Theme: Money

Speed Clearing for Outstation Cheques

Cheques can be issued to a person holding a bank account in a bank branch in the same city or outside. When the cheque is issued to a person outside the same city then it becomes an outstation cheque.

Speed Clearing is a process that makes it possible to clear such cheques, locally. With the help of MICR and Core Banking System (CBS), the entire process of clearing such cheques has become easier and faster. It is also referred to as ‘Grid-Based Cheque Truncation System’.

Before the Speed Clearing Process existed, if you deposited an outstation cheque at your bank, it would first go to the local clearing house in your city and then the cheque would be physically sent to the outstation branch to process the payment. Now, with speed clearing, the cheque is sent to the local branch of the drawee bank for clearance.

Hence, clearance becomes faster with the Speed Clearing System.

Procedure for Electronically Filing Tax (Offline Filing)

The offline electronic filing (e-filing) mode is applicable for all Income Tax Retun (ITR) Forms. In the offline e-filing mode, you have to fill the ITR form offline, and then submit it on the Income Tax Department website.

Step 1: Select ITR Form

For offline mode, you have to download the appropriate ITR Form from the Income Tax Department’s e-filing portal. If you want to know which ITR form you have to fill, read here.

A pre-filled form can also be downloaded if you log in to the e-filing portal. From your account, you can choose to ‘Download Pre-Filled XML’. Import this to fill personal and other details into your ITR forms.

Step 2: Fill in Details

You can fill in the downloaded ITR form offline. Ensure that you fill the form completely and provide all the necessary details correctly. Validate all the tabs in the form.

Note that ​​​​​​​​​​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. Keep the ITR forms safely as they may be asked by the tax authorities when demanded in situations like assessment, inquiry, etc.

Step 3: Compute your Tax Liability

Compute total income for the financial year and compute your tax liability. You can also take the help of a Chartered Accountant for this. After this, collect all the documents and verify all the taxes deducted from your income. This way you can compute the total income chargeable to tax. After computing your total income, you have to calculate your tax liability. You can do this by applying the tax rates in force as per your income slab.

Step 4: Deductions

Once you have computed your tax liability, deduct the taxes that have been already paid by you through TDS, TCS and Advance Tax, and add interest payable (if any). This will tell you if all the taxes are already paid by you or any additional tax has to be paid, or if you have paid any excess taxes and a refund is due to you.

Step 5: Submit ITR Form

Generate and save the form. After preparing the form offline, you can then submit it online by logging in to the e-filing portal.

Step 6: Upload ITR Form in XML Format

After selecting the ‘e-File’ menu, leading to the ‘Income tax return’ page, you will have to select the assessment year, ITR form number, and whether your ITR is an original/revised return. You can then upload your form in the XML format. You have several options for verifying your form, and can choose to verify your form at the time of submission or later.

Once the verification is done, you can check your ITR status here.

Valid cheques

A valid cheque is one that can be presented to the bank in order to receive money from the drawer’s account. The validity of the cheque will depend upon the date it was issued. Once a date has been written on a cheque at the time of issuance, it will only stay valid for up to 3 months from that date. For example, if a cheque has been issued on 1st January, 2019, then it will only be valid till 1st April, 2019. There are two broad categories of valid cheques:

Notice issued by Income Tax Authorities

Sometimes, you may be required to file income tax returns (ITR) in response to a notice issued to you by the income tax authorities. These are some major instances when notice can be issued to the taxpayer:

If your tax return is defective

If the Assessing Officer thinks that your return of income is defective, he may notify you of the defect,(( Section 139(9), Income Tax Act, 1961)) and give you an opportunity to rectify the defect within fifteen days of the notice. The defect should be rectified within fifteen days or the extended period allowed by the Officer. Otherwise, your return shall be treated as an invalid return. It will be considered that you as the taxpayer have failed to submit the return, which will result in penalties for you.

