Yes, this is cheque bouncing. If the account of the person who issued you the cheque is closed, then it is an act of cheque bouncing.
Theme: Money
What does Account Payee on the side corner of the cheque mean?
If “Account Payee” is written between the crossed lines on the corner of the cheque, it means that when the cheque is presented to the bank by you, the cheque amount will be transferred to your bank account only. You cannot get the cheque amount in cash over the counter.
What does “or bearer” on a cheque mean?
When a cheque has no name written in the payee section and the “or bearer” has not been crossed out, it is called a bearer cheque. To know more about bearer cheques, please refer to this.
Are there any other consequences to dishonor of cheque that I can face in terms of banking privileges with my respective bank?
The RBI (Reserve Bank of India) allows each bank to decide the consequences of repeated cheque bounces. So please check with your bank with regards to specific consequences for repeated cheque bounces.
Is it possible that the bank can misplace my cheque after I have presented it to them for encashment?
It is possible for the bank to misplace your cheque either during the clearing process or at the paying bank’s branch. In such situations the bank should do the following:
- The bank should immediately inform the customer who presented the cheque.
- The customer is entitled to be reimbursed by banks for related expenses for obtaining duplicate instruments and also interest for reasonable delays in obtaining the same.
As soon as the bank informs the customer that the cheque has been lost, then the customer can take precautions and inform the drawer of the cheque to stop the payment of the cheque.
It may however be noted that the probability of losing the physical instrument in the hands of paying bank is remote, in the locations covered by CTS as clearing is undertaken on the basis of images.
Will I receive an acknowledgement for cheque deposited in a bank for collection?
There are two types of facilities that banks provide for cheques:
- They provide a drop-box facility where you can drop-off your cheque. You will not get an acknowledgement for a cheque dropped at the drop-box.
- They also have collection counters where you can get an acknowledgement when you give the cheque for collection at the bank branch’s counter.
I issued a cheque to my landlord at the beginning of the month for rent and when he en-cashed the cheque there was no money in my bank account. Can I be held liable?
Yes, you can be held liable for cheque bouncing. Typically a cheque is valid for 3 months from the date on which it is issued. When you make a promise to your landlord to pay your rent through a cheque, it is understood your promise is good for 3 months. Even if your intention was to pay your rent when you wrote the cheque, but a few days later, your account balance went below the amount required to pay the rent cheque on the day your landlord presented the cheque for payment, you have still committed an illegal act. The relevant factor is not your intention to pay when you wrote the cheque, but whether your promise can be honoured on the day your landlord presents the cheque at his bank.
I lost my cheque return memo. What do I do?
Write to your bank requesting another cheque return memo. Your bank will give you another copy of the cheque return memo which will be in duplicate.
If I have filed a cheque bouncing case against someone, can I ask the Court for some interim compensation?
Yes, if you have filed a cheque bouncing case against someone, you can apply for interim compensation to be given to you. This compensation would be 20 percent of the amount of cheque that was bounced. Once the court passes the order for the compensation, you should be paid within 60 days by the accused person. In exceptional cases they can even pay you in 90 days.
If the final court order in the case is in your favour, the award amount that you will receive will be after deducting the compensation amount paid in the beginning of the case. But in case the final order is not in your favour, you must return the initial compensation amount with interest.
What is the format in which I should send a notice to the issuer/drawer of the cheque?
Any demand made after the dishonour of cheque will constitute a notice. It is not necessary that the notice should be sent by Registered Post alone, it could be sent even by fax. It is not necessary that the notice should be in any particular form or style. What is essential is that there should be a demand to pay the dishonoured cheque amount.
What is Income Tax?
Income tax is a tax levied by the Government of India on the income of every person. The Income Tax Act, 1961, covers legal provisions regarding the collection of income tax. There are some important points you will need to keep in mind to understand income tax, such as:
Persons filing Tax
It is mandatory for every person to pay income tax. Income tax law defines the term ‘person’(( Section 2(31), Income Tax Act, 1961)) to include individuals, Hindu Undivided Family etc. Read more here.
