate more than Rs. 2.5 lakh in income or accruals within a single fiscal year. Documents needed to complete an ITR Prior to beginning your e-filing procedure, it is crucial to have all the necessary papers close to hand. Passbooks for bank and post office savings accounts and PPF accounts wage slips PAN card and Aadhar Card Form-16, a TDS certificate that your company has given you, contains information on the salary you were paid and any TDS that was, if any, deducted from it. Certificates of Interest from Banks and the Post Office If TDS is applied to payments other than wages, such as interest from permanent deposits or recurring deposits, exceeding the allowed thresholds, Form-16A must be completed. If you have sold a property, the buyer must provide you with Form-16B indicating the TDS deducted from the amount received to you. Form-16C from your renter, requesting information on any TDS deducted from the rent you received. 77 CU IDOL SELF LEARNING MATERIAL (SLM)
Your Consolidated Annual Tax Statement, Form 26AS. It contains all the details on the taxes that were submitted against your PAN. a) The TDS that your employer deducts b) Banks' TDS deductions c) TDS withheld from payments given to you by any other organizations d) Taxes in advance that you have paid g) Your own self-assessment taxes. Investments that save taxes Evidence needed to support deductions under sections 80D to 80U (health insurance premium for self and family, interest on education loan) bank statement for a mortgage Describe Form 26AS. The percentage of tax withheld at source from payments/investments made by individuals, workers, and independent contractors is shown on Form 26As, which is a crucial document. This gives the taxpayers the opportunity to request refunds for any delayed or excess tax payments. To facilitate online income tax return filing and promote adherence to all tax requirements, the new Form26AS, effective for AY2020–21, has been updated. The new Form 26 AS's statements of financial transactions are a key component. As the name suggests, they are declarations in which the taxpayers list any significant financial 78 CU IDOL SELF LEARNING MATERIAL (SLM)
transactions that they performed that might be advantageous to them when completing their taxes. Your Aadhar card information, date of birth, email and home addresses, date of birth, and cellphone number will all be shown in the new format of 26AS. It will state whether there are any ongoing or concluded tax disputes with the tax authorities. How can I connect my Aadhar card to my tax returns? Each and every individual taxpayer must provide their Aadhar number while submitting tax returns. Additionally, he or she must connect their Aadhar number to their PAN (permanent account number) card. If the Aadhar number is not provided, neither physically nor digitally filing a tax return is possible. Seniors may submit their tax forms manually, while those under the age of 80 must do so online. Your income tax return may be connected to your Aadhar number by: The new ITR forms available on the Income Tax website include extra areas where you may type or write the number. The 28-digit enrollment ID may be used in its stead if you have requested an Aadhar number but have not yet received one. If the Aadhar number has already been uploaded online, the ITR forms will automatically include it. ITRs from the past will only be checked once by September 2020. Up until September of this year, the Indian Income Tax administration permitted one-time scrutiny of previously filed returns. Prior to this change, taxpayers had only 120 days from the date of filing to check their returns. The one-time verification provision is only applicable 79 CU IDOL SELF LEARNING MATERIAL (SLM)
to taxpayers who have not confirmed their tax returns from the assessment years 2015–16 to 2020–21 up to September 2020. Every time a return is submitted online, it must be validated by sending the duly signed ITRV slip by mail or electronically to the CPC in Bengaluru. The verification is a statement made by the taxpayer attesting to the truth and accuracy of the information included in the returns he submitted. Tax return verification is essential because if a return is not confirmed, the tax filing procedure is invalidated. As a result, the taxpayer risk fines. What has changed with ITR forms? Relief measures enacted in response to the COVID-19 worldwide epidemic are included in the revised IT return forms. The Central Board of Direct Taxes has announced these new tax return forms. The following characteristics of the forms: Individuals, Hindu undivided families (HUFs), and partnership businesses that have deposited more than Rs 1 crore in a bank, incurred personal travel expenses of more than Rs 2 lakh, or paid a power utility bill of more than Rs 1 lakh are now included in the tax net. Second schedule: The new form includes a separate schedule called Schedule DI that allows tax payers to specify the amount of investments or expenditures for which they are eligible for a tax refund. A previous provision that forbade joint homeowners from submitting tax returns using ITR-1 or ITR-4 has been repealed. Value of electronic filing E-filing, often known as electronic filing, is the method of transmitting tax returns online. The Income Tax Department of India's pre-approved tax preparation software is used for this. 80 CU IDOL SELF LEARNING MATERIAL (SLM)
The advantages of e-filing have increased the popularity of the online tax payment system. The taxpayer is free to submit a tax return from the comfort of their home at any moment throughout a defined time period of the fiscal year. ITR filing is not required for certain people, yet it might still be advantageous for them. Here are several advantages that those who submit their ITR may take advantage of: When requesting a refund: There is a strong chance that tax deducted at source (TDS) was applied to the name of the person who earns an income or makes an investment in India. According to the tax legislation, the taxpayer must submit an ITR if they want to get a refund of the TDS. Document verification is made simple by the use of income tax records, which may be used to create papers that prove your income history when asking for loans. This is because your income is used to determine your eligibility when you apply for loans. In addition to being the most often recognized paperwork when applying for a visa or loan, an ITR document provides a thorough picture of your overall income. Income tax returns are used as evidence of income and to inform your insurance of the amount of compensation that will be due in the event of an accident-related death or disability. It is seen as a verified and official document since it was submitted to a government agency. You have two options for submitting your ITRs: you may do it yourself online, or you can hire an expert. The \"Sahaj\" income tax return form is available for download or online completion on the income tax department's official website. An ITR-V form serving as an acknowledgment will be created after your return has been filed in full. After submitting your taxes, you have 120 days to verify this form. 4.2 FILLING OF RETURN U/S 139(1), 139(3), 139(4), 139(5) Any person who has not yet submitted their income tax returns may also get numerous various types of returns from the IT department as a reminder to do so, in accordance with Section 139 of the Income Tax Act of 1961. 81 CU IDOL SELF LEARNING MATERIAL (SLM)
In the event that a person or a company hasn't submitted tax returns by the deadline, Section 139 of the Income Tax Act of 1961 addresses the many types of returns that may be filed. The following dates are typically the deadlines by which individuals or organizations must submit their income tax returns: The deadline for filing income tax returns is July 31st of each assessment year for those taxpayers who are not obliged to undergo an audit of their books of accounts. These things and people might be considered in this: a paid individual or worker a professional or someone who is self-employed an adviser a self-employed person Every assessment year, on September 30th, all individuals who are obligated to submit income tax returns or who are subject to having their books of accounts audited must do so. These things and people might be considered in this: a business a professional or someone who is self-employed A working partner engaged by a company that must have an audit of its books of accounts completed an adviser 82 CU IDOL SELF LEARNING MATERIAL (SLM)
Section 139 of the Income Tax Act of 1961 Requires the Filing of Various Forms of Income Tax Returns While Section 139 primarily addresses late income tax return filing, it also has sub sections that address other income tax return types that must be submitted when returns are not filed by the deadline. The following are these subsections: Section 139(1) - Voluntary and Mandatory Returns: The Income Tax Act's Section 139(1) addresses both Mandatory Returns and Voluntary Returns, the two forms of late income tax returns. Required Returns: The following people or organizations must submit a Mandatory Return: Any business, whether it is public, private, international, or domestic Any organization, which includes Unlimited Liability Partnerships (ULP) and Limited Liability Partnerships (LLP) Any individual as long as the total of their taxable income for the relevant fiscal year exceeds the allowable exemption ceiling. Returns of Free Will: If a person or organization files income tax returns and a situation arises where the person or organization is not required to submit a Mandatory Return, the income tax returns that the person or organization filed will be considered a Voluntary Return. Voluntary Returns are also regarded as legitimate returns. Return of Loss, Section 139(3) 83 CU IDOL SELF LEARNING MATERIAL (SLM)
The following is stated in Income Tax Act Section 139(3): Any assessee or business that has acquired or earned income that comes under the headings \"Profits and Gains of Business or Profession\" or \"Capital Gains\" is obligated to submit income tax returns of such income at any time before the expiry of the due period as specified in Section 139. (1) The right to carry over any losses incurred to later years shall be forfeited if the assessee or the organization in issue fails to submit income tax returns before the expiry of the due period specified under Section 139(1). However, the assessee's or the entity's ability to offset these losses will still be unaffected by the late filing of income tax returns. Losses incurred under any of the following categories won't be impacted by late income tax return filing: losses suffered by homeowners or other residential property Unabsorbed losses or expenditures, as described in Section 32 (2) Section 139(4) - Late or Belated Income Return According to Section 139(4) of the Income Tax Act, In the event that an assessee or organization is unable to submit income tax returns by the deadline specified in Section 139(1), then Regardless of which occurs first, the assessee or the company may still submit late or belated income tax returns within a year after the conclusion of the relevant assessment year or prior to the completion or conclusion of the assessment as per Section 144. Section 271F of the Income Tax Act of 1961 imposes a penalty of Rs 5,000 on assessees or corporations that file income tax returns late or belatedly. However, even if income tax 84 CU IDOL SELF LEARNING MATERIAL (SLM)
returns were submitted after the year of assessment had ended, no penalties shall be assessed on those that were not mandated to be filed in accordance with Section 139(1)'s requirements. Revised Return under Section 139(5) The following is stated in Income Tax Act Section 139(5): If the original or initial income tax return that was filed by the assessee or entity in accordance with Section 139(1) or Section 142(1)(i) contains a particular or specific \"omission\" or \"wrong or invalid statement,\" the assessee or entity has the right to file a revised income tax return within a period of one year following the expiration of the assessment year of relevance or prior to the completion or conclusion of assessment, depending on which occurs sooner. It is not possible to make changes to a late or overdue tax return. However, any loss return that was submitted by the deadline specified in Section 139(1) is subject to amendment. Dates for Section 139 deadlines Different sub-sections of Section 139 of the Income Tax Act of 1961 address various types of returns submitted by various people, entities, and organizations as well as various situations including late payments and inaccuracies. As a result, this section specifies a few deadlines by which individuals or corporations must submit their income tax reports. The following dates are involved: All tax assessees that do not need an audit done must submit their returns by July 31st, even though this deadline is sometimes extended by up to a month to August 31. The following people and organizations are included in this: a person or worker who receives pay a professional or someone who works for himself 85 CU IDOL SELF LEARNING MATERIAL (SLM)
a consultant or a free-lancer September 30th - All individuals and organizations who must or may be subject to an audit of their financial records must submit their income tax returns by September 30th of each assessment year. The government reserves the right to extend this deadline. These organizations and people may fall within this category: an organization a professional or someone who is self-employed An associate working for a company or a consultant who requests an audit of his accounting records How does Section 139 relate to ITR Form 7? For all persons, institutions, and businesses required to file returns under Sections 139(4a), 139(4b), 139(4c), and 139, the Income Tax Department has issued Form ITR 7. (4d). Taxpayers are advised to verify Form 26AS, the Tax Credit Statement, with the tax statistics such as amounts received, paid, or deducted. The IT Department might get an ITR-7 in one of the following ways: submitting paperwork electronic filing with a digital signature Data transmission through electronic means, followed by submission of the ITR-Verification Vs of Return. Bar-coded returns being provided 86 CU IDOL SELF LEARNING MATERIAL (SLM)
Business trusts that are not required to provide returns for income or loss under any other provision of this section may do so under Section 139(4e). Recent changes to the Income Tax Act's Section 139 Section 139 of the Income Tax Act provides that (I) With effect from the first day of April 2017, the words, figures, and letter \"provisions of section 10A\" in sub-section (1)'s sixth provision must be replaced with the words, brackets, figures, and letter \"provisions of clause (38) of section 10 or section 10A.\" (ii) In sub-section (3), the words, brackets, figures, and letter \"or sub-section (2) of section 73A\" must be included after the phrase \"sub-section (2) of section 73\"; (iii) Beginning on the first day of April 2017, (a) The following sub-section must be substituted for subsection (4), namely:— \"(4) Any person who has not provided a return within the period permitted to him under subsection (1) may provide the return for any preceding year at any time until the end of the relevant assessment year or before the conclusion of the assessment, whichever is sooner.\"; (b) Subsection (5) shall be replaced with the following subsection:— \"(5) Any person may furnish a revised return at any time before the expiration of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier, if he discovers any omission or any wrong statement therein after having furnished a return under subsection (1) or subsection (4).\"; (c) Clause (aa) in sub-section (9), in the Explanation, must be removed. 87 CU IDOL SELF LEARNING MATERIAL (SLM)
Section 139 Income Tax Error Codes For the assessee to get a notice of a faulty return, there are several error codes with lists of defects under Section 139 of the Income Tax Act of 1961. Some of the fault codes listed under Section 139 are below: When the assessee enters a negative sum in the sections for gross profit or net profit, the ITR is deemed to be defective. Error Code 8: Even if the assessee's entire presumptive income under Section 44AD is less than 8% of Gross Turnover or Gross Receipt, it is considered as a Defective Return when they submit ITR-4S. Error Code 31: When the balance sheet and profit and loss account have not been completed, yet the taxpayer has income listed under the heading \"Profits and Gains of Businesses and Profession.\" When tax is identified as due in a submitted income tax return but not paid, the error code 38 is generated. 4.3 SUMMARY Section 139 of the Income Tax Act of 1961 talks about Income Tax Returns that were filed late. This means that the section helps a taxpayer if he or she hasn't filed an ITR in a certain amount of time. There are many parts to Section 139, such as Section 139 (1), Section 139 (3), and more. Let's look at the different parts of Section 139 of the Income Tax Act of 1961 in this article to find out what it means. 88 CU IDOL SELF LEARNING MATERIAL (SLM)
Section 139 of the Income Tax Act tells tax assesses how to file late returns if they didn't file their income tax returns by the deadline. Under Section 139 of the Income Tax Act of 1961, there are different subsections that deal with different types of tax assesses who don't file their ITRs on time. Section 139 (1) talks about filing Income Tax Returns, both when you have to and when you don't have to. Here are the situations where you have to file an ITR. Anyone whose total income is more than the limit for not having to pay income tax must file ITR by the due date. section 139(3) is about how to file your income tax when you lose money. If an individual taxpayer lost money in the last fiscal year, they do not have to file a tax return. Every assessment year, the ITR must be filed by September 30 by all people or businesses that have to go through a tax audit of their books. This date can also be moved back at the government of India's choice. This deadline also applies to a business, a self-employed person or professional, a working partner at a firm, or a consultant who needs to have an audit done. 4.4 KEYWORDS Net taxable income – This is the income chargeable to income tax and is computed after deductions that are allowed under Income Tax Act (i.e. various Section 80s). You pay tax on this amount. Assessee – A ‘person’ who is liable to pay income-tax or any other sum of money under the Income Tax Act. This could be an Individual, Hindu Undivided Family (HUF), Association of Persons (AOP), Body of Individuals (BOI), Companies firms, Limited Liability Partnerships (LLPs), local authority, and any artificial juridical person (AJP) not covered under any of the above categories. Assessment – The process of examining the returns filed by the assessee by the Income Tax Department. Assessment Year (AY) – The period of twelve months commencing on the 1st day of April every year and ending on March 31 and succeeds the respective Financial Year. For example, for FY 2019-20 the AY is 2020-21. An assessee is required to file income tax returns for the respective AYs. Previous Year (PY) – It refers to the financial year immediately preceding the Assessment Year. To put it simply, PY is the same as the Financial Year. 89 CU IDOL SELF LEARNING MATERIAL (SLM)
Income Tax Return – This is the form to report to the Income Tax Department the income earned (under various heads: salary, house property, business & profession, capital gain, and other sources) during the Previous Year or the applicable Assessment Year. To do so, there are various forms (viz. ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6 and ITR 7) depending on the sources of incomes earned, the amount of income earned and type of assessee (viz. Individual, Hindu Undivided Family, Firm, Company, etc.). 4.5LEARNING ACTIVITY 1 Explain filling of return ___________________________________________________________________________ ___________________________________________________________________________ 2 Explain section 139(1) ___________________________________________________________________________ ___________________________________________________________________________ 4.6 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. Which ITR Form to Fill? 2. Where to Invest in Order to Save Tax? 3. How to E-Verify Income Tax Return? 4. Who is Required to Fill Schedule FA (Foreign Assets)? 5. Is There any Compulsion to Disclose all Bank Accounts other than Dormant Account? Long Questions 1. How to Claim Relief u/s 89(1)? 2. How can One Revise Income Tax Return? 3. What Should One Report in Schedule ICDS? 4. Is Aadhar Number Necessary to Link While Filling Income Tax Return? 5. Is it Compulsory to E-File Income Tax Return or One Can File Return in Paper Form? B. Multiple Choice Questions 90 CU IDOL SELF LEARNING MATERIAL (SLM)
1. Choose the form to be filled in for allotment of PAN card by Mr.Jatayu who is a resident Indian citizen of 65 years. a. Form 49A b. Form 49AA c. Form 15G d. Form 15H 2) Choose correct category of assesses with PAN AFZFK7109K a. Proprietorship b. Company c. Individual d. Partnership Firm 3) The provisions of Section 139A shall not apply to the person who is in receipt of only Agricultural Income, if they furnish declaration in a. Form No.61 b. Form No.15H c. Form No.15G d. Form No.60 4) Same PAN cannot be allotted to more than a. 1 person b. 5 persons c. 3 persons d. 2 persons 5) Which of the following transactions are linked with the help of permanent account number? a. Tax payment 91 CU IDOL SELF LEARNING MATERIAL (SLM)
b. Availing TDS credit c. Filling of return d. All of these Answers 1-a, 2-d, 3-a, 4-a, 5-d 4.7 REFERENCES Reference books How to Pay Zero Taxes, 2020-2021: Your Guide to Every Tax Break the IRS Allows Paperback – Illustrated, December 13, 2019 by Jeff Schnepper (Author) Lasser 1001 Deductions 2021 P (J.K. Lasser) 1st Edition by Barbara Weltman Taxes Made Simple: Income Taxes Explained in 100 Pages or Less Paperback – June 19, 2019 by Mike Piper Get What's Yours - Revised & Updated: The Secrets to Maxing Out Your Social Security (The Get What's Yours Series) Hardcover – May 3, 2016 by Laurence J. Kotlikoff Textbooks Saving the Family Cottage: A Guide to Succession Planning for Your Cottage, Cabin, Camp or Vacation Home Fifth Edition by Stuart Hollander Attorney (Author), Rose Hollander (Author), David S. Fry Attorney (Author) 475 Tax Deductions for Businesses and Self-Employed Individuals: An A-to-Z Guide to Hundreds of Tax Write-Offs Paperback – Illustrated, February 1, 2019 by Bernard B. Kamoroff C.P.A. (Author) 8 Ways to Avoid Probate Thirteenth Edition by Mary Randolph J.D. (Author) U.S. Master Tax Guide® (2021) by CCH Tax Law Editors (Author) Website https://www.hdfclife.com/insurance-knowledge-centre/about-life-insurance/what-is- income-tax-return https://www.incometaxindia.gov.in/Pages/tax-services/file-income-tax-return.aspx 92 CU IDOL SELF LEARNING MATERIAL (SLM)
https://www.incometax.gov.in/iec/foportal 93 CU IDOL SELF LEARNING MATERIAL (SLM)
UNIT - 5VERIFICATION OF RETURN STRUCTURE 5.0 Learning Objectives 5.1 Introduction 5.2 Verification of Return u/s 140 5.3 Processing of Return and Intimation u/s 143(1). 5.4 Summary 5.5 Keywords 5.6 Learning Activity 5.7 Unit End Questions 5.8 References 5.0LEARNING OBJECTIVES After studying this unit, you will be able to: To gain provisional and procedural knowledge about Income Tax Law in force for relevant accounting year To provide an Insight in to practical aspects and procedural aspects for filling tax returns for various Assesses. To acquaint themselves about the concept and principles of Auditing, Audit process, Assurance Standards,Tax Audit, and Audit of computerized Systems. To get knowledge about preparation of Audit report. Tounderstand the basic concepts and to acquire knowledge about Computation of Income, Submission of Income Tax Return, Advance Tax, and Tax deducted at Source, Tax Collection Authorities under the Income Tax Act, 1961 5.1 INTRODUCTION Every tax filer must confirm that they are the one who submitted the income tax return (ITR) after submitting it in order to reduce the likelihood of fake ITR filing. The income tax department gets your tax return when you submit an ITR, but does not immediately begin processing it (or checking). After the return has been validated, processing only then begins. This procedure is known as ITR verification. 94 CU IDOL SELF LEARNING MATERIAL (SLM)
A rapid method for e-verifying income tax returns has been created by the Income Tax Department. You are not needed to log in to your income tax site for this new procedure. All you need to do is visit the income tax website's main page, where the E-verify return option is located on the left. All you have to do is input your PAN, acknowledgment number, and pertinent A.Y. after clicking on it. and go on with the e-verification procedure using either the EVC or the Aadhar OTP. ITR (Income Tax Return) e-Verification: 6 Techniques A taxpayer's income tax return is not considered to be legitimate unless the taxpayer certifies it. The majority of tax payers must have filed their returns by the new deadline of August 5, which was extended. However, a taxpayer's income tax return is not considered to be legitimate unless the person certifies it. In the past, taxpayers may either use a digital signature or transmit the completed ITR-V form to the Income Tax Department's Centralized Processing Center in Bengaluru to authenticate the return. However, the Income Tax Department has since substituted e-verification of returns for ITR-V. According to the tax agency, taxpayers who are not required to utilize the digitally signed certificate are eligible for e-verification. (The income tax department delivers the ITR-V to the registered email address once a return is e-filed.) When submitting the ITR form, taxpayers have the option of e-verifying the return. The tax payer may still e-verify the return if it has already been posted by selecting \"e-File >e-Verify Return\" after logging in. There are six ways to electronically check the return. 1) By use of an Electronic Verification Code (EVC) sent to a registered email address and cellphone number. (EVC is a 72-hour-valid 10-digit alphanumeric code that may be produced using the e-Filing site.) 2) Using an OTP for Aadhaar 3) By accessing e-Filing through net banking 4) Through Bank Account Number EVC 95 CU IDOL SELF LEARNING MATERIAL (SLM)
5) Through Demat Account Number 6) Through a bank ATM, EVC Verification is the last stage in the income tax return (ITR) filing procedure since skipping it will result in an incorrect tax return. This must be finished within 120 days of the income tax return filing date. Prior to FY2013–14, the return could only be confirmed by a digital signature or by submitting a speed-post copy of the ITR–V, the electronic filing acknowledgment, that was physically signed, to the Centralized Processing Center in Bangalore. But when technology advanced and the e-filing website's usage became more sophisticated, the option to electronically validate returns became available. 5.2 VERIFICATION OF RETURN U/S 140 The provisions of the Act pertaining to the verification of the return of income and presence of the authorized representative have been amended to allow the return of income can now be verified by any other person specified by the Board in the circumstances of a business and an LLP. According to Section 140 of the Act, a firm's return must be validated by the managing director (MD) of such company. Any director of the firm may verify the return if the MD is unable to do so for any unavoidable cause or if there is no MD. Additionally, it is stated that the return must be checked by the insolvency professional hired by the adjudicating authority (AA) in the case of a firm whose application for an insolvency resolution procedure has been approved under the Insolvency and Bankruptcy Code, 2016 (IBC). Similar to this, in the case of a limited liability partnership (LLP), the return must be validated by the LLP's designated partner or, in the absence of a designated partner, by any partner. In order to allow any other person, as the Board may specify, to check the return of income in the circumstances of a corporation and a limited liability partnership, it is suggested to change clauses (c) and (cd) of section 140 of the Act. In addition, Section 288 of the Act specifies who is qualified to represent an assessee in proceedings under the Act before any Income-tax Authority or the Appellate Tribunal as its \"authorized representative.\" Even though section 288 of the Act does not explicitly mention an insolvency professional acting as an authorized representative of the corporate debtor, it has been reported that this has been creating some practical difficulties. The IBC grants the Administrator or Insolvency Professional the authority to exercise the powers of the Board of Directors or corporate debtor. 96 CU IDOL SELF LEARNING MATERIAL (SLM)
In order to allow any other person to act as an authorized representative, the Board is proposing to change section 288's sub-section (2). These changes will become operative on April 1st, 2020. Persons Authorized to File a Return Under Section 140 of the Income Tax Act: - signatures Theauthorized individual must sign the income tax return. The following signatures are required on the return of income: 1) I by the individual himself (ii) by the individual himself or by any other person properly authorized by him (iii) in the event that the individual is mentally incapable, by his legal guardian or any other person qualified to act on his behalf. (iv) If the individual is unable to sign for any other reason, then any other person legally authorized by him may do so. Important Points: In the cases of (ii) and (iv) above, the person signing the return must be in possession of a valid power of attorney from the relevant party, which must be submitted together with the income tax return. 2) In the case of a partnership ship: I by the managing partner (ii) in the absence of a managing partner or in the event that the managing partner is unable to sign due to unforeseen circumstances, by any partner of a business who is not a minor. 3) In the case of a Limited Liability Partnership (LLP): I By the designated partner thereof, or (ii) In the absence of a designated partner as such, or in the event that the designated partner is unable to sign and verify the return due to any unforeseen circumstance, by any partner thereof. 4) In the case of a HUF: I by the Karta (ii) by any adult family member if the Karta is not present in India or is mentally incompetent. 5) When a company is involved: I by the managing director (ii) By any director of the firm if there is no managing director or if the managing director is unable to sign due to unavoidable circumstances. (iii) By the individual lawfully authorized by the company to sign on his behalf in the case of a business that is not a resident of India. A power of attorney that is connected to the income tax return should be used to provide the authority. (iv) By the liquidator in the event of a company's dissolution. (v) By the business's principal officer in the event of a corporation whose management has been taken over by the federal government or a state government. 97 CU IDOL SELF LEARNING MATERIAL (SLM)
6) If a political party, by the party's chief executive officer 7) By the Local Authority's Principal Officer in the case of a Local Authority. 8) By any member or the Principal Officer thereof in the event of AOP or BOI. 9) For any other person, by them or by someone else who is qualified to act in their place. Important Information: A return without an authorized signature is void-ab-initio, which implies it is invalid and of no value as such. 5.3 PROCESSING OF RETURN AND INTIMATION U/S 143(1). Processing Income Tax Returns The Central Processing Unit (CPC) processes all submitted income tax returns. All initial evaluations are being carried out by CPC in Bangalore. The Income Tax Department's CPC unit processes the ITR by comparing the information supplied in the ITR with the information already on file and sending a notice of intimation in accordance with section 143 (1) to the registered email address. Only once the taxpayer files the return and properly verifies it, the Income Tax Department processes the tax return. To ensure quick processing of the returns, taxpayers are recommended to submit their taxes on time. filing of income tax returns To prevent any late costs or penalties, individuals should submit their income tax forms before the deadline. The submission of the return, whether it is done on time or beyond the deadline, is the sole step in the ITR processing procedure. To ensure rapid processing, it is also advised to submit the returns on time. ITR confirmation Once the return has been correctly confirmed, the department only then begins the income tax processing. 98 CU IDOL SELF LEARNING MATERIAL (SLM)
Within 120 days of the return's filing date, the taxpayer must provide the ITR-V (Acknowledgement), which must be signed in blue ink, to confirm the accuracy of the return. Physical delivery of ITR-V to the Central Processing Center is planned (CPC). CPC will acknowledge receipt of it by sending an email to the taxpayer's registered email address. Since all communication between the taxpayer and the government will happen through that email ID alone, the taxpayer must accurately provide that email address on the return form. Additionally, rather of physically mailing the acknowledgment to the department after filing the return, the taxpayer may e-verify it. You may do that by using any of the following methods: online banking achaar OTP using the department's website to get EVC code putting bank account information on the internet for electronic filing providing DEMAT account information on the webpage for electronic tax filing. processing ITRs according to Section 143 (1) After the ITR has been verified, the department processes the return and, upon completion, provides the notification required by Section 143(1) of the Income Tax Act, 1961. The notification will be sent through email to the registered email address and a text message to the registered mobile phone, respectively. Each e-filed return is processed by CPC, which also produces the u/s 143 notification (1). The department creates an intimation under section 143 by comparing the information supplied in the taxpayer's return with the records kept by the CPC (1). 99 CU IDOL SELF LEARNING MATERIAL (SLM)
The notification also includes a thorough breakdown of the tax computation made by the taxpayers and the income tax division. The whole procedure typically takes between 30 and 45 days from the day of the e-verification or the CPC's receipt of the ITR-V. Post-ITR processing status The ITR intimation must be decoded by the taxpayer. Here are three circumstances that the taxpayer may need to be aware of: Refund determined: If the taxpayer's return is accepted as correct and contains a valid refund claim, the refund is given to the taxpayers. The credit of refund procedure typically takes 20 to 45 days from the date of the income tax returns e-verification. It may take longer, however, if the acknowledgment was delivered physically to the CPC. Demand established: The department sends a demand intimation if any mismatch is discovered on the taxes paid or the credit claimed. The demand must be satisfied within the time frame specified in the section 143 notification (1). No demand, No refund: When the government approves the taxpayer's information and issues a green card, the ITR processing status changes to \"No demand, No refund.\" It denotes that the assessee is not responsible for paying any interest or taxes, either. 5.4 SUMMARY To verify your ITR using the Aadhaar-based one-time password (OTP), your mobile number must be linked to Aadhaar and registered as such in the Unique Identification Authority of India (UIDAI) database and your PAN must be linked with Aadhaar. 100 CU IDOL SELF LEARNING MATERIAL (SLM)
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