Not filing tax return on time

In order to make an income tax assessment, the Assessing Officer may serve a notice on any person who has not submitted an income tax return on time, to make the person submit the return. The Officer can also ask you to produce any accounts or documents required by the Officer. The income tax authorities can ask you to submit or verify any information.  Further, this may include a statement of all your assets and liabilities.(( Section 142(1), Income Tax Act, 1961). Reassessment of your income chargeable to tax – If the Assessing Officer thinks that any part of your income chargeable to tax has escaped assessment or not been assessed for any assessment year,((Section 147, Income Tax Act, 1961))

then he may assess or reassess such income which has escaped assessment and which comes to his notice subsequently. Before making this assessment, the Assessing Officer shall serve you a notice.(( Section 148, Income Tax Act, 1961)) The notice will require you to submit a return of income for the previous year corresponding to the relevant assessment year. The notice will specify the time within which you have to submit the return.

Penalties for not responding to notices

You have to respond promptly to the notices mentioned above, and act accordingly. If you do not respond, you can be punished under the Income Tax Act. However, you will not be punished if:

  • You submit the return before the end of the assessment year
  • Tax payable does not exceed Rs. 10,000.

If you don’t respond to a notice asking you to submit your tax return, or a notice asking you to submit your return for reassessment, then you can be punished with imprisonment and an unlimited fine. If the tax amount involved is more than Rs. 25 lakh, you can face imprisonment from 6 months up to 7 years. In other cases, you can face imprisonment from 3 months up to 2 years.(( Section 276CC, Income Tax Act, 1961))

Crossed Cheque

Crossing a cheque means that it cannot be transferred to anyone else. In such cheques, you have to draw two parallel lines on the top left corner of the cheque and you can write the words “Account Payee Only” or “Not Negotiable” with it.

 

Crossed Cheque

For illustration purposes only

These cheques cannot be encashed at the cash counter of a bank but can only be credited to the payee’s account.

These cheques are crossed to minimise the risk of misappropriation or loss of identity. Since crossed cheques are not payable at the counter and the amount is credited into the bank account of the payee, this is a safer way of transferring money as compared to an uncrossed or an open cheque on which no amount of money has been written.

A crossing may also be made where the name of the bank is indicated on the cheque, to restrict the payment. For example, if a cheque is made in the name of B and a crossing “Bank of Baroda” is made on the cheque, the cheque would be payable only to the account of B with Bank of Baroda and no other bank

Process for Electronically Filing Taxes – Online Filing

The online electronic filing (e-filing) mode is applicable only for ITR forms 1 and 4, which you can fill directly online.

Step 1: Select Income Tax Return (ITR) Form

For online mode, you have to directly login to the Income Tax Department’s e-filing portal and select either ITR-1 or ITR-4. If you want to know which ITR Form is applicable to you, read here.

Step 2: Prepare your ITR Form online

Select the ‘e-File’ menu and then the ‘Income tax return’ page. You will have to select the assessment year, ITR form number. You will also select whether your ITR is an original/revised return. Further, you can then access your form by selecting the ‘Prepare and submit online’ option.

Step 3: Fill in Details

Read the instructions carefully. Ensure that you fill the form completely and provide all the necessary details correctly. Click on the ‘Save Draft’ button periodically to save the entered ITR details as a draft. You can do this to avoid loss of data/rework due to session timeout. The saved draft will be available for 30 days. However, this means 30 days from the date of saving or till the date of filing the return.

Note that ​​​​​​​​​​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. Keep these documents safely with you as they make be asked by the tax authorities or officers in situations like assessment, inquiry, etc.

Step 4: Submit the form

After filling the form, you have to choose the appropriate verification option in the ‘Taxes Paid and Verification’ tab. You have several options for verifying your form, and can choose to verify your form at the time of submission or later.

Once the verification is done, you can check your ITR status here.

Assessment/ITR Verification

The last step of the Income Tax Return (ITR) filing process is verification. You have to file your ITR verification within 120 days of filing the tax return. If you don’t do so, then it means that you have not filed ITR.

These are the several ways in which you can electronically verify your ITR at the time of filing your ITR:

  • Digital Signature Certificate (DSC) – Along with your ITR form, attach the signature file generated from DSC management utility.
  • Aadhaar OTP – Enter the Aadhaar OTP you receive in your mobile number registered with UIDAI.
  • Electronic Verification Code (EVC) using Prevalidated Bank Account Details, or using Prevalidated Demat Account Details – Enter the EVC received in the mobile number registered with Bank or Demat Account respectively. Validity of such EVC is 72 hours from the time of generation.

