Tax payments, return filings, and other tax compliances are extremely exhaustive, time, and cost consuming processes, especially for entrepreneurs who otherwise need to invest all their time, efforts, and money in the growth and development of their startups. To ease the burden of such compliances on entrepreneurs, the Central Board of Direct Taxes (CBDT) regularly comes up with new and simplistic methods, revised costs, quicker timelines, and the much needed transparency in the laws related to taxation in India. The purpose of this blog is to discuss one such recent notification of the CBDT, which reduces the window for tax filing and verification in India
The new notification of the Central Board of Direct Taxes has been issued with the purpose of expediting the process of filing income tax returns. The provisions of the notification deal with a specific ITR form, namely, ITR 5, which is filed by eligible tax paying entities like firms, LLPs, Associations, Societies, and Trusts. The form is filed with the Department of Income tax in both online and offline modes. Here in this article, we have discussed the eligibility, methods, and modes of filing of ITR5.
What is the new notification of CBDT for filing ITR-5?
According to a notification issued by the CBDT dated 29th July 2022, the taxpayers required to file their returns in ITR-5 form must do so within 30 days prior to the deadline. Earlier, this time limit extended to 120 days and provided a relatively larger window to eligible taxpayers for filing their returns. However, to expedite the process, CBDT has decided to reduce the time limit or window for filing ITR5 returns from 120 days to 30 days. Besides, the verification of ITR 5 must also be conducted within 30 days from the date of filing. This notification shall come into effect on 1st August 2022.
Case 1 - If ITR 5 has been filed online before 1st August 2022
In the context of the above notification, for returns filed in ITR 5 prior to 1st August 2022, the window of 120 days instead of 30 days shall be applicable, indicating that the notification issued by CBDT is not retrospective in nature. This may have provided some relief to taxpayers who have filed ITR 5 on or before the due date of 31st July, 2022.
Case 2 - If ITR has been filed online after 1st August 2022
However, for taxpayers filing of ITR5 after 1st August 2022, the reduced window of 30 days shall be applicable. The implication of such condition shall be that taxpayers who had to file the income tax return by the due date of July 31, 2022, will now have to file their delayed returns under section 139(4), and shall have to pay the prescribed late fees under section 234F of the Income tax Act, that too within the limited window of 30 days only.
What is the Eligibility for filing ITR 5?
Filing Income Tax Returns is as essential as paying income taxes under the prescribed tax rates in India. Like the payment of taxes, the filing of tax returns are also regulated by the Income Tax Act, 1961. An income tax return contains the basic relevant tax details of the taxpayer, including his tax liabilities, claims of tax deductions and exemptions, the total taxable income, the tax rates applicable, and the absolute amount of tax that has been paid. Such returns are filed in different forms prescribed under the Income Tax Act, one of which is ITR 5. The eligibility and purpose of each of these forms is different from the others. All tax paying entities that are required to file their income tax returns through the ITR 5 form, have been listed in the table below.
| S.No. | Taxpayers eligible to file Income Tax Returns in Form ITR 5 |
|---|---|
|
1. |
Firms |
|
2. |
Limited Liability Partnership |
|
3. |
Association of Persons |
|
4. |
Body of Individuals |
|
5. |
Artificial Judicial Persons referred to in Section 2 (31) (vii) |
|
6. |
Local Authority referred to in Section 160 (1) (ii) and (iv) of the Income Tax Act |
|
7. |
Cooperative Society |
|
8. |
Societies registered under the Societies Registration Act, 1860 |
|
9. |
Business trusts referred to in Section 139 (4E), or any other state laws, except trusts that are eligible to file ITR 7 |
|
10. |
Estate of a deceased person |
|
11. |
Investment fund referred to in Section 139 (4F) |
|
Note that individual taxpayers, Hindu Undivided Families, companies incorporated under the Companies Act 2013, and taxpayers who file Income Tax Returns under Sections 139 (4A) and 139 (4D) of the Income Tax Act, 1961 are ineligible to file ITR 5. |
|
What are the ways in which ITR 5 shall be filed and verified?
ITR 5 can be filed in both offline and online modes to the Income Tax Department. Immediately after filing the returns, they must be verified before being finally submitted to the concerned authority. A tax return is not considered to be valid unless it has been filed and verified in the manner prescribed under law. We have discussed each of the methods of filing and verifying tax returns.
Filing ITR 5 online and verifying by Digital Signature
Returns here are filed online by logging into the Income Tax Account of the assessee on the official website of the Income Tax Department. The next step is to fill out the return details in form ITR 5 and sign the same using a digital signature. The digital signature shall be used to verify the returns of the assessee.
Filing ITR 5 online but verifying it offline
If the assessee filing the ITR 5 form online does not have a digital signature for verification, he shall have to print 2 copies of the return application, and manually sign it, before posting it to the Central Processing Center (CPC) in Bengaluru. The assessee can keep the second copy of the return for recording it as evidence of ITR filing.
In the context of sending the ITR-V to the CPC Bangalore, a couple of points must be remembered:
- The date of dispatch of the ITR-V as reflected through the post receipt will be considered as the date from which the 30-day time limit shall be counted according to the new notification.
- If income tax filers have filed their returns in ITR 5 electronically after the 30 days window has expired, then the date of submission will still be considered as the date of ITR filing, and accordingly the relevant provisions of delayed filings and late fees shall be applicable.
Filing ITR 5 online and verifying by OTP or EVC
Income Tax Returns can also be filed online to be verified using a One-time password or an Electronic Verification Code. For this, the PAN card of the assessee must be linked to his Aadhar card. Consequently, after filling out the return details online, as the assessee proceeds for its verification, an OTP is sent to the contact number and email address registered in the Aadhar card of the assessee. After the assessee furnishes the OTP, the process of verification gets completed.
Assessees can also generate EVC for the verification of their IT returns, only if ITR 5 is filed under Section 140 of the Income Tax Act, 1961. Such EVCs can be generated through net banking, bank ATM, or demat account number on the registered contact number and email address of the assessee. Once furnished, the process of verification gets completed
Filing ITR 5 offline and verifying it manually
Assessees also have the option of filing returns offline, where the details are filled out in a plain paper, or in the format of a barcode. These returns are filled out manually, are signed manually and posted to the Income Tax Department. On reception of the ITR, the Income Tax Department issues an acknowledgement to the assessee.
Assessees also have the option of filing returns offline, where the details are filled out in a plain paper, or in the format of a barcode. These returns are filled out manually, are signed manually and posted to the Income Tax Department. On reception of the ITR, the Income Tax Department issues an acknowledgement to the assessee.