Calculating Taxable Income
The Income Tax Department taxes you based on your income from categories such as income from salaries etc. The total income calculated from these heads is called the gross total income. It is from this amount that deductions are made. Read more here.
Entities and Income exempt from Tax
Certain entities as well as certain kinds of income are exempt from tax. In other words, income tax will not be charged to such entities and incomes. Some examples include agricultural income, income for scholarships for higher education etc. Read more here.
Deductions with respect to tax
A deduction is an expense that is subtracted from an individual’s gross total income to reduce the amount which is going to be taxed. Deductions can be less than, more than or equal to the amount of income. If the amount deductible is more than the amount of income, then the resulting amount will be taken as a loss while calculating taxes.(( Section 80A, Section – 80AA, Section – 80AB, Section – 80AC, Section 80B, Section 80C, Section 80CC, Section 80CCA, Section – 80CCB of the Income Tax Act, 1961)) Some of the deductions for individuals include income from a loan taken for house property, income from loans taken for higher education etc. Read more here.
Tax Collection
Taxes are collected by the Government through:
Banks in India
Taxpayers can voluntarily pay income tax by going to designated banks. For example, taxpayers can pay advance tax and self-assessment tax in authorized bank branches such as ICICI Bank, HDFC Bank, Syndicate Bank, Allahabad Bank, State Bank of India, etc.
Taxes deducted at source [TDS]
When tax is collected from the very source of income of the person receiving income, it is known as ‘taxes deducted at source’ or TDS.(( Tax Deducted At Source, Income Tax Department, available at https://www.incometaxindia.gov.in/Pages/Deposit_TDS_TCS.aspx For example, if you are a professional earning a retainership fee in a company, a certain amount may be deducted by your company as tax when it is given to you. The company will deposit the deducted money to the government. The person whose tax has been deducted at source will get a Form 26AS or TDS Certificate. This will be given to the person by the entity or person deducting the tax. For example, XYZ Company will deduct an amount for tax before giving Aman his monthly salary, and provide Aman with the TDS Certificate.
Taxes collected at source [TCS]
Tax collected at source (TCS)((Section 206C, Income Tax Act, 1961)) TDS is the tax payable by a seller, which he collects from the buyer at the time of sale. For example, in a parking area of a shopping mall, along with the parking fee, the mall will charge a tax amount for a parking lot. Some other instances where sellers collect TCS are for liquor, while selling a motor vehicle, jewellery, etc.
It is mandatory for a taxpayer to have a PAN Card as well as an Aadhar Card while filing taxes.
How do cheques work?
Let’s understand how cheques work. A cheque is a promise made in writing by one person to another to unconditionally pay a specified amount of money. However, you can also write a cheque to yourself.
For example, if Amit owes Asha Rs. 10,000, he can give Asha a cheque of Rs. 10,000. When Asha presents this cheque to the bank, she will receive Rs. 10,000 as cash or in her bank account. Rs. 10,000 will be deducted from Amit’s account.
In technical terms, as used by bankers and lawyers, a cheque is also referred to as and is a type of a ‘Negotiable Instrument’.
The different parties involved in dealing with a cheque are:
- The issuer of the cheque (Drawer)
- The payee/holder of the cheque and
- The bank (Drawee)
Calculating Taxable Income
The Income Tax Department taxes you based on your income from the categories given below(( Section 14, Income Tax Act, 1961)). Gross total income is the total income calculated based on these categories. It is from this amount that deductions are made.
Income from Salary
Income from salary is taxable in India. Salaried income which is taxable consists of:
- Salary due from the employer (including a former employer) to the taxpayer during the previous year. The salary will be taxed even if it has not yet been paid.
- Salary paid by the employer (including the former employer) to the taxpayer during the previous year, before it became due. For example, if the employer pays the salary for a project in advance.