There is no requirement to send documents to the Income Tax Department if you want to verify your tax return electronically. If you verify your ITR using an electronic method, then you will immediately receive the confirmation from the Tax Department regarding verification. Read more about e-verifying your return here.

Verifying at a later time

You can also choose to verify at a later time. If you don’t want to e-verify the ITR, you can instead send the signed ITR-Verification through normal or speed post to “Centralized Processing Center, Income Tax Department, Bengaluru – 560500”.

When you send the ITR-Verification via post to the Income Tax Department, they will send you an email confirming its arrival. This means your ITR is verified. The email will be sent to the email address you have registered in your e-filing account on the Income Tax Department’s e-filing website.

Income Tax Department’s Processing of Tax Returns

After the return is verified, either via e-verification or physically, the Income Tax Department will start processing your tax return. This is to ensure that the details filled by you are correct as per the Income Tax Act. The authorities may also cross-check details with you.

In order to make an income tax assessment, the Assessing Officer may serve a notice on any person who has not submitted an income tax return on time, to make the person submit the return. The Officer can also ask you to produce any accounts or documents required by the Officer. The income tax authorities can ask you to submit or verify any information.  Further, this may include a statement of all your assets and liabilities. (( Section 142(1), Income Tax Act, 1961))

Once the return is processed, the Department communicates it to your registered email ID. If there are errors, you have to explain further or correct the mistakes made while filing the original ITR.

Bearer cheque

If you have a bearer cheque, then you can present it to the bank and get the cash amount written on it. Any person can give the cheque and collect the money written on it.

For Example: If Sanjana presents the bearer cheque at the bank counter for encashment, the amount will be paid in cash to her.

 

Bearer Cheque

For illustration purposes only

Usually the words “or bearer” are printed on the leaf of the cheque. It can be issued to a third party in the third parties name or in the name of the firm. A bank cannot refuse payment of this kind of cheque across the counter.

Since anyone can present it to the bank and collect the cash amount written on it, these are risky in nature. So in a situation where you lose it, there may be a chance of someone else presenting it to the bank and collecting money.

If a cheque is crossed then it automatically is not a bearer cheque.

Deductions Reduced from 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. Deduction can be less, 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 are:

Contribution to LIC and Other Pension Fund 

Individuals can claim all contributions up to Rs. 1,50,000 of a payment under LIC’s annuity plan, or to any other insurer for receiving pension.(( Section 80 CCC, Income Tax Act, 1961)) This does not include any interest or bonuses that are in the individual’s account.(( Section 80 CCC, Income Tax Act, 1961)) If a deduction is claimed for this, later on when the pension is received by the individual or someone that he appoints (nominee), the pension will be taxable.

Taxable income received under a pension scheme includes:

  • contributions made to receive pension; and
  • contributions to all approved insurers under the Insurance Regulatory and Development Authority.(( Section 23 ABB, Income Tax Act, 1961)) You can find a list of approved insurers here.

This also includes contributions in Equity Linked Savings Scheme (ELSS) which is a mutual fund equity scheme that offers long-term wealth creation along with tax benefits(( Section 80C, Income Tax Act, 1961)), and has a mandatory lock-in period of three years. Investments in ELSS up to a maximum of Rs. 1.5 lakh per annum qualify for deductions. You can deduct the amount you invest in an ELSS from your total income in order to reduce your taxable income, and thus reduce your taxes.

Contribution to National Pension System

National Pension System(( Section 80 CCD, Income Tax Act, 1961)) is a retirement benefit scheme which is compulsory for all Central Government workers who were employed on or after January 1, 2004. Other employees and self-employed persons also have the option of being a member of NPS.(( Section 80 CCD(1), Income Tax Act, 1961))

Deduction for Employer: All employer’s contributions to NPS is taxable as salary income. The employer’s contribution to the NPS is deductible by the employee in the year in which contribution is made. The maximum deduction is 10% of the salary amount of the employee.

