Taxation
New tax forms ease detailing of foreign travel, bank accounts
After complaints by individual income tax payers over the new forms announced in April, the government on Sunday notified a fresh set -- each of no more than three pages -- and did away with the much-resented details sought on foreign travel and bank accounts.
 
Since the process is still on to recast the software to enable e-filing of the returns, the last date for filing has also been extended to August 31, it was announced by the finance ministry on Sunday.
 
Notably, against the details of foreign travel and the expenditure thereon required from some categories of tax payers, the new forms require only the passport number, including that of the old one, if available or issued.
 
Another clause grudged was over the bank accounts details and the balances, in them for both operational and the dormant ones. Now, only the Indian Financial System Code is required for all accounts. Exemption from this has been extended to accounts dormant for over three years.
 
The finance ministry had acknowledged that the new tax forms had caused much concern.
 
"The government has received representation on the new return forms notified on April 15, 2015 and taking into account the concerns raised, the government has decided to modify the return forms," Finance Minister Arun Jaitley told the Rajya Sabha earlier this month.
 
The Central Board of Direct Taxes (CBDT) had notified the new norms that required an assessee to furnish all bank details, accounts opened or closed in the year with the closing balance, as also the sources of funds for expenses in an overseas travel.
 
The purpose of asking details relating to foreign travel, according to the finance minister was to tackle the menace of black money. He had further sought to justify the forms by saying fresh details were not required in forms filed by the majority of individual taxpayers.
 
The highlights of the new forms are:
 
- Individuals with income without any ceiling, other than agricultural income exceeding Rs.5,000, can now file Form ITR 1 (Sahaj). Similar simplification for individuals and Hindu undivided families (HUFs) in respect of Form ITR 4S (Sugam).
 
- A new Form, ITR 2A, can be filed by individuals or HUFs who does not have capital gains, income from business or profession, or foreign asset and foreign income.
 
- In lieu of foreign travel details, only passport number, if available, would be required to be given in Forms ITR-2 and ITR-2A. Details of trips or expenditure thereon not required.
 
- On bank account details, only the IFS code and the number of current and savings accounts held during previous year will be required. The balance is not required. Details of dormant accounts, not operational for last three years, not required.
 
- A foreigner in India on a business, employment or studies visa, not mandatorily required to report foreign assets acquired during the previous years in which he/she was non-resident -- if no income is derived from such assets during the relevant previous year.
 
- To simplify further, the main pages of Form ITR 2 and new Form ITR 2A, will not contain more than three pages. Other information will be captured in Schedules, required to be filled only if applicable.
 
"As the software for these forms is under preparation, they are likely to be available for e-filing by the third week of June 2015," a statement issued by the finance ministry said.
 
"Accordingly, the time limit for filing these returns is also proposed to be extended up to August 31, 2015 (31.08.2015). A separate notification will be issued in this regard," the statement added.

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Economy & Nation Exclusive
How to reply to a demand notice for tax arrears
Here are some quick tips for taxpayers on how to file an online response to income tax demand notice, they may have received on tax arrears
 
Several people are receiving demand notices from the Income Tax department for tax arrears, despite having paid all their dues on time. Why is this happening?  We learn that this has happened because the Assessing Officers (AOs) are uploading the tax demands on the website of the Income Tax Central Processing Unit (CPU), which automatically sending out notices and causes panic among taxpayers. 
 
The outstanding tax demand in the notice may be inaccurate for various reasons. A common one is non-reporting or delayed reporting of TDS by deductors leading to mismatch between the claim and data available with the I-T department. Other reasons are: non-posting of challans, non-disposal of rectification applications and incorrect details of income or pre-paid taxes reported by taxpayer. Since the demand notice is issued, the taxpayer has no option but to respond to it without fail. 
 
One Moneylife Foundation member has received a tax demand notice for the assessment year (AY) 2008-09 that too when, he had received a refund for the same year. But this is not the first time it has happened. In the past, he had received similar notice in the past, but after noting his response, the assessing officer (AO) accepted the mismatch in tax deducted at source (TDS) and released the refund. 
 
After a hue and cry from taxpayers who have received such notices despite having paid taxes in time, the Central Board of Direct Taxes (CBDT) has brought out detailed guidelines to help taxpayers file their response online. The Circular explains various steps to be taken by the taxpayers to view and submit their response and also spells out various facilities available to taxpayers as well as responsibilities of the assessing officers-AOs to verify and take corrective actions.  
 
A demand up to Rs1 lakh for an Assessment year in case of an individual or Hindu undivided family (HUF), which has already been paid but is shown as outstanding due to mis-match or other errors, can be rectified on the basis of evidence of tax paid as submitted by the taxpayer.
 