- Any arrears or pending salary paid by the employer (including the former employer) to the taxpayer during the previous year. This happens only if tax was not charged to this amount in an earlier year.
The following break-ups within your salary are fully taxable:
Basic Salary | Fully Taxable |
Dearness Allowance | Fully Taxable |
Bonus, Fee or Commission | Fully Taxable |
Income from Capital Gains
Income from capital gains(( Capital Gains, Income Tax Department, available at https://www.incometaxindia.gov.in/Tutorials/15-%20LTCG.pdf. is charged only in the following conditions: There should be a capital asset((Section 2(14),Income Tax Act, 1961)). In other words, this refers to any property held by a taxpayer.
- During the previous year, the capital asset is transferred by the taxpayer.
- There should be profits or gains as a result of transfer. Read more here to understand which transactions are not considered to be “transferred” by the taxpayer.
Some transactions not taxed are:
- Distribution of assets(( Section 46(1), Income Tax Act, 1961)) in a company to the shareholders at the time of liquidation
- Distribution of capital assets (( Section 47(1), Income Tax Act, 1961))on a partition of a Hindu Undivided Family
Income from House Property
A house property could be your home, an office, a shop, a building or some land attached to the building like a parking lot. The Income Tax Act does not differentiate between a commercial and residential property. All types of properties are taxed under the head ‘income from house property’ in the income tax return. This includes property you own. Income from house property is taxable if:(( Section 22, Income Tax Act, 1961))
- The house property should consist of any building or land attached with it
- The taxpayer should be the owner of the property
- Business or profession is not carried on by the taxpayer in the house property
Income from Business and Profession
Remuneration, bonus or commission received by a partner from the firm or anyone working independently in a business or profession, is not taxable as ‘Income from Salaries’. Rather, it would be taxable as ‘Income from a Business or Profession’ (( Section 17, Income Tax Act, 1961)). Tax is charged on the following from a business or profession(( Section 28, Income Tax Act, 1961;Section 41, Income Tax Act, 1961; Section 43 , Income Tax Act, 1961)):
- Any compensation or other payment owed to or received by any specified person.
- Income derived from a trade, profession or any specific services performed for its members, like an income made by a contractor.
- Cash assistance (by whatever name it is called) received or receivable by any person against exports under any scheme of Government of India.
- Value of any benefits arising from a business or a profession.
- Interest, salary, bonus, commission or remuneration owed to or received by a partner from partnership firm.
Read more examples on which income is charged here.
Income from Other Sources
Any income which is not chargeable to tax under any other heads of income, but which is not to be excluded from the total income, is chargeable to tax under the head “Income from Other Sources”.(( Section 56, Income Tax Act, 1961)) Some examples of these are:
- Dividends
- Income from winning lotteries, crossword puzzles, races including horse races, card games, gambling or betting of any form or nature.
The following amounts fall under the head “income from other sources”. Amounts not taxed under the head of ‘Profits and Gains from Business or Profession’, fall under this category. This is applicable only if
- Any money received by an employer from his employees as a contribution towards PF (Provident Fund), ESI (Employee State Insurance), Superannuation Fund, etc.
- Interest on securities
- Income from machinery, plant or furniture belonging to taxpayer and let on hire
- Composite rental income from letting of plant, machinery or furniture with buildings
- Any sum received under Keyman Insurance Policy (including bonus)
Intention of Drawer of Cheque
If a cheque you issued has bounced, intention of the drawer of the cheque does not matter. It is irrelevant whether or not you intended to for your cheque to bounce. Even if the bouncing of the cheque has happened without ill intent or malice it is considered illegal and a crime under the law.
Tax Rates
The rates of income-tax and corporate taxes are available in the Finance Act passed by the Parliament every year. You can also check your tax liability and calculate the amount of income tax you have to pay by using the free online tax calculator available at the Income Tax Department website.
