Filing of Returns
Under the provisions of the Income Tax
Act, tax payers are required to file their returns of income for
the assessment year 1994-95 and subsequent years on or before the
dates mentioned below:-
- Where the assesses is a company, the 30th day of November of
the assessment year;
- Where the assessee is a person, other than a company-
- in a case where the accounts of the assessee are required
under the IT. Act or any other law to be audited or where
the report of an accountant is required to be furnished under
section 80HHC or section 80HHD or where the prescribed certificate
is required to be furnished under section 80R, 80RR or section
80RRA or in the case of a cooperative society, the 31st day
of October of the assessment year;
- in a case where the total income includes any income from
business or profession, and there is no requirement of getting
the accounts compulsorily audited or of furnishing a report
or certificate as mentioned in (i) above, the 31st day of
August of the assessment year;
- in any other case, the 30th day of June of the assessment
of Default of Delay
13.1.1 Delay in furnishing
the return attacts charge of interest at the rate of 1.5 percent,
for every month or part of a month for the period of dealy on the
amount of tax found due on the proceesing of return or on regular
assessment (refer para 13.6) after giving credit for advance tax
and tax deducted at source. In case of
failure to file the return such interest is to be calcuted upto
the date of best judgement assessment under sec.144.
A person liable to tax is required to file a return of
income with the Assessing Officer having jurisdiction over his case.
The return forms for the purpose can be obtained from any Income
Tax Office or from a specified Post Office. The assessee before
filing the return is expected to compute the tax on his returned
income by way of self-assessment and if there is any additional
liability of tax, the assessee is required to pay the same. The
unpaid tax if any is recovered according to the procedure specified
in the Act.
For the convenience of non-residents liable to Indian
Income Tax, Non -residents Circles have been created in big cities
namely, Bombay, Delhi, Calcutta, Madras, Cochin and Ahmedabad. Any
person who is a non-resident and has not yet been assessed to tax
any where in India, may file his income tax return in any of the
above mentioned Non-resident Circles. However, once he files return
in any of these Circles, Jurisdiction
over his case will continue to be with circle unless it is change
under orders of the appropriate authority.
of Tax prior to filing of return
Tax payers whose total income is likely
to be chargeable to tax for the assessment year are required to
pay tax in advance during the financial year (April 1 to March 31)
on their estimated current income, which will be assessable to tax
during the next following financial year called assessment year.
The cureent income for this purpose means the total income
which will be chargeable to tax in the relevant assessment year.
The advance tax is payable in instalments as follows :-
|Due date of instalment
| A. For companies
|i) On or before the 15th June
||Not less than fifteen per cent of total advance
|ii) On or before the 15th Sept.
Not less than forty five percent
of total advance tax as reduced by the amount, if any, paid
in the earlier instalment.
|iii) On or before the 15th Dec.
Not less than seventy five percent
of total advance tax as reduced by the amount if any, paid
in the earlier instalments.
|iv) On or before the 15th March
The whole amount of such advance
tax as reduced by the amount or amounts, if any, paid in the
earlier instalment or instalments.
B. For Non-Corporate Assessees
i) On or before
the 15th Sept.
Not less than thirty percent of
such advance tax.
ii) On or before the 15th Dec.
Not less than sixty percent of
such advance tax as reduced by the amount, if any, paid in
the earlier instalment.
|iii) On or before the 15th March
The whole amount of advance tax
as reduced by the amount or amounts, if any, paid in the earlier
instalement or instalments.