About 95% of entries of demand involve demand up to Rs1 lakh and about 90% of such assesses are individuals and HUFs, the I-T department said.
 
Here are the steps that a taxpayer needs to take to file online reply to a tax demand notice...
 
1. Visit e-filing site of I-T department www.incometaxindiaefiling.gov.in
2. Log in using your user ID, password, date of birth and the captcha code
 
3. Go to e-file menu and select 'Response to Outstanding Tax Demand'. You will get following details... 
 
4. Here you can choose your response depending upon the situation related with your tax payments. 
 
 
In case, you select, the 'Demand is correct" and submit it, then you cannot "disagree with the demand" any further. After submitting, you will get a success message. Remember, if there is any refund due, then it would automatically be adjusted against the tax demand (plus interest) outstanding. In the other case, you will have to immediately pay the amount due.
 
If you select, 'Demand is partially correct', then you will have to enter the amount, which is correct and the amount that is incorrect. 
 
For the amount, which is incorrect, you will have to mandatorily file one or more reasons. If demand is already paid, then challan identification number (CIN), if available. You need to give details, in case, the demand is reduced, or if appeal is filed, or if rectification/revised return is filed.
 
Based on the reasons, you selected, you need to provide additional information and upload relevant documents.
 
If you select 'Disagree with the Demand', then you need to furnish details of disagreement along with reasons.
 
5. After successfully submitting the details, you will get the transaction ID. After submitting your response, you can also check the details by clicking on 'View' button. Here ends your part.
 
The AO, who had issued the demand notice, then checks, verify details submitted by you, and take necessary action. If your reply or I-T department’s record shows that the tax has already been paid and there is a challan number available for it, then the AO reduces the demand as per the case.
 
If there is a mismatch in advance tax or self-assessment tax, then the AO passes order under Section 154 of the I-T Act.
 
Demand due to TDS Mismatch: 
a. If the taxpayer's reply or Departmental records show that the demand is on account of TDS mismatch and TDS credits are available in the system, the AO should follow steps as under:   
 
i. The AO should reduce the demand by passing rectification order u/s 154 on the system after taking into account the TDS credits available on the system. 
ii. If the demand is prior to 1 April 2010, the demand has to be net reduced directly on the CPC-FAS system after rectification u/s 154.   
 
b. If the credits are not available in 26AS: The reduction can be one only in the cases of Individuals and HUFs. Further, the amount of reduction should not exceed Rs1 lakh for that AY and AO should take following steps:   
 
i. AO should pass order u/s 154 manually after obtaining the TDS certificate from the assessee based on which claim has been made.   
ii. In case, the outstanding demand is more than Rs25,000 for that of the quantum of demand being reduced, the AO should obtain an indemnity bond.
iii. Additionally, in case the demand being reduced under paragraph 4.2.(b).(i) above, exceeds Rs50,000 for that AY for the assessee, besides obtaining the indemnity bond, approval of Range Head should be taken on file before removing/reducing the demand.
 
Demand already reduced or action is pending: 
(a) If the taxpayer's reply or Departmental records show that demand has already been reduced byway-of an order (rectification order, appeal effect order etc.), the demand has to be reduced directly on the CPC-FAS system.   
 
(b) In case where rectification or giving effect order to reduce demand is pending, the same should be completed and revised demand should be reflected.   
 
(c) It is also clarified that after taking action as per pare 4.1 or 4.2, if any refund becomes due to the taxpayer, the same may also be issued. 

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COMMENTS

YESHVANT WADEKAR

1 year ago

VERY GOOD ARTICLE. MOST INFORMATIVE.

YESHVANT WADEKAR

1 year ago

VERY GOOD ARTICLE. MOST INFORMATIVE.

Priti

2 years ago

I have always been a salaried employee and filed my returns on time. The IT dept had incorrectly raised a tax demand in year AY2009-10. I had a tax refund in year AY2012-13 which the IT dept adjusted against the incorrect tax demand. I tried to respond to my IT demand as per your post above, however I realised that the IT dept has removed the tax demand. So, I can not see any tax demand now. My question is - how do I get my tax refund back?
Can you please guide me?

Priti

2 years ago

Hello, IT dept had raised incorrect demand during year 2009-2010 due to tax credit not taken into account. For year FY11-12, I had a tax refund which they adjusted against incorrect demand. I tried to respond to the incorrect demand as per your above suggestion and realised that the IT demand has removed the incorrect tax demand. My question is - now how do I try to get my refund back from the IT dept?

I have always been a salaried employee and filed my tax returns on time!!