Deduction for Employee: The NPS contribution made by an employee is deductible in the year the contribution is made. Here, the deduction amount is 10% of the salary of the employee. If the contribution is made by another person who is not an employee, then the deduction limit is 20% of the gross total income.(( Section 80 CCD(2), Income Tax Act, 1961))

Pension or other payments out of the NPS account will be taxable for the person who receives it. However, if the amount of pension received by NPS  is used to purchase an LIC annuity plan in the previous year, then it will be exempt from tax.

Maintenance, including Medical Treatment of a person with a disability

An individual as well as a member of a Hindu Undivided Family can claim deduction for expenditure related to:

  • Medical treatment including nursing, training and rehabilitation of a person with a disability.(( Section 80DDB, Income Tax Act, 1961))
  • Deposits made under an approved LIC scheme or other insurers.

Deductions can be claimed depending on the disability faced by the individual or a dependent relative, like a member of a family including spouse, children, siblings, parents etc.

  • Persons with disabilities can get a fixed deduction of Rs. 75,000. A person with disability includes those suffering 40% or more of blindness, low vision, hearing impairment, locomotor disability, mental retardation, mental illnesses and cured of leprosy.
  • A higher deduction of Rs. 1,25,000 is available for persons with severe disabilities (80% and higher). To claim such deductions, the individual must have certification issued by the medical authority. The assessing officer may even ask you to get a fresh reassessment to obtain a fresh medical certificate.

Medical Treatment

A resident individual or resident Hindu Undivided Family can claim deductions for medical treatment if they have:

  • Incurred expenditure for the medical treatment of a specified disease or ailment as prescribed. Some examples of such diseases are dementia, Parkinsons disease, malignant cancers, AIDS, chronic renal failure, etc. (( Rule 11DD, Income Tax Rules, 1962))
  • Incurred medical treatment for themselves or for dependants like husband,wife, children, parents, siblings etc.
  • A prescription for such medical treatment can be from a neurologist, an oncologist, a urologist, a haematologist, an immunologist or such other specialist, etc.(( Proviso to Section 80 DDB, Income Tax Act, 1961))

Either Rs. 60,000 (for senior citizens) or Rs. 40,000 (for any other person) will be taken as the deduction (whichever expenditure on medical treatment is lower). The amount deducted will also be reduced if an individual gets insurance money or is reimbursed by the employer for medical treatment.

Payment of Interest on Loan Taken for Higher Studies

An individual can claim deduction for the payment of interest on a loan taken for high studies(( Section 80E, Income Tax Act, 1961)) for themselves or their relatives like spouse, children etc. If the loan is taken for higher studies is from a bank, financial institution or an approved charity, the interest is deductible in the year the interest is paid. The entire interest is deductible on the year the individual pays interest on the loan, as well as seven years(( Section 80E(2), Income Tax Act, 1961)) after the interest is paid up.

Payment of Interest on Loan for buying House Property

To claim a deduction for interest on loan taken for residential house properties, a taxpayer can be a resident or non-resident of India. Further, the following conditions are to be met(( Section 80 EE, Income Tax Act, 1961)):

  • The person has to take a loan.
  • The loan should be for a residential house property.
  • The loan should be taken from a bank or a housing finance company. For example, the loan is sanctioned by the bank or housing finance company during April 1, 2016 to March 31, 2017.
  • The amount of the loan sanctioned should not exceed Rs. 35 lakhs.
  • The value of the house property should not exceed Rs 50 lakhs.
  • The person claiming deduction should not own any residential house property on the day the loan is sanctioned.

The taxpayer can claim deduction under Section 80EE only if the above conditions are satisfied.

Donation to certain funds, trusts and charitable institutions

Deduction is available to a taxpayer if he contributes or gives donations to approved funds and charitable institutions/donations(( Section 80G, Income Tax Act, 1961)). Any taxpayer , company, firm etc. can claim such deductions. 100% deduction is available for donations to National Defence Fund, Prime Minister’s National Relief Fund, Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES FUND) Prime Minister’s Armenia Earthquake Relief Fund, Africa (Public Contributions – India) Fund, National Children’s Fund etc.