The advance tax payable is the tax on the current income minus the
tax deductible at source or collectible out of any income included
in the current income. The provisions for advance tax are not applicable
where the tax payable for the assessment year is less than Rs. 5000/-
If the tax payer does not make payment of advance tax voluntarily,
the assessing officer can issue a notice at any time during the
financial year, but not later than the last day of February asking
him to pay the advance tax in specified instalments. Such notice
is ordinarily based on the assessed income of the tax payer for
the latest year. The assessee in that case has an option to pay
advance tax on the basis of his own estimate if he considers that
his current income during the relevant accounting period would be
less than the income on the basis of which advance tax has been
demanded from him. The assessing officer can modify his notice of
demand in certain circumstances. Similarly, the assessee can also
revise his estimate any number of times and after adjusting the
amount already paid, if any, pay the balance in instalments falling
due after the revised estimate.
of Deferment/Short Payment
Default in making payment as per the instalment plan mentioned in
para 13.2 attracts conequence in the form of charge of interest
for deferment at the rate of 1.5% per month for 3 months on the
amount of shortfall from the required percentage in the instalments
due on 15th June, 15th September and 15th December. If the advance
tax paid upto the last instalment, i.e. 15th March falls short of
the tax payable as per the return of income, interest @ 1.5% is
payable on the amount of shortfall calculated from the date.
case of failure to pay the advance tax or in case of shortfall in
such payment in relation to 90% of the assessed tax, a further interest
at the rate of 1.5 percent per month of part of month is chargeable
from First April of the assessment year to the date of processing
of return or the regular assessment on the amount falling short
of the assessed tax.
Deduction of Tax At Source
Person responsible for paying any income
chargeable to tax under the head 'Salaries' is required to compute
the tax liability in respect of such income and deduct tax at source
at the time of payment. If the employee has any other income he
can inform the employer in which case the employer can take that
income into consideration for computing his tax liability. He will
not take account of loss except loss from house property.
Those responsible for paying any income by way of interest
on securities or any other interest are required to deduct tax at
source at the prescribed rates at the time of credit of such income
to the account of the payee or at the time of payment thereof by
any mode. W.e.f. 01.07.1995 interest on term deposits with banks
is also subject to such deduction.
Tax is also duductible at source in respect of following
income at the rates noted against each-
(i) Winnings from lottery or crossword puzzle (on amount
exceeding Rs. 5,000/-)
Rates in force
(ii) Winning from horse race (on amount exceeding Rs. 2,500/-)
Rates in Force
(iii) Payment to contractors and sub contractors (on amount
exceeding Rs. 20,000/-)
2% to Contractors; 1% to sub-contractors
(iv) Insuracne Commission
Rates in force.
(v) Payment to non-resident Sportsman or Sports Association
(vi) Payment on repayment of Deposits under N.S.S. (on amount
exceeding Rs. 2,500/-)
(vii)Payment on repurchse of Units
(viii) Commission on sale of lottery tickets
(ix) Rent (on amount exceeding Rs. 1,20,000/-
|1.5% if payee is individual of HUF; 20% in other
(x) Fees for professional or technical services (on amount
exceeding Rs. 20,000/-)
Deduction is required to be made only
if the payer is a person other than individual or HUF
Tax Collection at Source
In certain cases tax is to be collected
at source from the buyer, by the seller at the point of sale. Such
tax collection is to be made by the seller at the time of debiting
the amount payable ijf the buyer to the account of the buyer or
at the time of receipt such amount from the said buyer, whichever
is earlier. Such of cases and the rate of collection of Tax at Source
are as follows:—
||Nature of Goods
Percentage of collection of
|Alcoholic liquor for
human consumption (other than Indian made foreign liquor)
||Timber obtained under
a forest lease
|Timber obtained by any
mode other than under a forest lease
|Any other product not
Where the tax deducted at source and
the advance tax paid in respect of the income assessable to tax
for any assessment year falls short of the tax chargeable on such
income, the balance tax liability represented by the shortfall aforesaid
is required to be paid by the tax payer on the basis of self assessment
before he furnishes the return of his income to the assessing officer.
Documentary proof of the payment of tax on self assessment has to
be furnished along with the return.
