4 things to note this tax filing season – The Hindu BusinessLine – BusinessLine

The December 31 deadline for filing your income tax returns for FY20-21 is round the corner. From a renovated website to an advanced utility for tax filing, the taxman has spared no effort to offer taxpayers a hassle-free experience this year.

A few tax payers also have new incomes that would be chargeable to taxes and for a few others, there are new concessional tax rates. Here is a low-down on whats new for taxpayers this tax filing season, so you can navigate that eleventh hour rush smoothly.

The Income tax Department launched a new website for e-filing in June this year (https://tinyurl.com/Incometaxportal). After initial hiccups, the site has been up and running for quite some time now. Existing registered users of the old website can seamlessly log into the new portal, with their credentials. However, those using Digital Signature Certificates (DSC) might have to re-register the same on the new portal, after logging in.

Those new to e-filing will need to register themselves on the new portal by furnishing details of their Permanent Account Number (PAN), mobile number, current address and e-mail address. Upon registration, users will receive OTP on both their mobile number and e-mail address.

New e-filing portal (https://www.incometax.gov.in/iec/foportal/)

Apart from availability of features in the old website such as filling/uploading your income tax returns (ITRs), verifying them, viewing/downloading Form 26 AS, request for refund re-issue, and viewing/responding to a demand notice, the new website also has a host of other new features. The website offers a single dashboard to view all the interactions, uploads, and pending actions with the IT Department. Besides, taxpayers can now fill all ITRs directly (1 to 7) online, unlike earlier where only ITR 1 and 4 were available to be filled online and the remaining forms were required to be filled via excel or Java utilities before being uploaded on the website.

On the new portal, in the online mode, one can make use of the free ITR preparation software that, through simple questions, not only guides one in deciding the applicable return and the schedules one needs to fill in, but also helps fill most of the ITR form for you. Users who opt for the offline mode need to fill in the returns using the JSON utility and later upload the same on the portal.

For further queries, taxpayers can view the detailed FAQs, tutorials, videos or dial up the call centre co-ordinates shared on the website. A chat bot (Tax Genie) is also available to respond to your queries instantly. Thereafter, the website is also well-equipped to handle seamless and fast processing of the returns filed.

Besides, the taxman is working towards launching other features such as a mobile application for tax filing and newer tax payment modes (such as through RTGS/NEFT, credit card, UPI and net banking), soon.

For ease of use and for the lack of internet connectivity throughout, a few taxpayers may wish to fill the return offline and then upload the same online.

The IT Department has discontinued the erstwhile excel and Java utilities and launched a new offline utility based on the JavaScript Object Notation (JSON) format. The utility is available on the e-filing portal under the downloads tab, for users to install on their computers. Post installing the utility software, users can download their pre-filled data from the e-filing portal in JSON format, which can be later edited offline on the utility. Even a draft version of the return filed online can be saved in JSON format and later filled in using the utility in the offline mode. A more detailed user guide is available on the income tax website at (https://tinyurl.com/taxoffline).

However, do keep in mind that since the utility has been recently launched, users have been experiencing technical glitches and bugs. Our checks with users show that while some experienced troubles with pre-filled data, for others, calculations went haywire. For instance, a taxpayer was not able to go through the option of paying taxes simply because the utility prompted the tax amount payable in the refund column, instead of the amount payable column (see screenshot).

Glitches in JSON utility The aggregate tax liability is greater than taxes paid earlier. But the utility is erroneously reflecting the difference in refund field, instead of amount payable.

Another user reported troubles with auto-calculated fields, such as in the schedule of Current Year Loss Adjustment where losses in the current year are adjusted against your taxable income. Since in both cases the fields cannot be manually edited, the users had to then re-fill the entire return afresh on the utility to go past the errors.

Another common bug that users faced was a no explanation, cliched response from the utility that read Internal Server Error. Clueless on what went wrong the user had to uninstall the offline utility and download it again before re-filling his ITR form. A few others found no errors while filing the return on the utility, but say that errors did crop up while uploading the JSON files on the portal.

So, brace yourselves for some hiccups while using the utility. Getting the job done right away might buy you some time before the deadline, in case you need to re-fill the return from scratch.

Also read: Know the key points about new tax regime

This year onwards, the exclusion list of ITR-1, that is, persons who cannot file their returns using ITR-1, has got some new frills. Taxpayers for whom TDS has been deducted at the rate of 2 per cent (under section 194N), on cash withdrawals exceeding 1 crore can no longer file their returns in ITR-1. Banks (including co-operative societies and post office) are required to deduct TDS on such withdrawals under section 194N and the deduction shall be 2 per cent for amounts exceeding 20 lakh or at the rate of 5 per cent if withdrawals exceed 1 crore, for non-filers of income tax returns (i.e. those who did not file returns in all of the last three assessment years).

Even employees of eligible start-ups, who can now defer their tax liability on ESOPs, cannot file returns in ITR 1 or 4. They have to file returns in forms 2 and 3 only. This is with reference to the recent amendment in tax laws wherein employees of eligible start-ups can now defer the tax on perquisite by 48 months from the end of the relevant assessment year in which the shares are allotted. However, if the employee quits the job or sells the shares before the expiry of the said 48 months, the perquisite shall be taxable in the year in which he/she quits or sells the shares. Besides, such employees should also remember to fill up the Schedule TTI (Computation of tax liability on total income) in the ITR forms 2 or 3, which now require clear bifurcation of such current and deferred tax amount on ESOPs.

This year also marks the beginning of taxes on your dividend incomes, post the abolition of Dividend Distribution Tax (DDT) in the Budget of 2020. Investors, hence, have their job cut out, in compiling all the dividends earned on their investments in FY21.

However, a few investment apps and broking apps help compile dividends earned on your holdings in a year. This could be useful while filling your Schedule OS relating to Income from Other Sources. One needs to clearly mention the dividend income earned, (those earned by non-resident taxpayers that are chargeable at special rates, under section 115A have to mentioned separately) and interest expenditure which can be claimed as a deduction under section 57(1) if incurred in relation to dividend income.

From now on, even those filing ITR-1 are required to give a quarterly break-up of the dividend income earned, to facilitate computing the interest liability according to advance tax provisions.

Also read: New income tax regime: Should you switch?

Starting this year, taxpayers will also be able to opt for concessional tax rates (under section 115 BAC of the Income tax Act), by foregoing certain exemptions. Taxpayers are required to specify if they are opting for new tax regime under the section, in Part A of all the ITR Forms.

Do remember, taxpayers are free to make the choice between the old and new regime (tax rates) every year, unless one earns business income. However, if those who earn business income opt for the new concessional rates in a given year, they cannot revert to older tax rates in subsequent years.

Besides, assessees with income from business or profession are required to exercise such option on or before the due date for furnishing returns by filing Form 10-IE. Details such as date of filing form 10-IE and its acknowledgement number must be mentioned in Form ITR-3.

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4 things to note this tax filing season - The Hindu BusinessLine - BusinessLine