The Tribune, Chandigarh, India

Salaried? You need to file I-T return too
Balwant Jain

The income tax return filing season is on. While talking to some of my friends who are salaried, I found that they are under the impression that they are not required to file their income tax returns as tax has already been deducted from their income by the employers or they cannot file the return if they miss the due date.

For their understanding, I will explain the legal position with regard to filing of the income tax return by individuals only and do not intend to cover any other income tax assessee.

Who is required to file the I-T return?

As per the present law of income tax, you are required to file your I-T return if your gross total income is more than the basic exemption limit. This exemption limit for the year ended March 31, 2014 is Rs 2 lakh for an ordinary individual taxpayer. For a senior citizen, this limit is Rs 2.5 lakh and for the senior citizens above 80 years, it is Rs 5 lakh.

The income to be considered for this purpose is income before deduction under various Sections like 80 C, 80 CCC, 80 CCD, 80 CCG, 80D, 80E, 80EE, 80G and 80 GGA and 80 TTA etc. These deductions are available for various items such as payments of PF, life insurance premium, tuition fee for children, NSCs, contribution to NPS, PPF, home loan repayment, health insurance premium, rent paid, deductions for investments made under Rajiv Gandhi Saving Scheme and savings bank account interest etc.

So even in the cases where taxable income after these deductions is below the exemption limit, you are still required to file your tax return. The exemption available to salaried employees from filing of your return if your income did not exceed Rs 5 lakh earlier is not available now.

You are also required to file the return in case you have any asset outside India or you are an authorised signatory for any account located outside India. So for those of you who had gone outside India on deputation or employment and had opened a bank account will be required to file income tax return in case bank account has not been closed by you. If you have investments like shares, bonds or mutual fund units of foreign companies, you are also required to file I-T returns even if your income is otherwise not taxable. So this provision will cover the employees who have received shares of foreign holding company as ESOP as part of their compensation package.

What is the last date for filing return?

In case you are required to file your income tax return as discussed above, the due date for the year just concluded is July 31, 2014. The due date is applicable in case of general individual taxpayers.

However, in case you are conducting a business and your accounts are required to be audited then the due date gets extended to September 30 of the year following the year. For the people who are working partners in partnership firms and whose accounts are audited, the due date is September 30.

What will happen if you miss the due date deadline?

People in general are under the impression that July 31 is now or never thing. This is not so. Even if you fail to file your return by the due date, you can still file it later on. So you can still file your return of income for the year ended March 31, 2014, by March 31, 2015. In case you file your return after July 31, 2014, you will not be able to revise your income tax return in case any omission or error is detected later on. Moreover, in case any tax is still payable, you will have to pay penal interest on the amount of tax for the period of delay in filing the return till you actually file the return. Another consequence would be, in case you want to carry forward any business loss, capital loss to be set off in subsequent years, you will not be able to do so and the loss incurred by you will lapse.

Therefore, it is advisable to file your return by the due date.

Is there any penalty if you don't file the return by due date?

There is no penalty if you fail to file your previous year's income tax return by July 31 and file the same by March 31, 2015. However, if your income is taxable and you fail to file your return of income by March 31, 2015, the same can be filed by March 31, 2016, but the income tax officer can levy a penalty of Rs 5,000. The penalty can only be levied after an opportunity is given to you to explain your side of the case.

This way even if all the taxes have been paid in respect of your income, you may still have to file your income tax return.

The author is CFO, Apnapaisa. The views expressed in this article are his own

Tax advice
File revised I-T return up to March 31, 2015
SC Vasudeva

My son is doing MBA in the USA. Where and how can he submit his I-T return for the AY 2014-15. He is in the US since 19/01/2014.

By what date the revised I-T return of AY 2013-14 can be submitted?

— KL Gupta

Your son is required to file I-T return if his income exceeds the maximum amount not chargeable to tax. The limit applicable for AY 2014-15 is Rs 2 lakh. He can file his return online.
The revised I-T return for AY 2013-14 can be filed up to March 31, 2015.

In reply to a query it was published that the husband is the first legal heir of the dues of her deceased wife. I have lost the date of that publication. Kindly repeat your advice if possible.

— Raj Khanwer

The Hindu Succession Act, 1956, contains the general rules of succession. In the case of a female Hindu dying intestate, such rules are contained in Section 15 of the said Act. Section 16 of the Act provides for the order of succession and manner of distribution among heirs of a female Hindu. Sub section 1(a) of Section 15 of the said Act provides that the property of a female Hindu dying intestate shall devolve according to the rules set out in Section 16 firstly upon the sons and daughters (including children of any pre-deceased son or daughter) and the husband.

I want to deposit money in an RD a/c in the name of my adult daughter (unmarried). I am employed but she has no source of income. My query is whether the interest earned on the RD a/c would be taxable in my hands or in the hands of my daughter.

— Kunal

It would be advisable to treat the amount contributed towards RD account as a gift to your unmarried daughter. In such a case, the income on the RD deposit would be treated as her income and she will be liable to pay tax, if any thereon.

Can a woman give gift to his son's HUF? If yes, will the gifted amount be treated as income of the son's HUF? The amount of gift is ~5 lakh.

— Rudresh Kumar

According to the provisions of Section 56(2)(vii) of the Act where an individual or a HUF receives, in any previous year, from any person or persons on or after the 1st day of October, 2009, any sum of money without consideration which exceeds Rs 50,000, the whole of the aggregate of such sum would be chargeable to income tax in the assessment of the recipient under the head "Income from other sources". The said section further provides that in case the amount is received from any of the relatives, the same shall not be treated as income of the recipient. The term relative has been defined as under by the aforesaid section:

In case of an individual

Spouse of the individual;
Brother or sister of the individual;
Brother/sister of the spouse of the individual;
Brother or sister of either of the parents of the individual;
Any lineal ascendant or descendant of the individual;
Any lineal ascendant or descendant of the spouse of the individual;
Spouse of the person referred to in clauses (b) to (g)

In case of an HUF

In case of an HUF, such exemption is available if the gift is received from any member thereof. As the mother would not be a member of son's HUF, any gift from her exceeding Rs 50,000 in a financial year would be taxable as income from other sources in the hands of HUF.

Gifting financial stability to your parents
Vishwajeet Parashar

Since childhood our parents have supported us and taken care of all our problems, which have come in the way of our development. On July 27, the world celebrated Parent's Day. You may have gifted something to your parents on this special day but you can also pay them back for all their hard work and efforts they've put in your childhood and your teenage years, by providing them some time-tested solutions to the problems which they generally face at this age.

Generally older people worry about three major concerns - illness, poor financial management and loneliness. Let's discuss these three issues one-by-one.

Health insurance is considered a necessity in today's day and age, however, a lot of people in various age groups, are left without this valuable protection. Senior citizens often find it difficult to find good health insurance plans because either they are too expensive or require extensive medical tests which they cannot perform. These factors force them to live without health insurance coverage. However, nowadays there are some good health insurance policies available in market. You may like to choose policies which come with no age restriction for entry or renewability, no pre-insurance medical test required, pre-existing disease coverage, pre & post-hospitalisation expenses cover, free annual health check-ups and no co-payments. Consult your financial planner for more details.

Retired people need regular source of income. One way is to invest their post retirement accumulated savings into a Post Office Monthly Income Schemes (POMIS). MIS can be done through post office and mutual funds. The logic of investing through mutual funds is that you will get interest from debt investment, plus an additional hike to your returns from equities which you may not get through POMIS.

For generating assured and regular returns, you can advise your parents to go for company FDs offered by various top rated companies on a short-term basis wherein they earn better interest. Generally the interest rates are competitively 2-3% higher than bank fixed deposits (with nomination facility). In case investments are done by senior citizens, they can get up to 0.25-0.60% higher interest, depending upon company to company. As the name suggests, interest earned on investment on a regular basis (half-yearly or annual) or on cumulative schemes, where the interest accumulates with the principal so that returns earned are higher, when compared to non-cumulative plan.

Capital-Protection-Oriented Fund (CPOF) is also an alternative to gain exposure to equities which is well suited for risk averse investors, as CPOF is a hybrid fund where 80% of the fund is invested in debt & 20% in equity fund which gives a kick to the investment in turn our conservative investors also get good return from this kind of mutual fund. In case of investing in CPOFs, you know exactly when it will mature and when you will have your cash flows. So if you have defined financial goals, you may look at investing in these funds.

At the end of the day, it isn't asking for too much if parents expect their kith and kin to attend to their requirements or pay them frequent visits, but often these visits become infrequent, and that is when they have to satisfy themselves with the company of television, books etc. So the best gift you can offer to your parents is a little more time from your busy life in order to understand them better and to repay them for all they have done for you.

The author is Group Marketing Head, Bajaj Capital Ltd.

The views expressed in this article are his own