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Tax returns or returns of income

As per Section 139 (1) of Income Tax Act, 1961, every person,

(a) being a company or a firm; or

(b) being a person other than a company or a firm, if (i) his total income or (ii) the total income of any other person in respect of which he is assessable under the Income Tax Act, 1961, during the previous year, exceeds the maximum amount which is not chargeable to income tax shall, furnish a return of his income or the income of such other person.

Obligation to file Income Tax Return by different assesses is as follows:

Company:

Every Company has to file a return in respect of its income or loss in every previous year. Further, the following companies are also required to file return of income even if there is no income or loss:

  • (a) A company whose entire income is exempt from tax. For example, a company engaged in agriculture business.
  • (b) A public limited company though incorporated but has not received certificate of commencement of business.
  • (c) A defunct company which is not yet liquidated.
  • (d) A private limited company which is incorporated but is in the process of setting up the business.
  • (e) A foreign company, if it has some business connection in India or is operating in India whether such company is having income or not.

Firm:

From assessment year 2012-13, it is mandatory for every firm to file return in respect of its income or loss in every previous year. The firm shall have to file return of income even if its income is exempt.

Individual:

If the following conditions are satisfied, an individual taxpayer has an option to submit his return of income or not to submit his return of income:

  • (a) The taxpayer is an individual. He may be resident or ordinary resident.
  • (b) His taxable income does not exceed Rs. 5,00,000/-. Taxable income should consist of salary and /or savings bank account interest (interest should not be more than Rs. 10,000/-)
  • (c) The individual has reported to his employer his savings bank interest for the purpose of calculating tax deductible under section 192.
  • (d) The individual has reported to his employer his permanent account number (PAN).
  • (e) The individual has received a certificate of tax deduction in Form No. 16 from his employer which mentions the PAN, details of income, tax deducted at source by employer and deposited to the credit of the Central Government.
  • (f) The individual has no claim of refund of taxes due to him for the income of the assessment year.
  • (g) The individual has received salary from only one employer for the assessment year.

Consequences of Late Submission of Returns:

If a return is submitted after the due date, the following consequences will be applicable:

  • (a) The assessee will be liable for penal interest under Section 234A.
  • (b) A penalty of Rs. 5,000/- may be imposed under Section 271F if belated return is submitted after the end of the assessment year.
  • (c) If return of loss is submitted after the due date, a few losses cannot be carried forward.
  • (d) If the return is submitted belated, deductions allowable under certain sections will not be available.

As per law, every Company whether private limited or public limited is mandatorily required to maintain proper books of accounts as prescribed under the Income Tax Act and to get its books audited by an independent chartered accountant before the due date as prescribed under Income Tax Act.