Rent Paid(( Section 80GG, Income Tax Act, 1961))

An individual can claim deductions for the rent paid for a residential accommodation by him or for his family. This person can be anyone including a self-employed person or a person who does not get house rent allowance from the employer. However, it should not exceed Rs. 5000 a month or 25% of the person’s income. Only an individual who pays rent for a residential accommodation for himself or his family can avail this deduction through Form No.10BA.

Donations for scientific research and rural development

Any individual, except someone gaining profits out of a business or profession, can claim deductions for donations made towards scientific research or rural development.(( Section 80GGA, Income Tax Act, 1961)) Such donations must be given to research associations, universities or other institutions which work in this area. A contribution can also be made for projects (approved by the Income Tax Department)(( Section 35AC, Income Tax Act, 1961)) or for the National Fund for Rural Development or National Urban Poverty Eradication Fund. The entire amount donated i.e., 100% can be deducted. The donation can be given in cash, cheque or draft. However, no deduction is allowed for cash contributions exceeding Rs. 10,000.

The points given above are some examples of major deductions applicable to individuals. Read here for more.

Order Cheque

An order cheque is a cheque where only the person or party in whose name the cheque has been drawn, can withdraw the cash. The person collecting the cheque has to give an identity proof to encash the cheque. In such cheques, you have to strike out the words “or Bearer” and specify the person to whom the cheque is written for. Only then will it become an order cheque.

 

Order Cheque

For illustration purposes only

For Example: If Sumeysh’s name is written on the cheque, only he can present the cheque for payment and get it encashed. No one else will be allowed to withdraw the amount.

The payee can transfer an order cheque to someone else by signing their name on the back of it. This is known as endorsing of a cheque.

Right to Information – Tax

The Right to Information Act 2005 (RTI Act 2005) states that all Indian citizens can access information which is under the control of public authorities.(( Section 4, Right to Information Act, 2005)) For example, if you want to know why your tax returns are delayed, then you can file an RTI application.

If you require any information which is tax related, you can approach the Central Public Information Officer (CPIO) or Central Assistant Public Information Officer (CAPIO) as the case may be, and specify the particulars of the information you require.((RTI, Income Tax Department, available at https://www.incometaxindia.gov.in/Pages/right-to-information.aspx The request has to be:

  • Made in writing or submitted online
  • Written in English, Hindi or official language of the state you are living in
  • Accompanied by fees requested during the application

The Public Information Officer will also help you write down the application if you require assistance. Other than the personal details, you will not have to give any reason for asking the information.

The CPIO has to provide the information within 30 days of the receipt of the request. If he does not do this, he may be punished with a penalty of Rs. 25,000. For details of CPIO, please click here​​ and visit the respective Field Offices/Directorate Generals Pages​​ or call Aaykar Sampark Kendra at 0124-2438000.

If you require any assistance on filing an FIR, then you can check out the Right to Information topic for any further clarification.

Cancelled cheque

If the words “cancelled” has been written on the cheque then, it is known as a cancelled cheque. Usually, the word cancelled is written across the cheque leaf in a big font, so that it is clear to anyone seeing the cheque, that it is a cancelled cheque. The purpose of giving anyone a cancelled cheque is to let someone, for example, your employer, know your bank account details such as:

  • Your full name,
  • IFSC Code,
  • Bank Account Number etc.
Cancelled Cheque

For illustration purposes only

Income exempt from Income Tax

Exemptions are those incomes which are exempt from tax. In other words, they do not form a part of the total income calculated for taxation purposes.

