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Thursday, July 28, 2011

Have you filed your Income Tax returns and what is Form 26AS

During the financial year end i.e., March – the Company’s focus was on completion of annual targets, individuals were worried about tax saving and the actual amount of tax deductions.  Income tax is a direct tax on income.

NO introduction would be necessary as almost every salary earner knows that the Govt. of India imposes income tax on taxable income of individuals, Hindu Undivided Families (HUFs), companies, firms, co-operative societies and trusts  and any other artificial person. Levy of tax is separate on each of the persons. The levy is governed by the Indian Income Tax Act, 1961.  For all of us receiving salary, the income tax gets deducted at the time of payment i.e., tax deduction at source.  

Whilst you are not required to provide details as to how your hard earned money suddenly disappeared, you need to properly submit your IT returns for all your income, from any source which will include, rental income,  interest on fixed deposits, income by dividends, income from horse races, income from gifts, income from winning bull races, income from shares and the like.    Filing of Income Tax returns is a legal obligation of every person whose total income for the previous year has exceeded the maximum amount that is not chargeable for income tax under the provisions of the I.T Act, 1961.

July 31st being the last date and given our attitude of doing things at the last instance, there is bound to be long drawn queues in the Income Tax Department.  There also exists the convenience of filing returns through Internet known as e-filing. It also eliminates/ reduces interface between assessee and tax officials.

Be aware that all your transactions can be tracked by Income Tax Department.  Over the years, the tax payers have felt the need for a single source where they could find details of all their financial transactions.  Even to date, the procedure of filing an Income tax return is somewhat cumbersome – you will feel this more, if you have placed some money in fixed deposit in a bank /NBFC ; or own more than a house, or have let out on rent a house property, have indulged in some sale of shares, Mutual funds etc.,   For all this, you need to obtain Form 16 from the authorities concerned evidencing the TDS and have to necessarily pay tax according to your slab – this actually needs to be done before the closure of the financial year i.e., you need to calculate your tax liability and pay your tax in advance – advance tax !

It is a good news for all tax payers that One can check their  tax credits in 26AS statement before filing IT return for faster processing and quick refunds.  It is advisable  to verify the tax credits in 26AS statement before filing the Income Tax Return. It will facilitate faster processing and quick refunds. The credits available in the tax statement confirm that:
a) the tax deducted/collected by the deductor/collector has been deposited to the account of the government;
b) the deductor/collector has accurately filed the TDS/TCS statement giving details of the tax deducted/collected on your behalf;
c) bank has properly furnished the details of the tax deposited by you.

It is hoped that in future, you will be able to use this consolidated tax statement (Form 26AS) as a proof of tax deducted/collected on your behalf and the tax directly paid by you along with your income tax return, after the need for submission of TDS/TCS certificates and tax payment challans along with income tax returns would be  dispensed with by the Income Tax Department.  However, as of now for claiming the credit for tax deducted/collected at source you may be required to enclose TDS/TCS certificates (Form 16/16A) issued to you by the deductor.

In addition to the above, you can also view the details of paid refund received during the financial year.  The Form 26AS (Annual Tax Statement) is divided into three parts, namely; Part A, B and C as under:
Part A displays details of tax which has been deducted at source (TDS) by each person (deductor) who made a specified kind of payment to you. Details of the deductor (name & TAN) along with details of tax deducted like section under which deduction was made (e.g. section 192 for salary), date on which payment was effected, amount paid/credited, tax deducted from payments and deposited in the bank are included in this part.
Part B displays details of tax collected at source (TCS) by the seller of specified goods at time these goods have been sold to you. Details similar to those displayed in Part A in respect of the seller and the tax collected will also be available.
Part C displays details of income tax directly paid by you (like advance tax, self assessment tax) and details of the challan through which you have deposited this tax in the bank.

The Department claims that uploads of  TDS/TCS statements are daily activity and thus represent an up to date feature.  As per the Income Tax Act, the deductors/collectors are required to file their TDS/TCS statements every quarter. This means that within about 15 days of the deductors filing quarterly e-TDS/TCS statement, the TDS/TCS entries will be posted in the tax statement which is available in the TIN website.

Thus, Form 26AS is a consolidated tax statement issued under Rule 31 AB of Income Tax Rules to PAN holders.   The Banks also upload challan details to TIN on a T+3 basis after the realization of the tax payment cheques.  So the advance tax that you pay would very much be part of this Form 26AS

So quote your Permanent Assessment Number [PAN] in all your transactions and pay your tax without fail in time.  Be a responsible citizen.  For more details and for registering for this facility log on to :   https://incometaxindiaefiling.gov.in.    It is a simple procedure and after a few entries, you are now registered with IT and in a position to view / download your form 26 AS

Regards – S. Sampathkumar

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