Things to keep in mind before filing tax returns

Ensure details are filled correctly as it needs to be matched with the IT department's database.

Like every year, you must be preparing to file your income tax returns. Here is something that you should be careful about: ensure every detail is filled in correctly as it needs to be matched with the income tax department’s (ITD) database. Also, some norms have changed for you if you are a buyer of an immovable property, so make sure you factor that in.

Match ITR details with ITD database

Conventionally, it used to be an individual’s responsibility to declare any income earned/accrued during a financial year while filing ITR. During the last few years, the Reserve Bank of India and the Securities and Exchange Board of India have made non-negotiable know-your-customer rules.

On the other hand, the income tax department has enforced detailed filings by all institutions and corporate entities. As a result, the department knows a lot more about a taxpayer through the Permanent Account Number (PAN).

The ITD introduced form 26AS for individuals to keep them informed of transactions recorded against their PAN. Form 26AS is an annual statement issued by the ITD for all tax deducted and tax collected at source. When filling the ITR form for AY 2013-14, you will find an instruction: “Please verify the TAN details and the amount of credit available in your Form 16 and 26AS."

Any return filed by an individual has to have minimum prescribed income/loss details. It must reconcile with the information already available with the department.

The ITD is responsible to run a check on the offender. It promises smooth processing of discrepancy-free cases. The case with a discrepancy gets flagged and a show-cause notice (in the form of an intimation under section 143/1-2) is issued to the taxpayer, seeking clarification.

We should remember that the income tax return form is a legal declaration and a binding document in which ignorance or casual mistakes are equivalent to “income concealment". Hence, the minimum return clearance criteria for seamless processing of ITR would be matching data.

Buyers of immovable property

Are you buying immovable property? If yes, you might be liable to deduct and deposit tax from the payment to the seller with effect from 1 June 2013.

The tax deducted at source (TDS) liability will be there even if the agreement or registration is done before 1 June. That is, the payment for purchase of property, not the sale date, is the criteria for TDS liability. TDS has to be deducted at the time of making payment or giving credit in books to the seller, whichever is earlier. It must be noted that non-resident Indians (NRIs) are already under the TDS deduction net.

Who comes under TDS net: As per the new notification, TDS is applicable to:

* An immovable property being transferred for a sale consideration value of 50 lakh or more. It is not (not applicable, even if the stamp duty value as per registrar of property is more than 50 lakh).

* Building and land only. It is not applicable for rural agricultural land and movable assets on property such as furniture, fixtures, plant and machinery.

* Instalments to seller as well for payment after 1 June 2013.

TDS rates: The TDS rates applicable are:

* 1% if the seller is resident and has a PAN.

* 20% if the resident seller does not have a PAN.

* 20% if the seller is an NRI.

Documentation: Every person responsible for deduction of tax under section 194-IA shall need to furnish certain documents to:

•The payee: the certificate of TDS in Form 16B within 15 days from the due date for furnishing the challan-cum-statement in Form 26QB.

•The director general of income-tax (system): a challan-cum-statement in Form 26QB within seven days from the end of the month in which the deduction is made.

The purchaser of the property is not required to be registered with the income tax department as is necessary for other cases of TDS deductions and deposits. The TAN number is not to be obtained, only challan-cum-statement in Form 26QB has to be submitted by the buyer.

Sudhir Kaushik is a chartered accountant and CFO, TaxSpanner.