Major Changes in filing Income Tax Returns in Budget 2016

The Finance Minister named Arun Jaitley has changed the Union Budget of India for the financial year 2016-17, Upholding that the current Indian economy is going in a right track. In the Budget for the fiscal year 2016-17, few changes have been introduced in the rules and guidelines concerned to the Income Tax Department and the E-filing Income Tax Returns. Here are the significant changes made by the Finance Minister and how these changes will be applicable in filing income tax returns. The changes are mentioned below:

1.       For whom Filing Income Tax Return is Mandatory?

Previous Budget: According to the rule of previous financial year 2015-16, the tax payers must file their income tax return if the gross taxable income of tax payer is greater than the basic limitations of tax that are applicable for all the tax payers without incurring any sort of tax saving deduction,

Changes to Current Budget 2016: According to the rules of current Budget 2016, the tax payers must file their IT Returns if their gross income is greater than the basic tax limit applicable for the tax payer without incurring any sort of tax saving deduction. The gross income as mentioned above would also comprise the long term capital gains grossed on sale of shares or parity based mutual funds where the tax free STT or Securities Transaction Tax has been paid under the section of Income Tax 10(38).

The exceeding capital gains that must be shown as exempted income in the Income Tax Returns form until previous year has been changed in the current budget 2016. This significant change has been made as a rule in the new Budget 2016 in order to cover people who have grossed considerable long term assets but do not file IT returns. This would also applicable to the people who ought not to any taxable income but their long term assets go beyond their normal tax income limit.

The basic tax income limit for the current fiscal year 2016-17 is mentioned below:

·         For tax payers below the age of 60 years – Rs 2.5 Lakhs

·         For the tax payers having age in between 60 and 80 years (Considered as Senior Citizens) – Rs 3 Lakhs

·         For the tax payers having the age above 80 years (Considered as Very Senior Citizens) – Rs 5 Lakhs

2.       Time limit or Validity for filing Belated IT Returns

Previous Budget: Earlier, as per the rule in filing the Income Tax returns, the tax payer could file their belated or delayed income tax returns within 2 years from the corresponding financial year till its end.

Changes to Current Budget 2016: As per the latest changes made in the Budget 2016, if the tax payers do not file their Income Tax Returns before the due date i.e., 31^st July, then it is called as belated return and the tax payer could file their belated Income Tax returns only within one year from the end of financial year 2016-17.

3.       Right to revise belated Income Tax Returns

Previous Budget: According to the existing rule in the previous fiscal year, the tax payer cannot revise their IT returns if it has been filed after the completion of the deadline of July 31.

Changes to Current Budget 2016: According to the new changes introduced in current Budget 2016, the tax payer can file revised return multiple times within a period of 1 year from the end of financial year.

In any of the case, if the tax payers do not file his/her Income Tax Returns within the due date, the tax payer would drop his/her right to carry onward damages.

4.       Defective Return

Previous Budget: According to the existing rules in the previous budget of Income Tax, ITR can be considered as defective by assessing officer under specific conditions. In such a condition, a period of 15 days will be provided to the tax payer so as to correct the mistake. If the mistake is not rectified by the tax payer, the filed ITR will be regarded as invalid. Such returns are considered as defective return.

Changes to Current Budget 2016: The new changes in the Budget 2016 eliminates the above mentioned condition for calling it as ITR defective. As per the latest rule, the ITR can be filed without the need of paying complete taxes and it would be regarded as valid return. However, the tax payer must pay the due amounts alongside the interest for filing ITR after the due date.

The new changes which have been introduced in the current Budget of the financial year 2016-17 are almost beneficial for all the tax payers. It is strongly advised to begin filing your ITR right now before July 31 i.e., the due date for filing IT Returns.

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