Agarwal Singhal & Associates

From this year the flexibility in filing tax returns has reduced. Now, if you don’t file the return for financial year 2016-17 by 31 March, you may face scrutiny and penalty

If you are among those taxpayers who have not yet filed their income tax return (ITR) for the financial year 2016-17, or the assessment year (AY) 2017-18, you must have received emails and messages from the income-tax department reminding you to file the tax return by 31 March 2018. You must remember that if you had income that was above the exempted limit during FY2016-17, then it is mandatory for you to file a tax return. If you had income that was less than the threshold limit for taxes to apply, but you deposited a considerable amount of cash in your bank accounts during the demonetization period, you should file a tax return.

What’s different this time around is that unlike previous AYs, when late tax returns could be filed even one year after the end of the relevant AY, now if you don’t file the ITR for the AY 2017-18 by 31 March 2018, you won’t be able to file it later.

What’s a late tax return
The last date to file tax returns is usually 31 July of each AY. Assessment year in which we assess income, pay taxes and file tax return for the previous year or the financial year. So, for financial year 2016-17, the AY is 2017-18. The last date to file the tax return for financial year 2016-17 was 31 July 2017, which was later moved to 5 August 2017. A tax return filed after the due date of that year is considered belated return.

“Starting AY 2017-18, belated returns can be filed before the end of the relevant AY, that is, by 31 March 2018 (this year) or before completion of assessment if any.

By 31 March 2018, you can do two things: one, you can file the tax return of financial year 2016-17; and two, you can also file the same for financial year 2015-16

Belated return: disadvantages

Not filing a tax return on time has consequences, and you will lose out on some benefits. For starters, there are penalties and interest levied on the income tax that was due. “The person who files a belated return for AY 2017-18 may be subject to a penalty of Rs 5,000 under Section 271F of the Income-tax Act, 1961,”

Apart from the penalty, interest too may be levied under various sections. “If any tax is due, interest may have to be paid under sections 234A, 234B and 234C of the Act,”

From the next AY, 2018-19, a fixed amount of penalty will be charged on belated tax returns. “Section 271F will get replaced by section 234F, which prescribes a late fee of Rs 5,000 if the return is filed after due date and up to 31 December, and Rs10,000 (from 1 January) up to 31 March of AY. However, if the total taxable income of a person doesn’t exceed Rs 5 lakh, late fee shall not exceed Rs 1,000,”

Besides penalty and interest, there are other disadvantages to filing tax returns late. One of these is not being able to carry forward capital losses. Certain losses like those from business and profession and short-term capital loss may not be allowed to be carried forward.

If there is any refund, it may be delayed and taxpayers will not receive interest on refund from 1 April of the AY. Interest will be paid from the date on which the tax return was furnished till the date on which refund is granted. “If return is filed within the due date, interest is paid effective 1 April of the AY to the date on which refund is granted”, you were eligible for a refund of Rs10,000; you filed the ITR in June, which is before the due date (31 July); and you get a refund in September. In this case, you will get interest on the refund from April till September. But if you file late, say, in October, and you get refund in December, you will get interest on the refund only from October till December.

What if you don’t file even a belated tax return?

Besides the penalties and other disadvantages that a belated tax return invites, the income-tax department can send you a notice of inquiry (under section 142(1)) or a notice of income escaping assessment (section 148). Through these notices, it can seek clarification on why the tax return was filed late, and you will be asked to file the return online as per the date specified in the notice. There may also be penalties.

If you don’t receive any notice and you have a genuine reason for not having filed the return, “you may send a written request to the AO (assessment officer) for filing a return,” You can do this even after the last date, that is 31 March of the AY, but the permission will depend on AO’s discretion.

If you don’t reply to the notice or don’t file your return within the stipulated time mentioned there, your problem can escalate, depending on the tax due. “If the person has taxable income and still doesn’t file a tax return, then in addition to penalty for non-filing of return, the person may also be subject to a penalty for under-reporting of income at 50% of the tax payable on under-reported income,” Criminal proceedings, too, can be initiated in some cases.

*Required CA, CA INTER, and Accountants having experience in Tally ,Income tax and GST at the office of chartered Accountants located at Borivali West and clients office Andheri and Khar, interested candidates can send their resumes at [email protected] please mention your current salary and expected salary...

Composition ​​​Facilities Available for​​ Small Manufacturers, Traders and Food / Restaurant Services

Composition Scheme would be available only to certain eligible taxable persons.

