How to file Nil Income Tax Return?

What Is Nil Income Tax Return? Here Is Why You Should File It

Did you know that you can file a tax return even if your income for the year is below the taxable limit? If your taxable income is less than the threshold limit of Rs 2.5 lakhs in a year, you are not mandated to file income tax return. But if you want to, you can file a nil return.

But you may wonder why get into the hassle of filing a tax return when you don’t have to pay any taxes. There are certain benefits of filing tax returns that you may not be aware of.

1) To carry forward losses

The only condition to carry forward losses is that you have to file tax return on time. If you file your income-tax return after due date which is generally July 31 of the year, you will not be allowed to set off your capital losses against capital gains in a belated return.

For example, you have incurred a loss suppose on sale of equity shares. To carry forward these losses for future adjustment with capital gains you must file tax returns.

2) To claim TDS refund

If your bank has deducted tax deducted at source (TDS) on your interest income over Rs 10,000, despite the fact that your income is below the taxable limit, you can claim a refund only if you have filed a tax return. Also, in case your rental income is more than Rs 1.8 lakhs in a year, your tenant is liable to deduct TDS. You will have to file a tax return for refund of TDS.

3) To show proof of your income

If you are applying for any kind of loan, most lenders ask for your income tax return of the past few years as a proof of income. Even if you are applying for a visa, foreign countries often ask for your income-tax return to know your financial position before issuing visa.

Source: NDTV Profit

SOP for online submission of statement of deduction of tax: IT Notification No 6/2016

Central Board of Direct Taxes has issued a notification regarding procedure for online submission of Statement of deduction of tax.

F. No. DGIT(S)/ADG(S)-2/TDS e-filing Notification/110/2016

Government of India
Ministry of Finance
Central Board of Direct Taxes
Directorate of Income Tax (Systems)

Notification No 6/2016

New Delhi, 4th May, 2016

Procedure for online submission of statement of deduction of tax under sub-section (3) of section 200 and statement of collection of tax under proviso to sub-section (3) of section 206C of the Income-tax Act, 1961 read with rule 31A(5) and rule 31AA(5) of the Income-tax Rules, 1962 respectively

The provisions relating to the statement of deduction of tax under sub-section (3) of section 200 and the statement of collection of tax under proviso to sub-section (3) of section 206C of the Income-tax Act, 1961 (the Act) are prescribed under Rule 31A and Rule 31AA of the Income-tax Rules, 1962 (the Rules) respectively. As per sub-rule (5) of rule 31A and sub-rule (5) of rule 31AA of the Rules, the Director General of Income-tax (Systems) shall specify the procedures, formats and standards for the purposes of furnishing and verification of the statements and shall be responsible for the day to day administration in relation to furnishing and verification of the statements in the manner so specified.

2. In exercise of power conferred by sub-rule (5) of rule 31A and sub-rule (5) of rule 31AA of the Rules, the Principal Director General of Income-tax (Systems) hereby lays down the following procedures of registration in the e-filing portal, the manner of the preparation of the statements and submission of the statements as follows:

3. The deductors/collectors will have the option of online filing of e-TDS/T CS returns through e-filing portal or submission at TIN Facilitation Centres. Procedure for filing e-TDS/e-TCS statement online through e-filing portal is as under:

a. Registration: The deductor /collector should hold valid TAN and is required to be registered in the e-filing website (https://incometaxindiaefiling.gov.in/) as “Tax Deductor Collector” to file the “e-TDS/e-TCS Return”.

b. Preparation: The Return Preparation Utility (RPU) to prepare the TDS/TCS Statement and File Validation Utility (FVU) ,to validate the Statements can be downloaded from the tin-nsdl website (https://www.tin-nsdl.com). The statement is required to be uploaded as a zip file and submitted using a Digital Signature Certificate. The signature file for the zipped file will be generated using the DSC Management Utility (available under ‘Downloads’ in the e-Filing website https://fiincometaxindiaefiling.gov.in).

c. Submission: The deductor/collector is required to login to the e-filing website using TAN and go to TDS -> Upload TDS. The deductor/collector is required to upload the “Zip” file along with the signature file (generated as explained in para (b) above). Once uploaded, the status of the statement shall be shown as “Uploaded”. The uploaded file shall be processed and validated at the e-filing portal. Upon validation the status shall be either “Accepted” or “Rejected which will reflect within 24 hours from the time of upload. The status of uploaded file will be visible at TDS -> View Filed TDS. In case the submitted file is “Rejected”, the reason for rejection shall be displayed.

(Gopal Mukherjee)

Pr. DGIT (Systems), CBDT

Download CBDT Notification No.F. No. DGIT(S)/ADG(S)-2/TDS e-filing Notification/110/2016 dated 04.05.2016

Nine reasons for getting an income tax notice

The Income Tax Department has launched a drive to ensure greater tax compliance. In recent months, thousands of taxpayers have been served notices after discrepancies were noted in their tax returns or their TDS details. This sudden rise in the number of tax notices is not because people have stopped paying tax or filing their returns. It's just that the tax authorities now have an integrated database on taxpayers and can track all financial transactions. Here are some common reasons for getting a notice.

Not mentioning PAN or quoting incorrect PAN 
The PAN is now mandatory for high-value transactions . If you do not submit it while making an investment or taking up a job, your income will be subjected to a higher TDS of 20%, instead of 10%. If the PAN is incorrect, you could even be slapped with a penalty of up to 10,000. The bigger problem of an incorrect PAN is that the TDS will not be credited to your account. What's more, the tax refund can be credited to another account if you submit the wrong PAN.

Not checking Form 26AS before filing 
The Form 26AS has details of the tax paid by an individual during a financial year. You can easily access your Form 26AS online. Some banks also provide this facility to their Net banking customers. If your bank, bond issuer or employer has deducted TDS, make sure it is mentioned in your Form 26AS. Also, check whether all the investments with TDS have been duly mentioned in the tax return. Any mismatch will lead to a notice from the department.

Mismatch in income and expenses & investments 
Financial services firms, registration authorities and merchant establishments are supposed to report certain high-value transactions to the CBDT. The Income Tax Department gets all information on the basis of your PAN. The CASS matches this information with the returns filed by the taxpayer and promptly issue a notice if there is a mismatch in the income you have declared and your investments and spending.

Not filing returns if income is above 2 lakh 
If your gross taxable income before deduction under any section is above 2 lakh, it is mandatory for you to file your return. If you don't file it, you can be slapped with a penalty of up to 300% of the outstanding tax. Even if there is no tax liability, you have to file the return if the gross income before various deductions is more than the basic exemption limit.