The Budget 2020 has given taxpayers the option to choose between:
- existing income tax regime with applicable income tax exemptions and deductions or
- a new tax regime with slashed income tax rates and new income tax slabs, but no tax exemptions and deductions.
Given below are the income tax rates for individuals:
Old/existing tax rates
Net Income Range | Income Tax Rate for Assessment Year 2020-21 |
Up to Rs. 2,50,000 | No tax |
Rs. 2,50,000 to Rs. 5,00,000 | 5% |
Rs. 5,00,000 to Rs. 10,00,000 | 20% |
Above Rs. 10,00,000 | 30% |
New reduced tax rates(( The Finance Act, 2020 (Rates applicable from April 1, 2020))
Net Income Range | Income Tax Rate (optional, applicable from April 1, 2020) |
Up to Rs. 2,50,000 | No tax |
Rs. 2,50,001 to Rs. 5,00,000 | 5% |
Rs. 5,00,001 to Rs. 7,50,000 | 10% |
Rs. 7,50,001 to Rs. 10,00,000 | 15% |
Rs. 10,00,001 to Rs. 12,50,000 | 20% |
Rs. 12,50,001 to Rs 15,00,000 | 25% |
Above Rs. 15,00,000 | 30% |
Income Tax for Senior Citizens
Senior Citizens are those who are above the age of 60 years or more during the previous year.
Net Income Range | Rate (Assessment Year 2021-22) | Rate (Assessment Year 2020-21) |
Up to Rs. 2,50,000 | No tax | No tax |
Rs. 2,50,000 to Rs. 5,00,000 | 5% | 5% |
Rs. 5,00,000 to Rs. 10,00,000 | 20% | 20% |
Above Rs. 10,00,000 | 30% | 30% |
Income tax for Super Senior Citizens
Super senior citizens are those who are above the age of 80 during the previous year (year in which income is earned)
Net Income Range | Rate (Assessment Year 2021-22) | Rate (Assessment Year 2020-21) |
Up to Rs. 5,00,000 | No tax | No tax |
Rs. 5,00,000 to Rs. 10,00,000 | 20% | 20% |
Above Rs. 10,00,000 | 30% | 30% |
Read more on income tax rates for a partnership firm, Hindu Undivided Family, etc.
Importance of Signature on a Cheque
The signature on a cheque means that the person who has signed it is giving permission to the bank to take money out of his or her account. When you give a cheque to the bank, keep in mind the following:
- Make sure the signature of the person who issues the cheque matches with the signatures in his bank records.
- If your signature on the cheque mismatches with your signature in the bank records, then the bank can fine you for this.
A signature mismatch can attract a penalty if the bank decides to return your cheque.
Who has to file Income Tax?
It is mandatory for every person to pay Income-tax. Income tax law defines the term ‘person’(( Section 2(31), Income Tax Act, 1961)) to include:
- Individual. For example, a salaried employee etc.
- Hindu Undivided Families (HUF). For example, a HUF including the joint family of Mr Rakesh, Mrs Rakesh and their sons pays tax as a separate entity.
- Association of persons or body of individuals. For example, a housing cooperative society.
- Firms. For example, a firm called TaxMann & Co-owned by Mr Rakesh and Mrs Rakesh.
- LLPs. For example, ABC LLP. In an LLP, each partner is not responsible or liable for another partner’s misconduct or negligence.
- Companies. For example, ABC Ltd., XYZ Ltd.
- Local authority and any artificial juridical person not covered under any of the above. For example, University and Institutions, Municipal Corporations, etc.
Thus, from the definition of the term ‘person’, it can be observed that, apart from a natural person, i.e., an individual, other artificial entities like a company, HUF, etc. are liable to pay Income-tax. All association of persons, body of individuals, local authority, artificial juridical person will have to pay income tax even if they were formed with or without the objective of earning a profit, or income. (( Exception to Section 2(31), Income Tax Act, 1961)) However, certain institutions or entities in India do not have to pay tax under the law. Read here to find out more.
