Latest news with #BombayCharteredAccountants'Society
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Business Standard
3 days ago
- Business
- Business Standard
Delay in ITR-5, 6, 7 utilities:Brace for shorter filing window, say experts
Taxpayers looking to file ITR-5, 6 and 7 are waiting for their forms to go live on the Income Tax portal. Tax experts say the hold-up has left professionals with a shrinking window to complete complex filings, raising the chances of last-minute errors. 'These forms require complex disclosures, audits and reconciliations. The phased rollout of ITR utilities this year has disrupted workflows even in the most efficient tax practices,' said Sonu Jain, chief risk and compliance officer at 9Point Capital. ITR-2 and 3 utilities were also released late in mid-July. 'Normally, filings for multiple clients are spread over 3-4 months. This delay has created a backlog, increasing the chances of last-minute rush, errors and delayed refunds. Taxpayers are also grappling with discrepancies between AIS data and their own records, making the process slower and more stressful,' said Deepesh Chheda, partner at Dhruva Advisors. What taxpayers should do now Experts stress that taxpayers should use this time wisely. 'Finalise your financial statements, reconcile data with Form 26AS and AIS, and prepare drafts of your returns based on last year's schema,' advised Kinjal Bhuta, CA and treasurer of the Bombay Chartered Accountants' Society. She warned that waiting for the utilities to go live could leave too little time for quality checks. Deepak Kumar Jain, chief executive officer of recommended that taxpayers, required to undergo audits, complete them early and coordinate closely with tax professionals. 'Preparedness always pays dividends. Do not rely on the hope of an extension,' he cautioned. Will the deadline be extended? While the government had extended deadlines for non-audit cases earlier, no fresh announcements have been made for ITR-5, 6 or 7 filings. 'Future extensions cannot be predicted. For corporates and trusts, due dates are linked to other compliance deadlines under the Companies Act and GST, so any miscalculation can lead to a domino effect of non-compliance,' said Jain of 9Point Capital. Penalties for missing the deadline Failing to file on time can prove costly. Taxpayers with income above Rs 5 lakh may face a penalty of Rs 5,000 under Section 234F, while those below the threshold are charged Rs 1,000. Interest at 1 per cent per month applies on unpaid taxes. 'Belated filers also lose the ability to carry forward business or capital losses and may face delayed refunds,' Chheda noted. Bhuta pointed out an additional risk. 'Multiple deadlines coinciding could overwhelm the Income Tax portal, adding to taxpayers' woes.' With little clarity on further extensions, taxpayers filing ITR-5, 6, or 7 should proactively prepare to avoid last-minute bottlenecks and penalties. Staying in contact with tax advisors will be critical in navigating the compressed timeline.
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Business Standard
3 days ago
- Business
- Business Standard
After buying a second-hand car, this is how you transfer insurance policy
Taxpayers looking to file ITR-5, 6 and 7 are waiting for their forms to go live on the Income Tax portal. Tax experts say the hold-up has left professionals with a shrinking window to complete complex filings, raising the chances of last-minute errors. 'These forms require complex disclosures, audits and reconciliations. The phased rollout of ITR utilities this year has disrupted workflows even in the most efficient tax practices,' said Sonu Jain, chief risk and compliance officer at 9Point Capital. ITR-2 and 3 utilities were also released late in mid-July. 'Normally, filings for multiple clients are spread over 3-4 months. This delay has created a backlog, increasing the chances of last-minute rush, errors and delayed refunds. Taxpayers are also grappling with discrepancies between AIS data and their own records, making the process slower and more stressful,' said Deepesh Chheda, partner at Dhruva Advisors. What taxpayers should do now Experts stress that taxpayers should use this time wisely. 'Finalise your financial statements, reconcile data with Form 26AS and AIS, and prepare drafts of your returns based on last year's schema,' advised Kinjal Bhuta, CA and treasurer of the Bombay Chartered Accountants' Society. She warned that waiting for the utilities to go live could leave too little time for quality checks. Deepak Kumar Jain, chief executive officer of recommended that taxpayers, required to undergo audits, complete them early and coordinate closely with tax professionals. 'Preparedness always pays dividends. Do not rely on the hope of an extension,' he cautioned. Will the deadline be extended? While the government had extended deadlines for non-audit cases earlier, no fresh announcements have been made for ITR-5, 6 or 7 filings. 'Future extensions cannot be predicted. For corporates and trusts, due dates are linked to other compliance deadlines under the Companies Act and GST, so any miscalculation can lead to a domino effect of non-compliance,' said Jain of 9Point Capital. Penalties for missing the deadline Failing to file on time can prove costly. Taxpayers with income above Rs 5 lakh may face a penalty of Rs 5,000 under Section 234F, while those below the threshold are charged Rs 1,000. Interest at 1 per cent per month applies on unpaid taxes. 'Belated filers also lose the ability to carry forward business or capital losses and may face delayed refunds,' Chheda noted. Bhuta pointed out an additional risk. 'Multiple deadlines coinciding could overwhelm the Income Tax portal, adding to taxpayers' woes.' Key takeaway With little clarity on further extensions, taxpayers filing ITR-5, 6, or 7 should proactively prepare to avoid last-minute bottlenecks and penalties. Staying in contact with tax advisors will be critical in navigating the compressed timeline.