Incomes Exempt from Tax

Given below are some examples of income that are exempted from tax:

  • Agricultural income(( Section 10(1), Income Tax Act, 1961))
  • Any payments received from family income or income of an estate belonging to the family by an individual member of a Hindu Undivided Family(( Section 10(2), Income Tax Act, 1961))
  • Share of profit from a firm(( Section 10(2A), Income Tax Act, 1961))
  • Leave travel concession provided by an employer to his employee who is an Indian citizen
  • Remuneration received by foreign diplomats(( Section 10(6), Income Tax Act, 1961))
  • Death-cum-retirement gratuity(( Section 10(10), Income Tax Act, 1961))
  • Retrenchment compensation(( Section 10(10B), Income Tax Act, 1961))
  • Scholarship granted to meet the cost of education(( Section 10(16), Income Tax Act, 1961))
  • Family pension received by families of Armed Forces(( Section 10(19), Income Tax Act, 1961))
  • Foreign allowance granted by the  Government of India to its employees posted abroad(( Section 10(7), Income Tax Act, 1961))
  • Tax paid on behalf of foreign companies in India(( Section 10(6A), Income Tax Act, 1961))
  • Income of mutual fund set up by a public sector bank or financial institution(( Section 10(23D), Income Tax Act, 1961))
  • Compensation received by victims of Bhopal Gas Tragedy(( Section 10(10BB), Income Tax Act, 1961))
  • Any sum of money from a life insurance policy. This includes bonuses but does not cover Keyman insurance policies(( Section 10(10D), Income Tax Act, 1961))
  • Daily allowance of Member of Parliament or State Legislature(( Section 10(17), Income Tax Act, 1961))
  • Any income from an approved research association(( Section 10(22B), Income Tax Act, 1961))

Further, apart from the ones listed above, there are multiple exemptions under income tax law. To read more click here.

Some institutions are also exempt from giving tax such as India Wildlife Conservation Trust, charitable organizations etc. Read here to see more on exempted institutions.

Precautions to be taken by customers

There are certain precautions to be taken by customers when dealing with cheques.

  • Ensure that the cheque has CTS 2010 written on it.
  • Preferably use image-friendly coloured inks like blue and black while writing cheques. Avoid using inks like green and red.
  • You should also avoid any alterations/corrections once you have written the cheque. Preferably, use a new cheque leaf if you need to make any alterations/corrections as the cheque may be cleared through image based clearing system.
  • Make sure that your signature on the cheque is the same as the signature in the bank records. Otherwise, your cheque may be declined and the bank may penalize you.

Financial Year and Assessment Year

The government levies income tax on the annual income of an individual. Income tax is calculated from a period starting from 1st April and ending on 31st March of a calendar year.

The income tax law classifies the calendar year as:

  • Previous year(( Section 3, Income Tax Act, 1961)): The year in which income is earned is called a previous year.
  • Assessment year: The year in which the income is charged for taxation is called an assessment year.

For example, income earned during the period of 1st April, 2020 to 31st March, 2021 by an individual is income of the previous year 2020-21. The income of the previous year 2020-21 is taxable in the next year, i.e., in the assessment year 2021-22.​

Previous Year for Businesses(( Proviso to Section 3, Income Tax Act, 1961))

However, for businesses or professions, the “previous year” is the period beginning with

  • The date of setting up of the business or profession; or
  • The date on which the source of income newly comes into existence,

and ending with the said financial year.

Precautions to be taken by banks while dealing with cheques

Use CTS Cheques Only

Banks should use “CTS 2010” cheques which are not only image friendly but also have more security features.

Using Stamps on Cheques With Care

Banks should exercise care while affixing stamps on the cheque forms, so that it does not interfere with the material portions such as date, payee’s name, amount and signature. The use of rubber stamps, etc, should not overshadow the clear appearance of these basic features in the image.

Scanning of CTS Cheques by Banks

It is necessary to ensure that all essential elements of a cheque are captured in an image during the scanning process and banks have to exercise appropriate care in this regard.

Procedure to file Revised Return

Electronically filing revised return (offline):

Step 1: Select ITR Form

For offline mode, you have to  download the appropriate ITR Form from the Income Tax Department’s e-filing portal. If you want to know which ITR Form you have to fill, read here.

A pre-filled form can also be downloaded if you log in to the e-filing portal. From your account, you can choose to ‘Download Pre-Filled XML’, which can be imported to your ITR form for prefilling the personal and other available details.

Step 2: Fill in Details

You can fill in the downloaded ITR form offline. Ensure that you fill or correct the relevant details of the form. Under ‘General Information’, choose the ‘Return filing section’ as ‘Revised return under section 139(5)’ and ‘Return filing type’ as ‘Revised’.

