Defective Return of Tax

Defective return of tax filing is defined under the Income Tax Act, 1961, under Section 139 (9). This will require a re-filing of taxes after the correction of the defects is done. This should also be done within a fortnight.

Income Tax in India

Income tax is a percentage of amount, which is given by employees and entrepreneurs from their annual income. There is no age restriction for an individual to be responsible to shell out income tax. You are expected to pay out the tax whether you are currently employed or a retiree if your earnings exceeds a set amount. But if your income per annum is less than that, no tax would be levied.

Income tax in our country is imposed as per the kind of income, namely, income from permanent/ contractual or part-time employment, income from retirement or other social security scheme, income from your own enterprise, income from properties such as rented buildings or estate, income from investment or shares among others. Another factor that determines the tax return in India is your residential status, which is mainly categorized into three, resident, non-resident and categorical resident.

Overview of Defective Return of Tax

Sanjay Kumar, aged 31, is working at a premier IT Company in Bangalore. He has recently got a notice from the income tax office, informing that his return filing was defective. Mr. Kumar frequently trades in shares, but in the previous fiscal sustained losses. Since he wished to take forward this loss, he specified it when he filed for returns. But he did not know that if a taxpayer includes losses from business income, an audited account list has to be submitted, which is why he received that notification from the tax department.

Although most of us diligently pay and file for returns without fail, these kinds of notices from income tax office can be baffling. In Kumar’s case, he was at least able to figure out how to rectify the errors while most cannot. So yes, your returns can be called as 'defective', if the info given by you are erroneous or unfinished. Even if one supporting document or duly audited account statements are missing, this can happen. And this is quite a usual occurrence especially with salaried people. Some simply are not aware about the norms of declaring a stock trading. Strangely, this is a mistake even people who venture into starting their business make. Normally, in the first year or so, the expenditures would be more, what with registering, finding and setting up an office etc. But if you are opting to file loss, you must get those account books assessed. Period.

Once you file their tax returns, the Income Tax department go through them and authenticates them. If they are unable to, the officials will send a notice to you informing that your returns are considered as defective as specified Section 139 (9) of the Indian Income Tax Act, 1961. If you get such a notice, you are expected to rectify the errors pointed out and then file again. This should not take more than a fortnight. If you ignore the notice or do not re-file in the stipulated timeline, the previous returns will be considered void and you will lose all the perks of filing your returns. There will be no more revision of returns during that fiscal or taking forward of losses. If you need more time to rectify the defects, you can get in touch with the concerned officer and request for an extension. After you get the defect corrected, it will be deemed as original. They will also retain the filing date the same as in the previous return.

One common slipup to warrant a notice is failing to pay tax on your fixed deposits. Fixed deposits and income from it are taxable. Lenders subtract ten percent obligatory tax at source and send it to the IT Department. This little info is then entered in your Form 26AS that provides every details of your deduction. If you belong to the 20 or 30 percent tax bracket, you must settle the outstanding tax on it. Most people fail to settle the due tax on savings thinking that the deduction made by the bank would suffice. Even if you have shelled out the entire amount but overlooked to put in the challan number while filing tax returns, you will possibly get a defective return notice.

Steps to Re-filing the defective returns

Re-filing the defective returns is no more a tedious task as it can be done online.

Please refer to the following steps for the same.

  • To re-file the defective returns, you must log in to the Income Tax e-filing portal using your user id and password. The CPC reference number and password will be specified on the notice.
  • Click on the option saying, ‘re-filing tax under Section 139 (9)’.
  • A page will open where you can change the info accordingly.
  • If you agree with the defect specified there, please click on ‘Yes’ on column given below the question, ‘Do you agree with defect?’.
  • If required, you must upload the relevant return XML.
  • Please keep the e-filing acknowledgement number and the date when you filed the previous tax return saved in your email or phone.

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