This scheme is specifically introduced by government to give relief to the small businessman. The best part of Composition Scheme is that this Scheme will be applicable for all goods however not applicable on Services except restaurant service provider.

Following Persons are not eligible to take benefit of composition scheme:​

Person making supply of goods which are not liable to GS​ Person making inter-State outward supplies​ Person making supplies through an e-commerce operator​ Manufacture of notified goods​ Person collecting GST​
​Person taking input tax credit
Composition scheme is not available for services:

opting to pay tax under composition scheme, except composite supply, by way of or as a part of any service, (i.e. food/restaurant services) for which specifically 5% rate has been prescribed.Suppliers of services i.e. service providers are excluded from

Eligibility to pay tax under composition scheme:
Only those taxable persons whose ‘aggregate turnover does not exceed Rs. 75 lacs in the last financial year will be eligible to opt for the composition scheme.

The Government, by notification and with recommendation of Council, is empowered to increase this threshold limit up to Rs.1 crore.

Rate of tax:

The rate of tax would be as under:

2% of the turnover in case of MANUFACTURER.
5% of the turnover in case of Food/Restaurant Services.
1% of the turnover in case of other suppliers (like traders / agents)
Benefits of Registering under GST Composition Scheme:
Limited Compliance: Under the composition scheme, the taxpayer is required to furnish quarterly return only, and thus he need not worry on record keeping and can focus on his business.

Limited Tax Liability: Another benefit of getting registered under the composition scheme is that the tax rate for such taxpayer is nominal under the GST Law.

Drawback of Composition Scheme:
Limited Territory for Business:A taxpayer registered under the composition scheme is barred from carrying out inter-state transactions and cannot offer import-export of goods and services. Thus, he is compelled to carry out only intra-state transactions and this limits the territory of his business.
No Credit of Input Tax: There has been no provision of input credit on B2B transactions. Thus, if any taxable person is carrying out business on B2B model, such person will not be allowed the credit of input tax paid from the output liability. Also, the buyer of such goods will not get any credit on tax paid, resulting in price distortion and cascading. This will further result in a loss of business as a buyer registered as a normal taxpayer will not get any credit when buying from a person registered under composition scheme. Eventually, such buyers might avoid purchases from a taxpayer under composition scheme.
No Collection of Tax: Though the rate of composition tax is kept very nominal at 0.5%, 1% or 2.5%, a taxpayer under composition scheme is not allowed to recover such tax from his buyer, as he is not allowed to raise a tax invoice. Consequently, the burden of such tax is kept on the taxpayer himself and this has to be paid out of his own pocket.
Penal Provision: Another provision which is heavily debated is the penal provision for a taxpayer under composition scheme. As per the GST Law, if the taxpayer who has previously been given registration under composition scheme is found to be not eligible for the composition scheme or if the permission granted earlier was incorrectly granted, then such taxpayer will be liable to pay the differential tax along with a penalty which can extend up to the amount of total tax liability i.e 100%.
Not applicable to the supplier supplying goods through E-commerce
Some Other Points:
he shall mention the words “composition taxable person, not eligible to collect tax on supplies” at the top of the bill of supply issued by him; and
he shall mention the words “composition taxable person” on every notice or signboard displayed at a prominent place at his principal place of business and at every additional place or places of business.

GST Transition Rules are hosted on the Government Website, its salient features are as under:

1. Persons entitled to take transition credit will have to submit a declaration within 90 days (upto 30th Sept) specifying the credit he wants to take on stocks lying with him on 30th June.

2. Declaration will have to be submitted in from GST Tran-1

3. Commissioner can extend this timeline by another 90 days

4. In case of capital goods whose part credit was availed in current period and part credit is to be availed under GST, he will have to submit the declaration specifying:
a. Amount of credit already availed in the current law
b. Amount of credit yet to be availed under the existing law and which he intends to avail under GST period

5. Persons having excise invoices for stocks lying as on 30th June will be entitled to take full credit of excise mentioned in the invoices

6. Deemed Credit:
Persons who do not have excise invoice, will be eligible to take credit in the following manner:
a. For goods taxable @ 18% or above - Credit shall be allowed at the rate of 60% of CGST payable on that goods – so if the rate is 18% then credit will be available @ 5.4% (60% of 9% CGST)
b. For goods other than above - Credit shall be allowed at the rate of 40% of CGST payable on that goods – so if the rate is 12% then credit will be available @ 2.4% (40% of 6% CGST)

7. Credit in the above Deemed Credit scheme will be available only once the said goods are sold and GST is paid. It’s like a cash back scheme.