Enter the Acknowledgement number and date of filing of the original return. You can find out these details by going to your e-filing account and choosing ‘Income Tax Returns’ under the e-filed returns/forms.

Step 3: Submit the Form

Generate and save the form. After preparing the revised return offline, you can then submit the form online by logging in to your account on the e-filing portal.

Step 4: Upload ITR Form in XML Format

After selecting the ‘e-File’ menu, leading to the ‘Income tax return’ page, you will have to select the assessment year, ITR form number, and state that your ITR is a revised return. You can then upload your form in the XML format. You have several options for verifying your form, and can choose to verify your form at the time of submission or later.

Once the verification is done, you can check your ITR status here.

 

Electronically filing revised return (online):

Step 1: Select ITR Form

For online mode, you have to directly login to the Income Tax Department’s  e-filing portal and select either ITR-1 or ITR-4. If you want to know which ITR Form is applicable to you, read here.

Step 2: Prepare your ITR Form online

After selecting the ‘e-File’ menu, leading to the ‘Income tax return’ page, you will have to select the assessment year, ITR form number, and state that your ITR is a revised return. You can then access your form by selecting the ‘Prepare and submit online’ option.

Step 3: Fill in Details

Ensure that you fill or correct the relevant details of the form. Under ‘General Information’, choose the ‘Return filing section’ as ‘Revised return under section 139(5)’ and ‘Return filing type’ as ‘Revised’.

Enter the Acknowledgement number and date of filing of the original return. You can find out these details by going to your e-filing account and choosing ‘Income Tax Returns’ under the e-filed returns/forms.

Step 4: Submit the form

After filling the form, you have several options for verifying your form, and can choose to verify your form at the time of submission or later.

Once the verification is done, you can check your ITR status here.

Cheque Processing Problems

There are several reasons that could cause problems in cheque processing and lead to cheque bouncing. But not all of them warrant legal action. For example, a cheque could bounce if the sign of the drawer does not match with the account.

A detailed list of these reasons has been provided by the Reserve Bank of India in Annexure D of the Uniform Regulation and Rules for Bankers Clearing Houses.

Mandatory Linking of Aadhar/PAN for filing Returns

It is mandatory for all income tax taxpayers or persons who have to file income returns (even on behalf of others), to have a Permanent Account Number (PAN). Your Permanent Account Number (PAN) is a 10-digit alphanumeric identifier, issued by the Income Tax Department. Each taxpayer (e.g. individual, firm, company, etc.) is issued a unique PAN Number, and it is compulsory to quote your PAN Number on return of income tax.

While making an application for a PAN Number, it is mandatory to quote your Aadhaar/Aadhaar Enrolment ID.  You can get an instant PAN by providing your Aadhaar details. Once you have applied for a PAN, you can also check the status of your PAN application. If there are any changes in your PAN/Aadhaar details, you can update the details.

Read more here about the procedure for obtaining a PAN number.

Forging a cheque

When you fill a cheque either without the authorisation of the account holder or exceed the amount you were authorised to fill then you have committed a crime. This is known as forging a cheque.

The punishment for this offence is jail time up to two years and/or a fine.

Examples

  1. Mustafa took a blank cheque from Adrija and without her knowledge added in an amount of Rs. 10,000 along with falsifying her signature. He presented this cheque to the bank for payment. In this case, Mustafa has committed forgery.
  2. Adrija gave Mustafa a signed cheque and authorised him to put in an amount only up to Rs. 10,000. Mustafa fills in Rs. 20,000 and presents it to the bank for payment. Mustafa has committed forgery.

Refund of Excess Tax

If the Assessing Officer is satisfied that the amount of tax paid by you for any assessment year exceeds the amount with which you should actually be charged, then you are entitled to a refund of the excess.(( Section 237, Income Tax Act, 1961)) Any excess tax you pay can be claimed as a refund.

