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November 13, 2020

Pre-filled income tax returns will now be provided to taxpayers

by CA Shivam Jaiswal in Income Tax

Pre-filled income tax returns will now be provided to taxpayers

The economic impact of the 2020 coronavirus pandemic in India has been largely disruptive. The lockdown though necessary has led to a disastrous impact on the economy. With an ever-increasing corona virus cases, lockdown was considered as an only solution to flatten the curve. However, the measures which were implemented to avoid a human disaster, have in turn led to the birth of several issues such as unemployment, recession, hindrance to economic growth, financial instability and so on.

The Government of India announced a variety of measures to tackle the situation, from food security and extra funds for healthcare and for the states, to sector related incentives and tax deadline extensions. With the ongoing COVID -19 pandemic a lot of income tax due dates were extended. The Income Tax Return Filing Date for Financial Year 2019-2020 is extended till 31st December, 2020 for individual taxpayers. The Aadhaar-PAN Linking Deadline was also extended by the Income Tax Department till March 31, 2021. Adding to the list of reliefs granted The Finance Minister, Nirmala Sitharaman recently tweeted that pre-filled Income Tax Return (ITR) forms will be available for individual taxpayers.

What do you mean by pre filed ITR’s?

The ITR form from now onward will have more pre-filled details including the salary income column. Some of the fields were already pre-filled in the IRR forms for 2019. There are different types of salaries that the Income Tax Act 1961 takes into account, including salaries, income from business or profession, house property, capital gains, and income from other sources or the residual income. For salaried individuals, the move essentially means no need to file an income tax return.

Linking taxpayers’ Aadhaar card, PAN card and bank accounts enabled the tax department to pre-fill the forms for taxpayers. The facility has been further extended to ensure the bulk of the details such as bank interest, salaries and tax deductions are automatically filled in the form which can be submitted once approved by the tax filer.

The ITR form, downloaded from the e-filing account of individuals, would now contain pre-filled details of salary income, house property income, capital gains from securities, bank interests, dividends, etc. and tax deductions. Information regarding these incomes will be collected from concerned sources such as banks, stock exchanges, mutual funds, EPFO, State Registration Departments etc. PAN will be used to pick the details from Form 26AS, the TDS return filed by payers and also the previous year’s ITR.

Document Identification Number

The Income Tax Department has started to conduct all the communication related to assessment, investigation, and redressal through a Document Identification Number (DIN), which is computer generated.

In order to keep a trail, every communication to be issued by the income-tax department will have a Document Identification Number (DIN). It will be relating to assessment, appeals, enquiry, penalty, prosecution, etc. It will bring in transparency in the functioning of the tax administration as almost all notices and orders of the IT department are being generated electronically.

However, the department has underlined that under five specific circumstances communication can be issued manually which include, technical difficulty in issuance of DIN, unavailability of concerned official in the office, delay in PAN migration, unavailability of PAN and functionality to issue communication in the system. Communication issued manually will be permitted only after recording reasons in writing and with the prior written approval of the Chief Commissioner or Director General of Income-Tax.

ITRs are randomly selected for scrutiny, where the I-T officer seeks additional information to verify taxable income as stated by the assessee. Scrutiny notice can be of two types: limited or complete scrutiny. In the former, the taxpayer is required to submit details with respect to specified transaction/ query for which scrutiny has been initiated. Under complete scrutiny, a tax officer can ask the taxpayer to show a detailed list of documents/information. Individuals can reply to the notice online through one’s I-T account.

What will be the benefits of these pre filed ITR’s?

These pre filed ITR’s will make tax compliance easier for everyone.

This will also make the filling of the income tax returns convenient, encourage more people to reveal their true incomes and not misreport their income to evade tax. This will provide greater transparency in the process.

Apart from reducing the time required to file a return, automation will also ensure the accuracy of data as chances of errors while filing taxes get reduced substantially. This would in turn translate into less tax litigation which would be beneficial for taxpayers as well taxmen.

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