When it comes to deadlines, the one for filing taxes is possibly the most feared. In a rare recognition of this, the Central Board of Direct Taxes (CBDT) has presented a late New Year gift to taxpayers. The deadline for submitting the ITR-V form for assessment year 2009-10 has been extended to 31 March 2010 or within 120 days of uploading the data, whichever comes later.The ITR-V form, used to file online returns without a digital signature, has to be uploaded by 31 July each year. Within the next 30 days, this form, duly signed and verified by the taxpayer, has to be sent by ordinary post to the Centralised Processing Centre in Bengaluru. In case you don't receive the e-mail acknowledgement for its receipt, you can send another completed ITR-V form by speed post. These relaxations are only a one-time measure introduced due to the demand from taxpayers. Apparently, the snail mail alone—read ordinary post—is not good enough.
There is more good news for taxpayers—they now have another tax-free option to park their money. The central government has authorised the Indian Railway Finance Corporation to issue bonds worth Rs 5,000 crore by 31 March 2010. The 6.5-7.25 per cent interest earned from these bonds will be fully exempt from income tax. The zerocoupon Bhavishya Nirman Bonds from the National Bank of Agriculture and Rural Development (Nabard), also to be issued by 31 March, are similarly eligible for tax concessions. These 10-year bonds, with a maturity value of Rs 20,000, will only be taxed as capital gains at the end of the tenure.
However, with every carrot there is an inevitable stick. From 1 April 2010, a higher tax will be deducted at source if you don't provide your Permanent Account Number (PAN) while investing in fixed deposits, bonds or schemes where TDS is applicable. The TDS deduction will be 20 per cent instead of the normal 10 per cent. As per the new provisions, the assessing officer concerned shall not provide the certificate for nondeduction or deduction at a lower rate if the PAN is missing. Similarly, the declaration by deductee under Section 197A for non-deduction of TDS on payments shall not be valid if the application doesn't carry the PAN number. The law will also apply to all non-residents in the case of payments or remittances subject to TDS.
In addition, expect a greater degree of scrutiny for all high-value tax refunds involving amounts more than Rs 1 lakh. The decision has come in the wake of the recent refund fraud in Mumbai, where the user IDs and passwords of certain officers of the IT Department, Mumbai, were fraudulently used to generate refunds for some beneficiaries. While this could translate to a delay in the refund process, the good news is that the CBDT plans to overhaul the existing system for handling high-value refunds. It is chalking out a more foolproof system to tackle the loopholes in the existing 'refund banker' system. Ironically, the system of electronically transferring refunds to the taxpayer's bank account was also introduced in response to fraud. Will the tax authorities be able to bell the scamsters this time around?