How to get your refund

If you want to claim any refund from the Income Tax Department, you can do so only if you file your ITR. There is no separate procedure as such in order to claim an income tax refund due to you. You can claim tax refund by simply filing the return of income(( Section 239, Income Tax Act, 1961)) and verification in the usual manner. The Income Tax Department will then confirm your ITR verification, including details of the refund amount. Your refund claim will either be accepted or rejected.

The excess tax will generally be refunded by crediting it in your bank account through ECS transfer. Sometimes, you may owe some payment to the Income Tax Department. In this case, the income tax authorities may set off the refund amount against the sum payable by you. This is done after giving you a written intimation of the action proposed to be taken.(( Section 245, Income Tax Act, 1961))

Delay in payment of refund

The Income Tax Department has been making efforts to settle refund claims at the earliest.​​ After applying for a refund, you can check your refund status. If the Assessing Officer does not grant the refund within three months after the month in which the refund is claimed, then the government shall pay you simple interest at 15% per annum on the refund amount.(( Section 243, Income Tax Act, 1961))

Cheque Bouncing

One of the ways in which a cheque is said to have been ‘bounced’ or ‘dishonoured‘ is when it is deposited or presented for payment but could not be encashed by the holder of the cheque.

There are several reasons why a cheque would bounce. However, not all of them amount to a crime. It is a crime if the cheque bounced either because of:

  • Insufficient funds in the drawer’s account, or
  • The payment for the cheque was stopped by the bank on the request of the issuer of the cheque.

Examples: ‘A’ issues a cheque to ‘B’ for Rs. 1,000. When B deposits the cheque in the bank, the bank informs him that ‘A’ does not have Rs. 1,000 in her account to pay ‘B’ with. The cheque has been dishonoured. ‘A’ issues a cheque to ‘B’ for Rs. 1,000. Before B can deposit the cheque, ‘A’ issues instructions to her bank to stop payment of the cheque without the knowledge and consent of ‘B’. When ‘B’ tries to encash the cheque, he cannot do so. The cheque has been dishonoured.

Revised Return

While filing your income tax return (ITR), ensure that you use the correct form to file it. If you use the wrong form to file your ITR, it is a defective return. You will be have to file it again. ​​​

If you have made any mistake or omission in filing your ITR, you should file a revised return.(( Section 139(5), Income Tax Act, 1961)) The return should be revised within the given time limit. A return can be revised before the end of the assessment year or before the completion of the assessment; whichever is earlier.

If the Assessing Officer thinks that your return of income is defective, he may notify you2(( Section 139(9), Income Tax Act, 1961)) of the defect, and give you an opportunity to rectify the defect within fifteen days of the notice. The Officer may also allow an extension of time to rectify the defect if you apply for the same. The defect should be rectified within fifteen days or the further period allowed. Otherwise, your return shall be treated as an invalid return. It will be considered that you as the taxpayer have failed to submit the return, which will result in penalties for you.

However, in some instances, the Assessing Officer may allow the delay and treat the return as a valid return.This can happen if you have rectified the defect after the permissible period, but before the income tax assessment has been made by the authorities.

Manner of filing

If the original return has been filed in paper format or manually, then technically it cannot be revised by online mode or electronically.

Notice after a cheque has bounced

Sending a notice after a cheque has bounced.

Punishing the Issuer of the Cheque

Send a demand notice

If a cheque that you’ve received as payment has bounced, you must first send a notice to the issuer of the cheque to pay the amount that was due, along with the cheque return memo that you have received from the bank. This is known as demand notice. This demand notice must be sent within 30 days of the cheque bouncing.

Drawer has to pay

The drawer will have 15 days from the date of receiving the notice to pay you the money.

Filing a Case

Drawer replies and pays the money

In such a situation, then there is no need to file a case, as you have received the money.

Drawer replies but does not pay the money

Where the drawer replies but does not pay the money, then upon the completion 15 day period, you have 30 days to file a criminal complaint in court.

Drawer does not reply, does not pay the money

Where the drawer does not reply and does not pay the money, then upon the completion 15 day period, you have 30 days to file a criminal complaint in court.

Recovering the Money

Once your cheque has bounced, you have 3 years to file a civil case to recover the money that is due to you. Please contact a legal professional to know more about the civil procedure.