Credit for Pre-assessment Taxes
Any pre-paid taxes i.e. the tax deducted
or collected at source, taxes paid by way of advance tax and tax
on self assessment in respect of the income of any year, is credited
to the tax payer at the time of determination of tax liability by
assessment or processing of return and if the amount of such pre-paid
taxes exceeds the tax determined to be payable by assessment or
processing the excess amount is refunded to the tax payer. Where
any tax is demanded after adjustment of prepaid taxes by the assessing
officer, it is payable within 30 days of the service of the demand
notice, or even before, if so directed by the Assessing Officer.
Procedure for Determination of Tax liability
Processing of returns
Every return received in the office
of the assessing officer is, processed to work out the tax and interest
payable or refundable on the basis of the return. In case any tax
or interest is found due, the same is intimated to the assessee
for making payment. If the pre-assessment taxes are found to be
in excess of the liability the excess amount is refunded.
Assessments after scrutiny
After processing of returns, the assessing
officer may, for the purpose of ensuring that the assessee has not
understand the income, require the assessee to produce evidence
to support the facts stated in the return of income. He then determines
the total income by an order in writing after taking into account
all relevant material produced before him by the assessee or gathered
by him and work out the tax liability on such income. Procedure
also exists for obtaining an advance ruling from the Authority for
Advance Ruling in relation to a transaction undertaken or proposed
to be undertaken by or with a non-resident (para 6.8). Advance ruling
can be obained by certain notified residents even in relation to
a question arising in the assessment/appeal.
Best judgement assessments
If a person fails to make a return voluntarily
or when ordered to do so by the assessing officer or, if he fails
to comply with the directions in the matter of substantiating the
return of income, the assessing officer may assess the total income
to the best of his judgement on the basis of available information
and enquiry made by him. Such assessments are commonly known as
Reopening of Assessment
Where no return of income has been made
or where after processing the return or completing the regular assessment,
the assessing officer comes to hold the belief that some income
has escaped assessment, he can reopen the assessments and, after
going through all the process of regular assessment, complete a
fresh assessment. Such reopening is, however, permissible only upto
a period of ten years after the end of the assessment year.
Penalties can be levied for various defaults like:
- Failure to furnish return of income
- Failure to keep or maintain books of accounts (Para 4.4.7)
- Failure to get accounts audited (Para 4.4.8)
- Concealment of income or furnishing inaccurate particulars
- Not furnishing information required to make the tax assessment.
- Failure to pay the tax within prescribed time.
- Failure to deduct tax at source.
There are provisions for prosecution
for certain types of. offences such as :-
- Evasion of tax
- Failure to file return in time
- Making false statement before IT. authorities
- Failure to produce accounts and documents called for
- Failure to deposit the tax deducted/collected at source in government
Rates of income tax (for the Assessment Year 1998-99 and 1999-2000)
Rates of income tax are as under:
including Hindu Undivided Family and Association of Persons
Rate for 1998-99
Rate for and
|Above Rs. 1,50,000
will be a surcharge @ 10% of tax for the assessment year 2000-01
and 10 and 15% for 2001-02 on specified slabs.
The whole of the total income as computed
under the Act is taxed at 35%. Surcharge is leviable @ 10% from
assessment year 2000-01.
For the purpose of corporate taxation,
companies are classified as 'domestic companies' and
'foreign companies'. A domestic company means an Indian company
or any other company which has made the prescribed arrangements
for declaration and payment of dividends within India. A 'foreign
company', means any corporate body incorporated under
the law of any other country which is not a domestic company as
it has not made the prescribed arrangements for declaration and
payment of dividend within India.
From the assessment year 1998-99, domestic
companies are taxable at 35% and foreign companies at 48%. For and
from a year 2000-2001 tax on domestic companies is to be increased
by a sur-charge of 10% of the tax.
In addition to tax at the rate mentioned
above, a domestic company is liable to an additional tax called
tax on distributed profits at the rate of 20% in respect of dividends,
declared distributed or paid, after 1.6.1977.