Mint
10-07-2025
- Business
- Mint
Income tax filing: How to deal with inaccuracies in annual information statement
MUMBAI : The annual information statement (AIS), introduced by the Income Tax Department to enhance transparency, is instead creating hassles for taxpayers by reporting incorrect incomes, according to chartered accountants. Introduced in 2021, the AIS gives a snapshot of financial transactions—ranging from securities and mutual funds to property deals and fixed deposits—during a fiscal year, sourced from multiple reporting entities such as banks, registrars, depositories, and sub-registrars. Available on the Income Tax e-Filing portal, the AIS complements the form 26AS by providing an expanded view of various income streams and transactions that might attract tax implications. However, it is often riddled with inaccuracies that leave taxpayers vulnerable to notices and assessments. The problems One of the most frequent errors in the AIS concerns capital market transactions, especially equity trading. Brokers and depositories report trade details, but inconsistencies between actual trade values and reported prices often don't match. 'We've come across several critical mismatches in tax reporting that can create significant challenges for taxpayers. In equity transactions, for instance, depositories often report closing prices that differ slightly from the actual transaction prices," said Ashish Karundia, chartered accountant and founder, Ashish Karundia & Co. These discrepancies often arise from systems failing to capture real-time prices or settlement-specific data. 'I received cases of senior citizens who do not even have a demat account. Surprisingly, capital gains were reported in their AIS. These individuals have never transacted in any securities in their entire lives, yet the system showed transactions," said lawyer and chartered accountant Kinjal Bhuta, who is also a treasurer at the Bombay Chartered Accountants' Society. Property deals are another area where AIS creates major confusion, especially in cases of joint ownership. The system often attributes the entire property value to each co-owner, causing inflated income disclosures. 'One of the reasons is that immovable property, time deposits, securities, or mutual fund units were purchased in joint names merely for the sake of convenience or as a gesture of affection. However, the second (joint) holder did not make any financial contribution toward the purchase," said Pankaj Bhuta, chartered accountant and founder of P. R. Bhuta & Co. The reporting systems often double-count the property value, creating a mismatch that doesn't reflect the actual financial arrangement. Even gift transactions get misinterpreted. 'A peculiar case involving property gifting. When someone does a gift deed and registers it under stamp duty, the system incorrectly treats it as a registered purchase and sale. This means both the gifting and receiving parties start getting notices about stamp duty value and fair market value, even though it was just a gift," said Kinjal Bhuta. The issue lies with how sub-registrars report transactions, noted Ganesh Rajgopalan, partner at accounting services provider A.P. Rajagopalan & Co. 'When joint property transactions are registered, sub-registrars report the same transaction for each joint holder, creating a complex reporting scenario. This means a single property transaction gets recorded multiple times across different PAN (permanent account number) holders, without clarity on individual ownership shares," he said. The AIS often miscalculates even interest income from fixed deposits. This issue arises when a taxpayer opts to receive interest only upon maturity while still being liable to pay tax on the interest accrued each year under the accrual method. In such cases, the AIS often either misses out on the yearly accrual or overstates the income in the year of maturity. For instance, if a taxpayer invests ₹5 lakh in a five-year fixed deposit at an annual interest rate of 7%, interest of around ₹35,000 accrues each year, totalling ₹1.75 lakh over five years. Ideally, this interest should be reported annually and taxed accordingly. However, if the bank reports the full maturity value of ₹6.75 lakh (principal + interest) only in the final year, the AIS reflects the entire ₹1.75 lakh interest as income in one year, inflating that year's income. What can taxpayers do? If you've noticed inaccuracies in your AIS, the first step is reconciliation—comparing the AIS, Form 26AS, and Taxpayer Information Summary (TIS) with your own records. 