8. To take the credit in this scheme following conditions will have to be fulfilled:
a. such goods were not unconditionally exempt from excise
b. the document for procurement of such goods is available
c. the stock of goods on which the credit is availed is so stored that it can be easily identified by the registered person.

9. Deemed credit scheme will go on for 6 months from GST date, so stocks lying as on 30th June have to be sold maximum upto 31st December, 2017. No credit will be available if these goods are sold after December 2017.

10. Separate return under for GST TRAN-2 will have to be filed.

11. Every person to whom the provision of section 142 (11) (c) applies, shall submit a declaration within 90 days of GST date in form GST TRAN-1 furnishing the proportion of supply on which VAT or service tax has been paid before the GST day but the supply is made after the GST day, and the ITC admissible thereon.

12. Every person to whom the provisions of section 141 (Jobworker) apply shall, within 90 days of the GST day, submit a declaration electronically in form GST TRAN-1, specifying therein, the stock held by him on the appointed day.

13. Every person having sent goods on approval under the existing law and to whom section 142 (12) applies shall, within 90 days of the appointed day, submit details of
such goods sent on approval in form GST TRAN-1.

* HOW TO GET READY FOR GST *

1. Get Complete your working for Closing Stock for the period 31.3.2017 / 30.6.2017 before GST Implementation date .

2. Allocate your such stock into quantative mode.

3. Get the A/c Statement from your Suppliers / Creditors for the year ended 31/3/2017 & compiled them from your books.

4. Rectify *Mismatch Reports of Purchases *, if persists .

5. Revise your Vat Returns if point no.4 applies to you.

6. Make strict follow-up to Collect all the C forms/H Form/ I forms .

7. Get your Books Finalise for FY 2016-17

8. Make a separate file of those items which are shown in your Unsold stock as on 30.6.2017 e.g. Purchase Bills/ Bill of Entry/ Excise Paying Documents etc.

9. Stock ageing be made to ascertain if any stock is more than 1yr old. If yes then dispose it off immediately or sell it to your sister concern against Tax Invoice locally.

10. Classify stock tax rate wise, purchased locally to get ITC into SGST.

11. Classify stock purchased on invoices bearing Duty Payment & non duty payments to get ITC transferred to CGST.

12. Inform your GSTIN / ARN to all suppliers of Goods & Services.

13. Obtain GSTIN of all Suppliers & Buyers.

14. Apply for migration in all states if you have centralised registration under Service Tax.

15. Train your accountants for GST accounting and returns formats.

16. Make Chart of HSN CODES & GST Rates on your goods & services to be purchased & Sold.

17. Check whether any stock of one year old is lying with you .

18. Analyse P and L and see which expenses are liable to RCM.

Taxability of Gifts received from Relatives & Non Relatives

If you receive a gift from any of your relatives or friends for Christmas or New Year or Pongal or any festival, worth more than Rs. 50000, as per income tax laws, it may be taxable income on your hands in certain situations.

Not only the income, if a person receives a gift, if the value of the gift is exceeding the certain limit then he/she must add it in his income and pay the income tax. There are certain exceptions on declaring the gifts as income.

Gifts received From Relatives

As per the Income tax act, the Gifts received from any of your relatives are fully exempt from tax. Whether you are received the gifts as Cash, Cheque or any goods. You are not liable to pay the tax for these gifts. Here the “relatives” term defines by the Income Tax act as follows :
o Spouse of the individual
o Brother or sister of the individual
o Brother or sister of the spouse of the individual
o Brother or sister of either of the parents of the individual
o Any lineal ascendant or descendant of the individual
o Any lineal ascendant or descendant of the spouse of the individual, Spouse of the person referred to in clauses (ii) to (vi).

Gift of more than Rs. 50,000/- can be received from below mentioned relatives without any taxes.

Tax-Smart 1: Exemption for Marriage Gifts:

Any gift received from any person on occasion of marriage of the gift's recipient will not be liable to income tax at all.
Also there is no monetary limit attached to this exemption, which is provided by Section 56(2) (vi).

