Assessment Introduction, Due date of filing Returns, Filling of Returns by different Assesses, E- filing of Returns, Types of Assessment

“Assessment” in the context of taxation, particularly in the Indian Income Tax system, refers to the procedure used by the tax authorities to determine the tax liability of a taxpayer. This process ensures that the income reported and tax paid by a taxpayer is correct and in accordance with the laws. The assessment is carried out after the taxpayer files their Income Tax Return (ITR).

Key Aspects of the Assessment Process:

1. Filing of Income Tax Return (ITR):

Assessment begins with the taxpayer filing an ITR. This return declares the income earned during the financial year, tax deductions or exemptions claimed, and the tax paid or refund due.

2. Notice from Income Tax Department:

If there are any discrepancies, under-reporting, or excess claims, the department may issue notices to the taxpayer asking for clarification, documents, or additional information.

3. Compliance and Submission:

The taxpayer needs to comply with the notices, furnish the required information, and may also need to appear in person before the Assessing Officer, if required.

4. Assessment Order:

After examining the submissions, the Assessing Officer passes an order, determining the final tax liability. This order can result in a demand (if additional tax is payable) or a refund (if excess tax has been paid).

5. Rectification and Appeals:

If the taxpayer disagrees with the assessment order, they have the option to file for rectification under Section 154, or appeal to higher authorities like the Commissioner of Income Tax (Appeals), Income Tax Appellate Tribunal, High Court, and Supreme Court, depending on the stage of appeal.

Filling of returns by different assesses

Filing of income tax returns in India varies based on the type of assessee, which includes individuals, Hindu Undivided Families (HUFs), companies, firms, and other entities. Each category has its own set of rules, forms, and deadlines.

Individuals and HUFs:

• Forms:

The most commonly used forms for individuals and HUFs are ITR-1 (Sahaj), ITR-2, ITR-3, and ITR-4 (Sugam). The choice of form depends on the nature and amount of income, and whether the individual has income from business or profession.

• Due Dates:

The due date for filing returns for individuals and HUFs is usually July 31st of the assessment year, unless extended by the government. However, for those who are required to get their accounts audited or those who are required to furnish a report under Section 92E, the due date is generally October 31st or November 30th of the assessment year.

• E-filing:

Filing of returns is predominantly done online through the e-filing portal of the Income Tax Department.

Companies:

• Forms:

Companies are required to file their tax returns using Form ITR-6 or ITR-7, depending on their nature of income and claims for exemption.

• Due Dates:

For companies, the due date is usually October 31st of the assessment year. If the company is required to furnish a report under Section 92E pertaining to international or specified domestic transactions, the due date is November 30th.

• Mandatory Digital Signature:

Companies are required to file their returns electronically with a digital signature.

Firms (Including LLPs):

• Forms:

Firms file their returns using Form ITR-5.

• Due Dates:

The due date for firms is generally the same as for individuals and HUFs required to get their accounts audited, i.e., October 31st of the assessment year.

• E-filing:

Firms also have to file their returns electronically.

Other Entities:

This includes associations of persons (AOPs), bodies of individuals (BOIs), charitable or religious trusts, political parties, research associations, etc.

• Forms:

These entities generally use Form ITR-5 or ITR-7, depending on their specific requirements and claims for exemptions.

• Due Dates and E-filing:

Similar to firms and companies, with due dates usually being October 31st or November 30th and mandatory e-filing.

General Guidelines:

• It’s important to choose the correct ITR form based on the nature and source of income.
• E-filing is mandatory for most taxpayers except for super senior citizens (aged 80 years or above) who can choose to file either electronically or physically.
• In case of any tax due, it should be paid before filing the return, as the return should be accompanied by proof of payment of tax.
• Taxpayers should also report all bank accounts held in India and foreign assets, if any, in their tax returns.

E- filing of Returns

E-filing, or electronic filing, of income tax returns in India is a convenient and efficient way for taxpayers to submit their tax returns online. The process is managed by the Income Tax Department through its dedicated e-filing portal.

Steps for E-filing Income Tax Returns:

1. Registration:
   • First-time users need to register on the Income Tax e-Filing portal (https://www.incometax.gov.in/).
   • Registration requires PAN (Permanent Account Number), which acts as the user ID.
2. Login:
   • Log in to the e-Filing portal using your PAN as the User ID and the password you created during registration.
3. Download the Appropriate ITR Utility:
   • Download the relevant ITR preparation software (Excel or Java utility) based on the type of return you need to file (like ITR-1, ITR-2, etc.). This is available under the ‘Downloads’ section of the portal.
   • Alternatively, you can choose to fill the return online using the ‘Quick e-file ITR’ link.
4. Prepare and Fill the Return:
   • Fill in the required details in the downloaded utility or the online form. This will include personal information, income details, deductions, taxes paid, etc.
   • Validate the information entered and calculate the final tax or refund.
5. Generate and Save the XML:
   • If using the utility, after filling out the form, generate an XML file of the return.
6. Upload the Return:
   • Go to the ‘e-File’ menu and click ‘Upload Return’ on the e-Filing portal.
   • Select the appropriate ITR, Assessment Year, and XML file you saved earlier. Then, upload it.
7. Verification of the Return:
   • After successfully uploading the return, you need to verify it. There are multiple options for verification:
     • Digital Signature Certificate (DSC): If you have a digital signature, you can sign the return digitally.
     • Aadhaar OTP: If your Aadhaar is linked to your PAN, you can use an OTP sent to your Aadhaar-registered mobile number.
     • EVC (Electronic Verification Code): This can be generated through your bank account, Demat account, or via Net Banking.
     • Physically Sending ITR-V: If none of the above options are feasible, you can send a signed copy of ITR-V (Acknowledgement) to the Income Tax Department’s CPC office in Bangalore within 120 days of e-filing.

Points to Remember:

• Accuracy: Ensure all data entered is accurate. Cross-check with Form 16, Form 26AS, bank statements, etc.
• Deadline: Be mindful of the income tax return filing deadline, which is typically July 31st for individuals (unless extended by the government).
• Documents: While you don’t need to attach any documents with the e-filed return, it’s essential to keep them handy for any future queries or assessments by the Income Tax Department.
• Follow Up: After filing, keep track of the status of your return and refund (if applicable) on the e-Filing portal.

E-filing is mandatory for certain categories of taxpayers, including those with income above a specific threshold, those who have to report certain financial transactions, or those who are subject to audit, among others.

Types of Assessments:

The Income Tax Act outlines different types of assessments:

• Self-Assessment:

Conducted by the taxpayer themselves when they file their ITR. The taxpayer calculates their tax liability and ensures they have paid all due taxes.

• Summary Assessment under Section 143(1):

Also known as ‘Intimation’, this is an initial automatic screening of the return by the Income Tax Department. It involves a basic check to ensure that the return is complete and consistent, and that the tax computation is correct.

• Scrutiny Assessment under Section 143(3):

This is a more detailed examination of the ITR by the Income Tax Department. It is done to ensure that the taxpayer has not under-reported income or over-reported deductions. Only a small percentage of returns are picked for scrutiny, often on a random basis or because of red flags.

• Best Judgment Assessment under Section 144:

If the taxpayer fails to comply with the requirements of the Income Tax Act (like not filing a return, not complying with notices, etc.), the Assessing Officer may make an assessment to the best of their judgment.

• Reassessment under Section 147:

If the Assessing Officer has reason to believe that some income was not assessed, they can reassess the income.

Note: Always refer to the latest guidelines from the Income Tax Department, as processes and requirements may change. If needed, consult with a tax professional for assistance in e-filing your tax returns.