'Always reconcile your income with Form 26AS, AIS, and TIS. If any discrepancies are found, you can submit your disagreement through the AIS portal on the Income Tax Department website. Ensure you retain all supporting documents to substantiate your response," said Pankaj Bhuta. He shares a step-by-step guide: Log in to Go to Pending Actions → Compliance Portal Click 'Proceed" and select the AIS tile Choose the financial year → View AIS → Select the transaction Click 'Optional' under 'Provide Feedback' and submit your response. Keep the acknowledgement (Reference ID) for future reference. Karundia suggested that taxpayers should identify the type of mismatch, prepare a reconciliation, and then raise it through the AIS platform. 'If the issue remains unresolved through the AIS feedback mechanism, taxpayers may also consider directly writing to the reporting entities for correction." What should the tax department do? Annual information statements lack legal backing. 'Taxpayers can challenge these AIS entries because there's no law validating these reports. The department has created these things without a proper legislative basis," said Kinjal Bhuta. She also recommended that the government issue public circulars whenever there are errors or delays. 'There should be an option for taxpayers to specify the reason for including a second/joint name and also upload supporting documentary evidence," added Pankaj Bhuta. Karundia recommended expanding feedback options on the AIS platform. 'Introducing a mechanism for taxpayers to directly communicate feedback to reporting entities would enhance accountability and potentially lead to faster resolution times." 'The current process of sending queries to sub-registrars is fundamentally flawed and creates unnecessary complications for taxpayers. The Income Tax Department should develop sophisticated software logic to automatically match transaction values," highlighted Rajgopalan. The income tax department didn't respond to Mint's emailed queries.
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Business Standard
09-07-2025
- Business
- Business Standard
Over ₹50k on rent? Here's the TDS rule that could cost you big if ignored
Paying rent above Rs 50,000 a month? As a tenant, you may be legally required to deduct tax at source (TDS) and deposit it with the government. Missing this crucial step could land you in trouble with penalties of up to Rs 1 lakh, tax experts warn. What the law says Under Section 194-IB of the Income Tax Act, individuals or Hindu Undivided Families (HUFs) not subject to tax audit must deduct TDS at 2 per cent if the monthly rent exceeds Rs 50,000. 'This provision, introduced in 2017, is still widely misunderstood, especially among salaried tenants in metro cities paying high rents,' said Niyati Shah, chartered accountant and vertical head -- Personal Tax at 1 Finance. 'If your monthly rent exceeds Rs 50,000, you must deduct TDS at 5 per cent and deposit it once in a financial year, either in March or when vacating the property, whichever is earlier,' explained Kinjal Bhuta, chartered accountant, advocate and secretary, Bombay Chartered Accountants' Society. 'There's no need to obtain a Tax Deduction Account Number (TAN); quoting your PAN and the landlord's PAN is sufficient.' 'The deducted tax must be deposited via Form 26QC within 30 days and a Form 16C TDS certificate issued to the landlord within 15 days,' Shah added. For those running businesses or professions with turnover above RS 1 crore (business) or Rs 50 lakh (profession), Section 194-I(b) applies. 'Such taxpayers must deduct TDS at 10 per cent if annual rent crosses Rs 2.4 lakh and require a TAN,' noted Suresh Surana, chartered accountant. What happens if you miss it? Failing to comply can be expensive. 'Overlooking TDS obligations can lead to a financial and compliance headache,' Shah warned. Experts states consequences include: -Interest of 1 per cent per month for not deducting TDS and 1.5 per cent per month for delayed deposit. -Late filing fee of Rs 200 per day until Form 26QC (the TDS return for rent) is submitted. -Penalty up to Rs 1 lakh under Section 271H for not filing Form 26QC or issuing Form 16C on time. In extreme cases, prosecution with jail terms ranging from 3 months to 7 years may apply for wilful defaults, Surana said. Missed the deadline? Here's what to do Voluntary compliance is key. 'If you've missed TDS, calculate and deposit it immediately with applicable interest through Form 26QC. Then issue Form 16C to your landlord,' advised Shah. She added that tenants can request a waiver of penalties by citing genuine reasons, especially for first-time lapses. Surana agreed, stressing the importance of acting swiftly. 