Encash a cheque
Follow these steps to encash a cheque.
Analyse the type of cheque that has been issued to you.
Bearer Cheque
If it is a bearer cheque, then there will be no name written on the cheque. You can:
- Go to any branch (in the city) of the bank that the cheque belongs to
- Present it for clearance
- The bank teller, will verify the details on the cheque and clear it
- The cheque will be cleared then and there and you will get the cash
Order Cheque
If it is an order cheque it will have your name written on it. You can:
- Go to any branch in the city of the bank that the cheque belongs to and
- Present it for clearance
- The bank teller, will verify the details on the cheque and clear it -The cheque will be cleared then and there and you will get the cash
Account Payee Cheque
If it’s an account payee cheque, then write your name, your account number and contact number at the back of the cheque, fill the deposit slip and exercise any of the following options.
Bank/ATM Dropbox Deposit
You can either go to an ATM of your bank or directly go to any branch of your bank where you have an account.
If the ATM of your bank has cheque deposit slips and a drop box, the most convenient option is to do the following:
- Fill in the cheque deposit slip. A deposit slip has two parts; the smaller part that you fill and keep with yourself and the bigger part that you fill and deposit in the drop box, along with your cheque.
- Tear your portion of the slip and keep it with yourself
- Pin the cheque and other part of the deposit slip
- Drop in into the ATM dropbox.
However, with this dropbox option, you will not receive an acknowledgement from the Bank of the receipt of your cheque and deposit slip. This means that if the cheque is lost by any chance, you will not be able to find out about the status of the cheque from the bank. However, you can still stop your cheque through internet banking or by writing a letter to the Bank.
If the ATM of your bank branch does not have the dropbox facility, then you have to go to the bank and drop the cheque. The detailed procedure is given below.
ATM Deposit
Some ATM’s have the option to deposit the cheque in the ATM machine itself. Please follow the procedure set out in the machine and deposit it accordingly.
Bank Deposit
- Fill a cheque deposit slip
- Get the appropriate cheque deposit slip form amongst the various slips that are usually kept at the dropbox area of the branch. Make sure you have the proper slip.
- Carefully fill in your bank account number, branch name, cheque amount etc. – Sign at the appropriate place. Also fill in details of the cheque, such as cheque number, bank from which the cheque is drawn, amount, date on which such cheque was drawn etc. Make sure that you fill in these details in the relevant places.
- Tear your portion of the slip, pin both cheque and the other part of the slip and drop them in the dropbox.
Income Tax Returns or Forms (ITR)
An Income Tax Return (ITR) is a form through which the details of income earned by a person in a financial year, and taxes paid on such income are communicated to the Income Tax Department.
Depending on the nature and status of income, different ITR forms are prescribed for different classes of taxpayers.(( Rule 12, Income Tax Rules, 1962)) Every taxpayer has to file tax returns under one specific ITR form only, and you have to choose the ITR form applicable to you. Filing the wrong ITR form will be considered as incorrect and defective.
Income Tax Forms
ITR forms can be downloaded on the Income Tax Department website. You will receive an Acknowledgement Form from the Income Tax Department when the data of the Return of Income in Forms ITR-1 (SAHAJ), ITR-2, ITR-3, ITR4 (SUGAM), ITR-5, ITR-6, ITR-7, is both filed and verified.
ITR-1 (SAHAJ)
Individuals residing in India having a total income of up to 50 lakh have to file this ITR Form. You are a resident if you have lived(( Section 6, Income Tax Act, 1961)):
- in India for at least 182 days in the previous year
- in India for at least 365 days in the four years before the previous year, and in India for at least sixty days in the previous year
You have to fill this form when the source of the income is from your:
- Salary or pension
- One house property
- Other sources like interest etc. (not including lottery winnings, income from race horses etc.)
- Agricultural income up to Rs 5,000
If you are a person who is not residing in India, or a director in a company,(( ITR-1, Income Tax Department website, available at https://www.incometaxindia.gov.in/forms/income-tax%20rules/2020/itr1_english.pdf)) or a person who has income from any source outside India, the ITR-1 form is not applicable.
ITR-2
This form is applicable to:
- An individual to whom ITR-1 does not apply, or
- A Hindu Undivided Family (HUF) whose total income does not include profits and gains of a business or profession.(( Rule 12(1)(c), Income Tax Rules, 1962))
For example, if Rama is a director in a company, then she will have to file tax returns under ITR-2, because she is not covered under ITR-1. Further, you have to fill this form when the source of the income is from your:
- Capital gains
- More than one house property
- Foreign income/foreign assets
ITR-3
This form is only applicable to:
- An individual or a Hindu Undivided Family (HUF) to whom forms ITR-1, ITR-2, and ITR-4 are not applicable, and
- Whose income comes from profits and gains of a business or profession.
For instance, if Shyam is a partner at a firm and earns more than Rs 50 lakh annually, then he will have to file ITR-3.
ITR-4 (SUGAM)
This form is applicable to individuals, HUFs and firms (excluding Limited Liability Partnerships) residing in India who have a total yearly income of up to Rs 50 lakh.
ITR-4 is applicable when the source of the income is:
- Business1
- Profession (( Section 44ADA, Income Tax Act, 1961))
- Salary or pension
- One house property
- Other sources like interest etc. (not including lottery winnings and income from racehorses)
Further, a person who is not residing in India or a director of a company need not fill this ITR-4 Form.
ITR-5
This form is applicable to the following:
- Firm
- LLP (Limited Liability Partnership)
- Association of Persons/Body of Individuals
- Artificial Juridical Person (( Section 2(31)(vii), Income Tax Act, 1961))
- Local authority(( Section 2(31)(vi), Income Tax Act, 1961))
- Representative assessee. A representative assessee could be an agent of a non-resident, the guardian of a minor/person of unsound mind, a trustee etc. who is authorised to receive or manage income on behalf of another person. (( Section 160(1), Income Tax Act, 1961))
- Cooperative society
- Societies registered under the Societies Registration Act 1860.
It is not applicable(( Sections 139(4A, 4B, 4C and 4D), Income Tax Act, 1961)) to individuals, HUF, a company and those persons filing ITR-7.
ITR-6
This form is applicable to companies, other than those companies claiming tax exemption for charitable or religious reasons.(( Section 11, Income Tax Act, 1961)) Further, you can find a list of tax-exempted institutions here.
ITR-7
This form is applicable to persons (including companies) such as:
- Every person receiving income from property held under trust, or for charitable or religious purposes (( Section 139(4A), Income Tax Act, 1961))
- Political parties (( Section 139(4B), Income Tax Act, 1961))
- News agencies, mutual funds, trade unions etc. (( Section 139(4C), Income Tax Act, 1961))
- Universities or colleges (( Section 139(4D), Income Tax Act, 1961))
ITR-Verification Form
You have to fill this form in situations where you have filed the data of the Return of Income in Forms ITR-1 (SAHAJ), ITR-2, ITR-3, ITR-4(SUGAM), ITR-5, ITR-7, but not verified electronically. Read more here.
- Section 44AD and 44AE, Income Tax Act, 1961 [↩]
Cheque Clearing
Cheque Clearing means processing a cheque from one bank to another by transferring the amount mentioned on the cheque to the payee’s account. The two most commonly used forms of cheque clearing systems are:
How to file Income Tax Returns?