Tax-Smart-2: Tax-Exempt Gifts from Other Persons:

Besides gifts received from relatives or on occasion of marriage, following are the other gifts which are completely tax-exempt as provided in Section 56(2)(vi) of the I.T. Act:
1. Gift received from a Will or by way of inheritance;
2. Gift received in contemplation of death of the donor;
3. Gift from a local authority;
4. Gift received from any fund, foundation, university or other educational institution or hospital or any trust or any institution referred to in Section 10(23C); and
5. Gift received from any trust/institution, which is registered as public charitable trust or institution u/s 12AA.

Tax-Smart 3: Gifts in Kind are Tax-Exempt:

Provisions relating to the taxation of gifts from non-relatives & non-specified persons in excess of Rs. 50,000 will be liable to income tax only when the gift is sum of money, by way of cash, Cheque or a bank draft. Gifts in kind like a gift of shares, gift of land, gift of house, gift of units or even mutual funds, jewellery, etc. shall not be liable to any income tax at all.

For example if you are receiving gift of Rs.100000 from your uncle (your mother’s brother), it is fully exempt from the Tax. Whenever you get the gifts please apply the relations in the above list to ascertain whether you are liable to pay any tax for the received gift.

Gifts received From Non-Relatives

Here non-relatives means anyone who doesn't come under the above mentioned relation for you. In this case you are tax exempt up to maximum of Rs.50000 for a financial year. If you receive the gift worth more than Rs.50000, you are liable to pay the tax whatever you received excess of the limit. This rule applies when the gift is a sum of money, whether in cash, by way of cheque, bank draft or any articles which is value more than the Rs.50000.

For example you are receiving a gift of Company Shares from one of your team mate in your company or when you are receiving a gift of Rs.100000 (cheque) for the best performing in your company (not a bonus), Rs.50000 is liable to pay tax

My mother gifted me Rs. X amount. Is this taxable?

The simple answer is “NO”. Any gift in the form of articles, shares or cash are not taxable on your hand. If you want to understand the gift related income tax laws, Under section 56 of the Income-tax Act, any money received without consideration which is exceeding Rs. 50000 is taxable on your hand. But, there is exception on certain situations.

The money is received from a relative, which includes, among others, any lineal ascendant or descendant of the individual is fully tax exempt on your hand. So, it is very clear that money received from your mother or father would be not taxable on your hand.
Another important point, if you want to claim the tax exemption on the gifts, please make sure that you have the gift deed executed and who is gifting signed on the papers. Without that the gift laws are not valid for claiming the exemptions. You may consult a lawyer for the documentation with respect to the gift transaction.

Marriage Gifts

One very happy feature of the provision of taxation of gifts is that any gift received from any person on the occasion of the marriage of the gift’s recipient would not be liable to income tax. There is no monetary limit attached to this exemption. Note that, if you receive any gifts at the time of engagement or the marriage anniversary if liable to pay the tax.

Special Tax Exempt gifts

The following list of gifts are fully exempted from Tax whether the it is received as Cash, or any other form of the material doesn't affect the exemption.
1. Gift received under a Will or by way of inheritance
2. Gift in contemplation of death of the donor; Gift from any local authority
3. Gift from any fund or foundation or university or other educational institution or hospital or any trust or any institution referred to in Section 10(23C)
4. Gift from any trust or institution, which is registered as a public charitable trust or institution under Section 12AA

No stamped document required for gift of movable property,
But it is advisable to keep letter of gift from donor on record!

LIST OF RELATIVES COVERED

Query: Your article states that gifts received by an individual from his relative are treated as exempt, even beyond Rs.50,000 in a year. Can you please elaborate which relatives are covered for this purpose?

Reply: One of the important exceptions provided under Section 56 of the Income-tax Act, in regard to taxing gifts as income, is in respect of sums received by any individual from his/her relative out of natural love and affection. For this purpose, the term ‘relative’ has been defined to include the individual’s spouse, brother or sister of the individual or spouse, brother or sister of either of the parents of the individual, any lineal ascendant or descendant of the individual or spouse and finally the spouse of any of the above-referred persons.

Lineal ascendants of an individual would include his father, mother, grandfather, grandmother and so on. Lineal ascendants of the spouse would include in-laws of the individual in the like category. Similarly, lineal descendants of the individual and the spouse would cover their son, daughter, grandson, grand daughter and so on.

