Amendment in ‘Filing Return of Income’ in Finance Bill 2020

1.     Amendment in Section 140 to enable any Person to File Income Tax Return (ITR) of a Company or an LLP from Assessment Year 2021-22

More persons authorised to verify the Income-tax return of a Co. and LLP [Applicable from Assessment Year 2020-211

The Income-tax Department starts processing the Income-tax Return (ITR) only if it is verified by the assessee or any other prescribed person. If ITR is not verified it is treated as an invalid return. Who can verify the return has been prescribed under section 140 of the Income-tax Act.

In respect of companies, as per the current provision, the return should be signed and verified by the Managing Director of the company. However, if for any unavoidable reason the Managing Director is not able to verify the return or where there is no Managing Director, the return may be verified by any director of the company.

Similarly, in case of an LLP, the return shall be verified by the designated partner thereof, or where for any unavoidable reason such designated partner is not able to verify the return, or where there is no designated partner as such, by any partner thereof.

Thus, as per the existing provisions of the Act, the return can only be verified by the director or partner of a company or LLP, respectively in the absence of the managing director or the designated partner.

Generally, the director of a company or partner in an LLP does not file the return of income as return filing work is handled either by the accountant or hired professionals. Thus, to remove the practical difficulties faced by taxpayers while filing of return of income, section 140 is proposed to be amended to enable any other person, as may be prescribed by the Board, to verify the return of income in the cases of a company and an LLP. It is possible that the CBDT may require such other person to hold a valid power of attorney from such company or LLP to verify the return.

2.     Amendment of Section 115A for Non-Residents who are not required to File ITR in respect of Income from Royalty and FTS (Fees for Technical Services)  from Assessment Year 2021-22

Section 115A provides an exemption to a non-resident from the filing of Income-tax return provided the income of such nonresident is in the nature of dividend or interest and tax has been deducted from such income. This exemption has been proposed to be extended to income in the nature of Royalty and Fees for Technical Services. Thus, the non-resident shall not be required to file the return of income if his income consists of dividend, interest, royalty or FTS and taxes have been withheld by the payer from the payment of such income in accordance with the provisions of the Section 115A.

3.     Due Date for Filing of Return from Assessment Year 2020-21

Section 139 is proposed to be amended to extend the due date for filing of return of income from September 30 to October31 of the Assessment Year in case of companies and in case of those persons who are required to get their books of account audited.

Further, where a firm is liable for tax audit, its partner (whether working or non-working) shall be liable to file the return on or before October 31 of the Assessment Year. Earlier, only working partners of the firm were covered under the said provisions.

Such extension in the due date has been given due to delinking of due date for filing of return of income and various reports. Such delinking has been done so as to enable the pre-filing of returns on basis of audit reports:

The due date for filing of return from Assessment Year 2020-21 shall be as follows: