CA Hiten Sharma

INCOME TAX RETURN

Applicability: ITR stands for Income Tax Return. As the name suggests, Income Tax is a tax levied by about the total Income earned during a financial year and to inform whether the person has paid required Tax thereon or not to the Department of Income Tax. In case a person pays excess tax then he can claim Income Tax Refund under the IT Act, 1961.

Income Tax is governed by Income Tax Act, 1961. As per the Income Tax Act, every person shall be liable to pay Income Tax at a prescribed Income Tax Rate if his/her total income is more than the prescribed income. Income Tax Rates are prescribed by the Ministry of Finance each year in the Finance Act.

Who is required to file ITR ?

Following persons are required to file Income Tax Return mandatorily if their total taxable income exceeds the prescribed threshold limit in a financial year

Individuals
Hindu Undivided Families (HUFs)
Firms
Limited Liability Partnership
Association of Persons
Body of Individuals
Companies
Local authorities
Any other Juridical Person

** Tax Liability depends upon the residential status of a person. Any person who is a resident of India is required to pay tax on his total global income.

Sources/ Heads of Income - Section 14 of the Income Tax Act, 1961

Income from Salary
Income from House Property
Income from Capital Gain/Loss
Income from Business & Profession
Income from Other Sources

Documents Required for ITR Filing

Form 16 (A/B/C/D)
Latest Bank Statement
Form 26 AS
Bank Account Details
Deduction Certificate (if any)
Login User ID & Password (Income Tax e-filing Portal)
Pan
Aadhar
Interest Certificate (if any)
Latest Financial Statement (In case of Company)
Investment Detail (if any made u/s 80)
Statement of Capital Gain or Loss

ITR Forms	Applicability of forms
ITR-1	A Resident Individual having Income less than Rs 50 Lakh, From : Salary/Pension. One House Property. Other Sources.
ITR-2	Any individual or a Hindu Undivided Family (HUF): All Income from ITR 1, if it is more than Rs 50 Lakh or All Income from ITR 1, having More than one House Property Capital Gains Foreign Income / Holding Foreign Assets Holding Equity Shares of Private Company Holding Directorship in a Company
ITR-3	Any individual or a Hindu Undivided Family (HUF), having Income: All Income of ITR 2 Under the head Business or Profession Maintains Full Books of Accounts
ITR-4	Any individual (Being Resident), Hindu Undivided Family (HUF) or Firm All Income of ITR 1 Income from Business / Profession Computed under Presumptive Taxation Scheme
ITR-5	Firms, LLPs, AOPs / BOIs, Artificial Juridical Person Estate of deceased, Estate of Insolvent, Business Trust and Investment Fund
ITR-6	For Companies Other Than Companies Claiming Exemption Under Section 11 of the Income Tax Act, 1961.
ITR-7	Persons / Companies required to furnish Return Under Section 139(4A) or Section 139(4B) or Section 139(4C) or Section 139(4D) or Section 139(4E) or Section 139(4F)

Implications of not filing ITR

Every person who is legally required to file ITR and if he/she fails to file ITR shall be liable to pay penalties prescribed under the law for the time being in force.
Fee under section 234F of the IT Act For default in furnishing Return of Income

1000/5000 - If Return is furnished on or before 31st December of the Assessment Year.

Benefits of Filing ITR

Nation Building
Avoid Penalties
Deductions
Easy to get Loan Approval
Acts as Income proof & Address Proof
Fast and Smooth VISA Processing
Count Losses in subsequent year
Investments
Become a Law Abiding Citizen

Income Tax Slab

TAX SLAB RATES AS PER SECTION 115BAC OF INCOME TAX ACT, 1961.
Income Tax Slab Rates for Financial Year 2020-2021 (Annual Year 2021-2022).
Finance Act, 2020 inserted new Section 115BAC (effective from Financial 2021) in the Income Tax Act, 1961. This section deals with the new tax regime. Taxpayers have been given 2 options of Tax Slab. This section is applicable on Individuals and Hindu Undivided Family only. This section gives optional tax slab rates to eligible taxpayers.

Total Annual Income	Tax Rates
Up-to Rs.2.5 Lakh	Nil
Above Rs.2.5 Lakh to Rs. 5 Lakh	5%
Above 5 Lakh to Rs. 7.5 Lakh	10%
Above 7.5 Lakh to Rs.10 Lakh	15%
Above Rs. 10 Lakh to Rs. 12.5 Lakh	20%
Above Rs.12.5 Lakh to Rs. 15 Lakh	25%
Above Rs.15 Lakh	30%

Eligibility Criteria for New Tax Slab Rate

Only the Individuals and Hindu Undivided Family (HUF's) have 2 options of slab rates for financial year. It means either they can opt for existing tax slab rates along with the applicable tax deductions and exemptions or they can choose new tax rates under section 115BAC without any deductions and exemptions.

The declared income of the taxpayer shall not include any business income.
No carry forward of losses from previous assessment year shall be allowed.
Taxpayer shall not be allowed to claim depreciation under section32(iia).
No Exemption or deduction shall be allowed for allowances or perquisites.
The taxable income shall be calculated without any deductions or exemptions specified under -
- Chapter VI-A of the Income Tax Act, 1961 (excluding Section 80CCD or Section 80JJAA)
- Section 24b
- Clause (5) or (13A) or (14) or (17) or (32) of Section 10/10AA/16
- Section 32(1)/ 32AD /33AB / 33BA
- Section 35/35AD/35CCC
- Clause (iia) of Section 57

TAX SLAB RATES AS PER EXISTING TAX REGIME

For Individuals, NRI & HUF

Age Group - below 60 Years

Total Annual Income	Tax Rates
Up-to Rs.2.5 Lakh	Nil
Above Rs.2.5 Lakh to Rs. 5 Lakh	5%
Above Rs. 5 Lakhs to Rs. 10 Lakhs	20%
Above Rs. 10 Lakhs	30%

For Individuals between the age of 60 and 80 years

Total Annual Income	Tax Rates
Up-to 3 Lakhs	Nil
Above Rs. 3 Lakhs to Rs. 5 Lakhs	5%
Above Rs. 5 Lakhs to Rs. 10 Lakhs	20%
Above Rs. 10 Lakhs	30%

For Individuals above the age of 80 years

Total Annual Income	Tax Rates
Up-to 5 Lakhs	Nil
Above Rs. 5 Lakhs to Rs. 10 Lakhs	20%
Above Rs. 10 Lakhs	30%

Income Tax Slab Rates for Domestic Companies

COMPANY TURNOVER	Tax Rates
Up-to Rs.400 Crore	25%
More Than Rs. 400 Crore	30%
Under Section 115BA	25%
Under Section 115BAA	22%
Under Section 115BAB	15%

Income Tax Slab Rates for Foreign Companies

Nature of Income	Tax Rates
Royalty & fee for technical services	50%
Any other Income	40%

Income Tax Slab Rates for Co-operative Societies

Income	Tax Rates
Up-to Rs. 10,000	10%
Above Rs. 10,000 to Rs.20,000	20%
Above Rs. 20,000	30%

Income Tax Penalty

Penalty under section 221(1) of the IT Act - Penalty payable when tax in default

As per Section 140A(3) of the IT Act, if a person fails to pay Self-Assessment Tax or interest or fee either partly or wholly, then the person will be considered as assessee in default in respect of unpaid amount.

As per the provisions of section 221(1) of the IT Act, when an assessee is in default in making payment of tax, he shall, in addition to the amount of the arrears and the amount of interest payable, is liable, to pay such amount of penalty as the Assessing Officer may direct. However, the total amount of penalty should not exceed the amount of tax in arrears.

Penalty under section 271A of the IT Act - Failure to keep, maintain or retain books of account, documents, etc.

An Assessee is required to maintain the Books of Account under section 44AA of the IT Act. If an Assessee fails to maintain Books of Account as per the provisions of Section 44AA, Assessee shall be liable to pay penalty under Section 271A of the IT Act.

Penalty as per Section 271A is Rs. 25,000.

Penalty under section 271AA of the IT Act-Failure to keep and maintain information and document, etc., in respect of certain transactions

Every Person entering in to 'International Transaction or Specified Domestic Transaction' shall have to keep & Maintain such information & documents as prescribed under Section 92D of the Act. Penalty under Section 271AA of the IT Act, is imposed in the following cases of the failures -

If a Person fails to keep & maintain information & documents regarding such Transactions as provided under Section 92D read with income tax penalty Rule 10D.
If a Person fails to Report such transactions which was required to be done.
If a Person maintains or furnishes a false information or documents regarding such transactions.

Penalty will be equal to 2% of the value of each 'International Transaction or Specified Domestic Transaction' entered into.

If the Person fails to furnish information & documents to the Authority, then the person will be liable to pay penalty of Rs. 5,00,000 under Section 271AA(2) of the IT Act.

Penalty under section 271AAC of the IT Act-In respect of certain income under Section 68, 69, 69A, 69B, 69C, 69D of the IT Act

Income from undisclosed Sources

Sr. No.	Section	Description
1	68	Unexplained Cash Credits
2	69	No explanation of Investment
3	69A	Unexplained Money or tax on undisclosed income
4	69B	Partial amount of Investment disclosed in books of Accounts
5	69C	Unexplained expenditure
6	69D	Amount repaid or borrowed on Hundi

As per the provisions of section 271AAC of the IT Act, if any income of assessee determined includes income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D of the IT Act for any previous year. The assessee shall pay by way of penalty @ 10% of tax payable under clause section 115BBE(1)(i) of the IT Act.

Penalty under section 271B of the IT Act-Failure to get accounts audited under Section 44AB of the IT Act

Penalty under section 271B of the IT Act shall be levied as under:

In case of Business- 0.5% of the Turnover or Gross Receipts.
In case of Profession- 0.5% of Gross Receipts. Or Rs. 1,50,000, Whichever is less

Penalty under section 271BA of the IT Act-For Failure to furnish report under section 92E of the IT Act

Every person entering into 'International transaction or specified domestic Transaction' shall have to obtain a report from CA in prescribed as per section 92E. If an Assessee fails to do so, in such case that Assessee shall be liable to pay penalty under Section 271BA. Penalty under Section 271BA for failure of Furnishing report from a Chartered Accountant as per Section 92E is Rs. 1,00,000/-.

Penalty under section 271D of the IT Act-For failure to comply with the provisions of section 269SS

According to Section 269SS of the IT Act, no person shall take or accept loan or deposit or any specified sum more than Rs. 20,000/-by any mode, other than the mode prescribed under the Section. 'Specified Sum' means any amount of money receivable, whether as advance or otherwise, for transfer of immovable property, weather transfer takes place or not.

Breach of the provision under Section 269SS of the IT Act will lead to penalty under Section 271D of the Act.

Penalty shall be levied of an amount equal to loan or deposit accepted or taken.

Penalty under section 271DA of the IT Act-For failure to comply with the provisions of section 269ST

According to Section 269ST of the IT Act no person shall receive an amount of Rs. 2,00,000 or more

Aggregate sum in a day from a person.
Single Transaction
Transactions relating to one event or occasion.

If the provision of Section 269ST of the IT Act contravenes, then penalty on such person who receives a sum will be levied under Section 271DA.

The penalty shall be equal to the amount of receipt of sum.

The above restrictions shall not apply to Banking Company, Post Office savings bank, Co-Operative bank, Government or any person notified by Central Government.
Restriction shall not apply, if a person proves that there were good and sufficient reasons for such contravention.

Penalty under section 271DB of the IT Act-For failure to comply with the provisions of section 269SU

With effect from 1st November 2019, Income Tax Act have inserted a new Section 269SU of the IT Act.

According to this Section, any person engaged in business should accept payment through prescribed Electronic Mode, if the amount of Gross Receipt from such business exceeds Rs. 50 Crore during the relevant previous year.

If the provision of Section 269SU of the IT Act contravenes, then penalty on such person who receives a sum will be levied under Section 271DB.

The penalty shall be Rs. 5000/-for every day during which such failure continues.

Penalty under section 271E of the IT Act-For failure to comply with the provisions of section 269T

According to Section 269T of the IT Act no person shall repay loan or deposits or specified advance more than Rs. 20,000/-by any mode other than the mode as may be prescribed. 'Specified Advance' means any amount of Money in the nature of Advance, in respect to transfer of an Immovable property, whether transfer has taken place or not. If the provision of Section 269T of the IT Act contravenes, then penalty on such person who receives a sum will be levied under Section 271E. The penalty shall be equal to the amount of loan or deposit or 'specified advance' so repaid.

Penalty under section 271FA of the IT Act-For failure to furnish statement of financial transaction or reportable account

As amended by Finance Act, 2020, an Assessee have to furnish statement of Financial Transactions or Reportable Account (earlier the statement was known as Annual Information Return AIR) as required under Section 285BA(1) of the IT Act. Non-furnishing of statement will lead to penalty under Section 271FA of the IT Act. Penalty of Rs. 500 per day of default shall be levied.

Note-As per Section 285BA(5),Tax Authorities issues a notice to the person to file the statement within 30 days from the date of service of such notice. If an Assessee fails to file the statement within the specified period, penalty of Rs. 1,000/- per day shall be levied immediately from the day where such notice for furnishing the statement expires.

Penalty under section 270A of the IT Act - For Misreporting & Under - reporting of Income

As per the provisions of section 270A of the IT Act, the Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or Commissioner may direct any person who has under-reported his income shall be liable to pay a penalty in addition to tax.

Penalty under section 270A of the IT Act, is levied as under:

On Under-reported Income or undisclosed income under income tax act, the Rate of penalty on undisclosed income under Income Tax Act shall be 50% of the Tax Payable.
Cases where Under-reporting of Income results from Misreporting of Income, then the Rate of Penalty shall be 200% of the Tax Payable.

Penalty under section 272A of the IT Act - Penalty for failure to answer questions, sign statements, furnish information, returns or statements, allow inspections, etc.

As per the provisions of Section 272A of the IT Act, Penalty is levied, if an Assessee fails to comply with Notices issued under various sections such as 142(1) or 143(2) or 142(2A) of the IT Act etc.