'Prompt correction before receiving a tax notice is viewed favourably by authorities.' Common mistakes to avoid Many tenants wrongly assume TDS applies only when rent is paid to companies or that personal rent is exempt. 'TDS applies irrespective of whether the landlord is an individual, HUF, or company, provided the Rs 50,000 threshold is crossed,' Surana clarified. Experts suggested few precautions for tenants: -Collect the landlord's PAN when signing the lease. -Maintain proof of TDS payment and Form 16C issuance. -Cross-verify entries in the landlord's Form 26AS to avoid disputes. Why it matters With the Income Tax Department tracking high-value transactions digitally, tenants ignoring TDS obligations risk notices, interest and penalties. 'A small deduction today avoids a big problem tomorrow,' Shah summarised
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Business Standard
07-07-2025
- Business
- Business Standard
Changed jobs recently? Here's how to file ITR without any errors
If you switched jobs during the last financial year, filing your income tax return (ITR) could be a bit tricky. With multiple Form 16s, possible TDS mismatches, and lump-sum payments like gratuity or PF withdrawals in the mix, even a minor slip-up can invite a notice from the tax department. Experts break down the common pitfalls and share tips to help you file your return smoothly. Don't miss income from previous employer 'One of the biggest mistakes taxpayers make is reporting income from only their latest employer and forgetting the salary earned from the previous one,' says Niyati Shah, chartered accountant and vertical head, personal tax at 1 Finance. 'This leads to underreporting of income and can trigger a notice from the tax department.' Deepesh Chheda, partner at Dhruva Advisors, points out that employees also often fail to inform their new employer about income from the earlier job using Form 12B. 'As a result, the new employer calculates tax only on the current salary, which often leads to insufficient TDS and a higher tax liability at filing time,' he says. Consolidate multiple form 16s To file your return correctly, start by collecting Form 16 from each employer you worked for during the financial year. Add up salary details from Part B of all Form 16s (gross salary, deductions, exemptions). Cross-check TDS details in Part A against your Form 26AS and Annual Information Statement (AIS). 'Use Form 26AS as the backbone for reconciliation. Filing your ITR based on consolidated income ensures transparency and helps you avoid tax notices later,' Chheda advises. Kinjal Bhuta, CA and secretary of the Bombay Chartered Accountants' Society, adds, 'When claiming deductions like 80C (investments) or 80D (health premiums), make sure you don't double-count them. These limits apply to your total income, not to each job separately.' Handle TDS mismatches proactively After a jobswitch, it's not unusual to see differences between TDS in Form 16 and what's reflected in Form 26AS or AIS. 'If there's a mismatch, reach out to the employer and request them to revise their TDS return (Form 24Q),' says Shah. Sujit Sudhakar Bangar, founder of recommends that taxpayers always file their ITR as per the TDS credits in Form 26AS. 'If the employer doesn't rectify the error, you may need to pay the shortfall to avoid a tax demand later,' he warns. Report lump-sum benefits correctly Benefits like gratuity, PF withdrawals, and leave encashment during a job switch need careful reporting. Gratuity: Tax-free up to ~20 lakh for eligible employees. Leave encashment: Exempt up to ~25 lakh for non-government employees. PF withdrawals: Tax-free only after 5 years of continuous service; otherwise, taxable. 'A common mistake is ignoring these receipts or reporting them incorrectly, which can invite scrutiny,' Bhuta cautions. Checklist for job switchers filing ITR -Collect Form 16 from all employers. -Reconcile income and TDS with Form 26AS/AIS. -Avoid double-claiming deductions like 80C, 80D, or HRA. -Report gratuity, PF withdrawals, and leave encashment properly. -File as per Form 26AS even if there's a mismatch with Form 16. The Bottom Line Switching jobs mid-year adds complexity to tax filing. But a little diligence now, consolidating Form 16s, checking Form 26AS, and correctly declaring lump-sum benefits can help you avoid unnecessary notices and penalties. 'A few extra steps today can save you major headaches tomorrow,' Shah says.
