rediff.com

NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  

Rediff News  All News 
Rediff.com  » Business » DON'T file your tax returns just yet!

DON'T file your tax returns just yet!

June 22, 2009 15:40 IST

The devil, they say, lies in the detail. And here's one that threatens to derail the income tax return filing process. Individuals now need to mention a unique transaction number (UTN) against every tax deducted at source entry.

The problem, though, is that infrastructure to generate UTNs is still not in place, leaving income tax assessees in a lurch as July 31, 2009, the last date to file returns for the financial year 2008-09, fast approaches. "Nobody can say whether the returns will be valid if filed without UTN," says Sandeep Shanbhag, a chartered accountant and director, investment and tax advisory, Wonderland Consultants.

In a circular dated May 21, 2009, Munesh Kumar, secretary, Central Board of Direct Taxes, said, "The credit for any TDS...claim will be allowed...if the assessee quotes the relevant UTN for every TDS." Simply put, if a UTN is not mentioned against a TDS transaction then the tax already paid by the individual will be considered unpaid.

It then becomes necessary that companies, who deduct tax every month against salaries, provide employees with UTNs against these deductions. This UTN then needs to be mentioned in the Indian Income Tax Return form that is used for filing tax returns.

"You won't get the tax credit unless the UTN is quoted. If they go ahead with the regulation, the person will have to pay the tax all over again along with the interest and penalty," says Shanbhag.

This logic will also hold for any TDS that a bank might have cut on interest earned on fixed deposit. Like employers, even banks will need to provide a UTN.

As per the May 21 circular, the National Securities Depository Ltd is supposed to issue UTNs to the deductor of TDS (companies, banks) who, in turn, has to pass on the UTN to the deductee.

That, clearly, isn't happening anytime soon primarily because the change was introduced on May 21, 2009, nearly two months after the last financial year came to an end.

"We don't issue certificates in the middle of the year and the UTN number will be given only by May 2010," says KVS Manian, group head - retail liabilities & branch banking, Kotak Mahindra Bank.

None of the form 16s received from salaried clients has any mention of UTNs, say chartered accountants. "UTN is to be provided for the accounting year 2008-09.Everybody - banks, employers etc - has issued TDS certificates and form 16 as per the old law," says Ameet Patel, partner at chartered accountancy firm Sudit K Parekh & Co.

Aware of the problem, the CBDT is in the process of amending this rule. Shishir Jha, CBDT spokesperson, says, "Action is being taken to ensure that assessees do not face any difficulty. Individuals are requested to wait a week for clarifications."

Given the uncertainty, it is advisable to wait for a week or two before filing your IT-return, says Shanbhag. "We have 40 more days to go till July 31. So, when there is such a big issue involved, one should wait," he says.

For reprint rights contact: syndication@dnaindia.net

Khyati Dharamsi & Vivek Kaul, DNA