You can file the Income Tax Return Form with the Income Tax Department in any of the following ways(( What are the different modes of filing income?, FAQs on filing the return of income, https://www.incometaxindia.gov.in/Pages/faqs.aspx?k=FAQs%20on%20filing%20the%20return%20of%20income)):
- Submitting the return in a paper form (offline) to the income tax office
- Submitting the return electronically under digital signature
- Electronically transmitting the ITR data under electronic verification code
- Electronically transmitting the ITR data, and later submitting the verification of the return
Procedure to file
Income tax returns can be filed manually as well as electronically i.e., e-filing.
Option 1: Manual Filing
For filing returns manually, you need to go to the Income Tax Department’s office to physically file returns. You can locate your nearest tax office here. Ensure that you fill the form completely and provide all the necessary details correctly. ITR forms are attachment less forms and, hence, you are not required to attach any document (like proof of investment, TDS certificates, etc. along with the return of income. However, these documents should be kept safely and should be produced before the tax authorities when demanded in situations like assessment, inquiry, etc.
Option 2: Filing Electronically
Electronically filing your tax returns through the Internet or online is an easier process than physically filing returns because you do not need to take an actual print out of the documents. Also, it is a simpler process and can be done for free online through the income tax website.
Electronic filing or e-filing of ITR can happen in two ways: Offline and Online.
In the offline mode, you download the ITR form from the income tax website, fill it offline and then submit it on the website. In the online mode (applicable only for ITR forms 1 and 4), you fill in the form directly online.
Cheque Truncation System
Cheque truncation is a form of cheque clearing system. It digitises a physical paper cheque into a substitute electronic form. This is done for transmitting the amount of money mentioned on the cheque to the paying bank. This is also referred to as ‘Local Cheque Clearing’.
In this process, an electronic image of a cheque is sent by the clearing house to the paying branch. This image contains all relevant information like date of presentation of the cheque, presenting bank, data on the MICR [Magnetic Ink Character recognition], etc. By this process, the paying branch gets these details automatically.
This is a much simpler and a faster process of clearing a cheque than physically transferring a cheque from one bank to another. Since cheque truncation speeds up the process of collecting cheques it results in better service to customers and reduces the scope of loss of cheques in physical transit. This process is faster and more secure.
Time Limit for filing Tax Returns
For the financial year of 2019-20, the Income Tax Return (ITR) general filing deadline is November 30, 2020. The deadline to file belated and/or revised tax returns for the previous financial year of 2018-19 is July 31, 2020.
You can find other important due dates and income tax timelines for the year 2020 in this Tax Calendar.
In your Income Tax Return (ITR) form, you will have to select a category to file the form, depending on:
- Date of filing the ITR form – You will be filing the form on/before the due date, or after due date
- Type of income tax return – Generally, you will be filing an original ITR form applicable to that assessment year. After filing the original form, suppose you later have to correct or modify any details in the form. Then, you will be filing another revised or modified return in reference to the original.
Different Timelines while filing tax returns
Thus, different income tax returns can be filed as:
On or before the due date (( Section 139(1), Income Tax Act, 1961))
For example, the filing deadline is 30th November. If Priti files her income tax return on 15th November, then she has filed the ITR before the due date.
Belated return (after due date)(( Section 139(4), Income Tax Act, 1961))
If you have not submitted your income tax return within the time allowed to you, then you may submit the return for any financial year at any time before the end of the relevant assessment year, or before the completion of the assessment (whichever is earlier).
For example, take a situation where you had to submit your income tax return for the financial year 2019-20 by 30th June 2020, but you didn’t do so. In this case, your assessment year will be 2020-21. If the assessment year is ending on 31st March 2021, you will have to submit your return by this date (end of assessment year). If the income tax assessment happens before the end of the assessment year, then you will have to submit your delayed return before the assessment.
Revised return (( Section 139(5), Income Tax Act, 1961))
After submitting a return/belated return, if you discover any omission or any wrong statement, you can submit a revised return at any time before the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.