Thus beyond the direct parent-child relationship, Dada-Dadi, Nana-Nani, Pota-Poti etc. all get covered within the meaning of the term ‘relative’ from whom any gift received is treated as fully exempt.
Moreover, apart from the closest members of the immediate family such as parents, children, brothers and sisters, even uncles and aunts (such as Kaka-Kaki, Mama-Mami, Masa-Masi, Foi-Fua) and also in-laws in these categories have been empowered to give tax free gifts without any monetary limits.

However, it needs to be borne in mind that cousins, nephews and nieces have been kept out of the list of ‘relative’ for the above purpose.

GIFT IN KIND FROM NON RELATIVE

Query: I am a Doctor planning to procure an expensive instrument worth Rs.50 lakhs, which has also public health application. A cousin of mine in USA proposes to pay for the same and send the same to me as a gift. Will this attract any income-tax liability in my hands?

Reply: There are two important aspects to be considered under your question. Firstly, whether your ‘cousin’ can be considered as a relative within the meaning of Section 56(2)(vi)? The answer is ‘No’, since ‘cousin’ does not fall within the definition of ‘relative’ for the purpose of gifts being treated as exempt from income-tax.

However, you should note that Section 56(2)(vii) casts income-tax liability only in respect of a ‘gift in kind’ exceeding Rs.50,000 which is covered in the list of nine specified properties, including land & building, shares & securities, bullion, jewellery, archaeological collections, drawings, paintings and any work of art. The gift of the medical instrument, though exceeding Rs.50,000 in value, would clearly fall outside the liability for income-tax, since it does not fall in this list. You may, therefore, go ahead and procure your public health application without any worry or concern.

LEGAL PROCEDURE FOR GIFT

Query: I am a retired Government Officer. I intend to gift some of my investments to my major son so that I can also derive the benefit of income-tax saving, since I am in the maximum tax bracket and he is not having any taxable income. Kindly let me know the legal procedure for the same.

Reply: Under the Transfer of Property Act, while the gift of an immovable property cannot be effective or complete until the ex*****on of a registered gift deed, attested by signatures of two witnesses along with the signature of the donor of the gift, no such requirement is prescribed in regard to a gift of a movable property. Under this law, the only requirement is delivery of possession of the movable property by the donor to the donee and acceptance by the donee of the same.

Accordingly, it is not necessary for you to execute any stamped document in support of the gift you propose to make to your son. It would, however, be advisable for you to address a forwarding letter to your son, stating clearly that you are making a gift to him out of natural love and affection borne by you towards him and also mentioning the details of the gifted property (for example, date and number of the Cheque or draft, name of the bank and amount, etc. as the case may be). This would act as supporting evidence in the case of your son, when in future, he may be required to explain the source of the investment held by him and the income derived there from. Your son should confirm acceptance of the said gift by way of acknowledgement.

In case of gift of shares, units or bonds, it would be necessary for you to execute a transfer form for the said purpose. In case of gift of a fixed deposit, you may prefer to also address a letter to the bank or the financial institution, informing them regarding the gift and requesting them to take the name of the donee on their record.

Simple solution to complications faced by Salaried Assessees
________________________________________
Well, the scenario I am going to elucidate is not something new or unheard off, however, there are few cautions which are often ignored thereby resulting into complications being faced by Salaried Assessees.

Quite some number of times it so happens with people working in Corporates that a Professional would visit them, take their respective Tax Deducted at Source (TDS) certificate Form 16, file their Income Tax Return for a mere amount and then when a scrutiny or a demand notice comes then this very Professional is mostly not traceable with respect to the same.


To clarify, I would say that there is an issue at both the ends because as far as Assessee is concerned he/she wants to get his/her Income Tax Returns filed with minimum effort and expense and are not mostly concerned about the accuracy of the same, however, as far as Professionals are concerned they too, in order to get clients, facilitate them in away which might someday go against the clients.

Thus, Assessees and Professionals need to take care of certain simple things in order to make filing of Income Tax Return and post Return filing scenario a smooth walk.

Assessees:

1. Should understand that its not only Form 16 (Certificate of TDS on Salary) which is required to prepare and file an Income Tax Return because it may be that Assessee has invested in Fixed deposits or has various other sources of Income thus, Income from all sources is required to be shown in the Income Tax Return and Income Tax commensurate to the same should be paid before filing the Return.

2. In order to get benefits for the respective deductions and exemptions provided under the Income Tax Act, 1961, the Assessee should maintain a proper record of all the investments/insurances bought during the year, all the payments with respect to rent, donation, School tution fees for children etc. Example: Life insurance premium payment receipts, Mediclaim premium payment receipts, Donations receipts with respect to Donations extended to registered bodies, Providend fund contributions etc.

3. Assessees should download Form 26AS from www.incometaxindiaefiling.gov.in in order to ascertain the TDS deducted with respect to Salary, interest etc. as Form 26AS gives a snapshot of Assessees income during the year on which TDS has been deducted. Plus Form 26AS also gives you the information on Advance Tax paid by you, if any, during the year. It also, among other things, gives you the information with respect to the status of Refunds claimed in prior years by the Assessee in his/her Income Tax Return.

4. Assessee should co-operate with the Professional by providing complete Bank statements and other documents per the requirement, in order to enable the Professional to prepare and file correct Returns. Just like you provide complete information to the Doctor so that the Doctor can help you in a proper and informed way.

5. Assessees must peruse the Return before filing in order to make sure that all their Incomes, investments, deductions etc. have been incorporated in the Income Tax return.

6. Lastly, compensate the Professional reasonably in order to make sure that the Professional takes due care with respect to preparation and filing of your respective Income Tax return and is responsive in case if Assessee receives any correspondence from Income Tax department. Always remember that a happy Professional leads to a happier client.

Professionals:

1. Must Educate clients with dos and donts regarding Income Tax returns.

2. Should not try to lure Assessees by charging minimalistic fees and providing coarse quality service.

3. Apprise Assessees of the repurcussions of non-compliance with the Return filing norms and improper disclosures.

4. Should act responsibly in case if Assessee receives a correspondence from the Income Tax department which he/she is unable to comprehend or reply to.

5. Must maintain a proper record of the Income Tax returns filed on behalf of Assessees including the documents provided by the Assessees for preparation and filing of Income Tax returns.

6. Keep track of the Intimations under Section 143(1) of the Income Tax Act with respect to the Income Tax returns filed by him/her and notify the Assessee and take the corrective action in case of any issue.

Thus, the aforementioned cautions and actions are small steps which, if taken timely, can make life easier and spare ones self of unnecessary hassle of Income Tax scrutinys and departmental clarifications because a stitch in time saves nine. Always remember that preparation and filing of inaccurate Income Tax returns in an attempt to save some money and time might lead to non-compliance and consequently wastage of a lot of time and money.

Please file your Income Tax Returns accurately and timely !!!

E-returns: CBDT may soon do away with submission of ITRV form

In what could be good news for lakhs of taxpayers filing their I-T returns online, CBDT is mulling doing away with the mandatory submission of paper verification printout to its processing centre in Bangalore.

Central Board of Direct Taxes (CBDT), the apex office to formulate policies for the Income Tax department, was prompted to take this "customer-friendly" step after it was recently informed that lakhs of such paper statements -- ITRV -- have not reached its Central Processing Centre (CPC) despite people filing their e-returns online.
CBDT is now considering either bringing a notification to make a change in the rules or an amendment in the I-T Act stipulating that taxpayers filing their returns online will no longer need to send ITRV through post to the Bangalore office.

The new measure, deliberated upon by the Finance Ministry and CBDT, will mean that the taxpayer will not even have to procure a digital signature as the department feels it has enough technology at its disposal to check cases of fake returns or under-reported IT returns.

"There have been regular letters by taxpayers and other bodies to the board in this regard. Recently, it was noticed that lakhs of statements did not reach the CPC. The board may now totally do away with the procedure of sending by post the paper statement of an e-return.

"The decision could happen soon as this concerns a lot of taxpayers and will be seen as customer-friendly," a source privy to the development told PTI.

The thinking at the highest level is that e-filing should be "hassle free and sans any glitches", which will prompt more number of people to file their tax returns this way.

The I-T department is also bolstered by the fact that more and more number of people are opting to file their returns online.
According to current procedures, when a taxpayer files his or her returns online, the person is required to mandatorily send the 'ITRV' by post to the I-T department's CPC based in Bangalore within 120 days.

The CPC, in return, sends an electronic acknowledgement to the tax return filer. The problem arises when the document sent by post does not reach the CPC because of lapses on the part of the taxpayer or some other reason.

In case of digital signatures (used by corporate entities), a bonafide statement that verifies the identity of the sender is required to be created by paying a fee and this requires regular renewal, which is why this is seen as a burden on salaried class and categories of small taxpayers.