DYK: Return filed without payment of tax, or interest, won’t be treated as defective
This change will come into effect from 1 April 2017 and apply from assessment year 2017-2018
There are various reasons that can make your income tax return (ITR) defective for the tax department. For example, selection of a wrong ITR form, information missing or not properly mentioned, filing ITR without paying the self-assessment tax or interest, and so on. But the Finance Bill 2016 proposed that a return should not be considered defective even if self-assessment tax or interest is not paid before filing. Here’s what is proposed in the finance bill and the steps you should take if you receive a defective ITR notice.
BILL PROPOSAL
Section 139(9) of the Income tax Act, 1961, deals with defective returns. Clause (aa) of this section emphasises that a return of income shall be regarded as defective if the self-assessment tax or interest, if any, has not been paid on or before the date of furnishing ITR. The Finance Bill has proposed to omit this clause from the next assessment year. The Bill states: “...the return which is otherwise valid would not be treated defective merely because self assessment tax and interest payable in accordance with the provisions of section 140A, has not been paid on or before the date of furnishing of the return."
This change will come into effect from 1 April 2017 and apply from assessment year 2017-2018. It is expected that if the return is filed without paying the due taxes, the department may send a demand notice. On receiving such notice, one would pay the due tax immediately. Otherwise, it may attract interest at the rate of 1% per month or penalty equivalent to the outstanding tax. The department may also adjust accumulated dues against any refund in following years.
WHAT SHOULD YOU DO?
If you receive an intimation under section 139(9) from the tax department stating your ITR is defective, you need to respond or file a revised return within 15 days. Mention the date of receipt of such notice in the revised ITR and correct all the defects as mentioned in the notice. Revised return will be treated as an original return and no new acknowledgement would be generated. But if an assessee fails to file a rectified return within the stipulated time, she can give an application to the assessing officer (AO) seeking an extension. If you rectify the defect after 15 days, or further extended period, but before the assessment is made, the AO may condone the delay and treat the return as valid. But if it’s not done, then the AO will treat the return as invalid, or as ITR not filed. In such a case, benefits of exemption, deduction or carried forward losses can’t be claimed.
MINT MONEY TAKE
Once you file your ITR, keep a track of the notices and mails issued by the tax department. Make sure your contact details are updated. Missing or not responding to intimation where required may lead to penalties and litigation. Take help of experts, if required, to respond to notices within the time mentioned.
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