For example, if you submitted your income tax return for the financial year 2019-20 by the deadline of 30th June 2020, your assessment year will be 2020-21. After submitting the return, if you realise that you have given some wrong information in the form, then you have to submit another revised form. This should have the correct information. If the assessment year is ending on 31st March 2021, you will have to submit your revised return by this date (end of assessment year). If the income tax assessment happens before the end of the assessment year, then you will have to submit your revised return before the assessment.
Modified return (( Section 92CD, Income Tax Act, 1961))
This applies in a situation where you have entered into an agreement after submitting your income tax return. If the agreement is applicable to or affects the financial year for which you have filed income tax, you will have to submit a modified return in accordance with the agreement.
For example, if you submitted your income tax return for the financial year 2019-20 by the deadline of 30th June 2020. Your assessment year will be 2020-21. After submitting the return, if you enter into an agreement that impacts your income tax returns for the financial year, then you have to submit a modified return including the details of the agreement.
The modified return should be filed within three months from the end of the month in which you entered the agreement. For instance, if you have entered into the agreement in July, you have to submit the modified return by the end of October (3 months).
When delay has been permitted by income tax authorities (( Section 119(2)(b), Income Tax Act, 1961))
The Central Board of Direct Taxes (CBDT) may authorise any income-tax authority to allow an application from you. The application may be for income tax exemption, deduction, refund, relief etc. Your application may be allowed/accepted even after the expiry period. You can take the help of a Chartered Accountant or Lawyer to do this.
Endorsing cheques
Endorsing cheques means that if you have an order cheque then you can endorse it to someone else. Endorsing means the payee can use the same order cheque to pay to someone else (the creditor) by writing that person’s name on the back of the cheque and signing it. When a person gets an endorsed cheque, he can collect the cash himself.
Example: Rahul gave a cheque to Raju. If Raju wants to endorse that cheque to Divya, he has to write Divya’s name behind the cheque and sign it.
Endorsing in favour of multiple people
A cheque can be endorsed any number of times. This means that a person can give it to someone, who can give it to someone else and the same can be continued multiple times. However, the bank may seek further information before crediting the amount in the account of the last person to whom the cheque is endorsed i.e. the final beneficiary of the cheque.
For Example
Jeet issued a cheque in favor of Sohini and Sohini decides to endorse the cheque to Adrija, by writing Adrija’s name behind the cheque given to her. Adrija can endorse the same cheque to any other person in the same way. Now, if the cheque has finally come to Param then the bank could ask for details (such as ID card) from Param when he approaches the bank to receive the cash.
Cheque that cannot be endorsed further
If a cheque is crossed and “Account Payee Only” or “Not Negotiable” is written on it, then it means that the cheque cannot be endorsed to anybody else. The cheque has to be necessarily collected by the banker of the payee on his behalf.
For Example
Simran has issued a cheque in favour of Namrata. But, she has written “Account Payee Only” or “Not Negotiable” and crossed the cheque. Then, Namrata cannot endorse it further.
Filing Tax Returns
Filing tax returns is a detailed and long-drawn process. Some legal aspects to keep in mind are:
Step 1:
Initially, for filing an Income Tax Return (ITR), you need to find out what category of taxpayer you are. This involves calculating your taxable income based on standard tax rates. There may also be certain tax deductions that you can avail to reduce your tax liability.
Step 2:
When it comes to actually filing tax returns, you must most importantly ensure that you submit your returns within the specified dates/timeline by selecting the correct ITR Form that is applicable to you.
Step 3:
There are various ways in which your ITR can be filed i.e., physically or electronically, and each filing option comes with a different procedure. Even within electronic filing, you have the offline and online options. Irrespective of how you file your ITR, you will have to verify it upon submission. Sometimes, you might have to correct certain details in your ITR Form, or claim a refund if you have paid excess tax.
Step 4:
Accurate information and filing on time is essential while filing taxes. If you violate any laws related to income tax, you can be punished. Hence, if you are doubtful about any aspect of filing returns, it is advisable to seek help by contacting the income tax authorities.