Pradeep R Hattangadi

2 years ago

Most of the demands pertain to the Assessment Years 2008-09 and 2009-10. In each of these Notices they say that the demand are based on Assessment made by the AO's. Surprisingly, in not a single case has the assessee received the Assessment Order. further, all these demands are in respect of Paper returns filed. There are also cases of demand relating to Assessment Year 2003-04 as mentioned by sri Rajesh Agarwal. In fact the TDS Section of the IT department does not have records of the TDS. so what is the fate of such assessees. Of course, the department has already recovered the dues from the refund due. it is better to pay interest than getting your refund adjusted from the dues which these guys have created out of nowhere. Sometimes I feel that it is a ploy to show that there is a huge demand outstanding from Assessees to the Parliament.

Rajesh Agarwal

2 years ago

i have come across, where department people are saying that, they are not aware of this scheme.there are cases, where department force fully asked the bak to pay the money and they took it directly from the bank, the amount still shows as demand. cases where ao has reduced the amount by rectification, still the old demand and the new demand for the same assessment year is reflected.

Sudhakar Ojha

2 years ago

Should the IT dedpartment not provide full detaills and records online when raising old demands ? How will tax payers specially the older ones keep such records ?

REPLY

Rajesh Agarwal

In Reply to Sudhakar Ojha 2 years ago

i think yes, if this is done, than either 505 of the demands will get dropped automatically, the the department will realise their mistake or they may not be in a position to trace the papers

MDT

In Reply to Sudhakar Ojha 2 years ago

Thanks for your comment.
As stated in the article, the AOs are uploading tax arrears demand on the CPC site. This means, the taxpayer would receive the notice on his/her registered email ID or even through post. When you open, the link "Response to Outstanding Tax Demand", it will show you the details, if any. You can click on the view button to check the notice and response as required.
-MDT

Sudhakar Ojha

2 years ago

But how do we get such old details such as 08-09 case you mentioned ?

REPLY

Ameet Patel

In Reply to Sudhakar Ojha 2 years ago

The reply given by MDT is correct. All tax payers MUST maintain their tax files for at least 8 years. The IT Act empowers the tax officer to reopen past assessments. So, independent of the demand related matter, you still need to maintain your past records.

MDT

In Reply to Sudhakar Ojha 2 years ago

Thanks for you comment.
As per the law, the I-T department can ask a taxpayer for documents related to past seven years for auditing/scrutiny purpose. Therefore, it is important to retain tax related documents for past 7 years in case any audit of the tax return filed is conducted by the revenue authorities. If you had filed your returns online, then you will get the details on your ITR-V form on the e-filing site of I-T dept.

MDT

In Reply to Sudhakar Ojha 2 years ago

Thanks for you comment.
As per the law, the I-T department can ask a taxpayer for documents related to past seven years for auditing/scrutiny purpose. Therefore, it is important to retain tax related documents for past 7 years in case any audit of the tax return filed is conducted by the revenue authorities. If you had filed your returns online, then you will get the details on your ITR-V form on the e-filing site of I-T dept.

Rajesh Agarwal

In Reply to MDT 2 years ago

yes, but they are asking for 2003-04 etc, so what do u suggest

Shah panel on MAT levy on FIIs holds first meeting
The Justice A.P. Shah-led three-member committee on direct tax matters held its first meeting on Monday on the applicability of the controversial minimum alternate tax (MAT) on Foreign Institutional Investors (FIIs) for previous years.
 
An official source told IANS on late Monday evening that the three-member panel met to discuss on its terms of reference and the methodology it is going to adopt for considering the contentious tax issue.
 
The panel, headed by Law Commission chairman Shah, was formally set up last week with former chief economic advisor Ashok Lahiri and noted chartered accountant Girish Ahuja as the other members.
 
The finance ministry in a statement on Wednesday said other tax issues would be referred to the Shah committee in due course.
 
The Income Tax department had sent notices to 68 FIIs demanding Rs 602.83 crore as MAT dues of previous years, with FIIs, in turn, moving the higher court challenging the demand.
 
The Shah committee will examine MAT notices for the period before April 1, 2015, and has been requested to "give its recommendations expeditiously".
 
Finance Minister Arun Jaitley in the Budget 2015-16 had exempted FIIs from paying MAT with effect from April.
 
The Central Board of Direct Taxes (CBDT) earlier this month said it will not issue any new demands for payments, and will take no coercive action to pursue claims that have already been filed under the controversial MAT.
 
Even after Jaitley's announcement exempting FIIs from paying MAT on capital gains earned by them, the income tax department sent notice to at least 90 foreign portfolio investors.
 
With the uncertainty created by MAT, foreign investors sold around $630 million in Indian shares and bonds on May 6, marking the biggest single-day sales since January 2014.

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