Electronic Verification to ease Return Filing for Taxpayers

With an attempt to make e-filing completely paperless, the Central Board of Direct Taxes (CBDT) has come out with the technology of e-verification of assesses by means of their Aadhaar number.

This will relax the requirement of sending physical copies of the return acknowledgment for verification to the Centralised Processing Centre (CPC), Bengaluru and will also do away with the need to digitally sign the return. However, this new system is just an alternative to the existing system. This means, those e-filing returns can continue to send their acknowledgements (ITR-V forms) in physical form to the Bengaluru centre within 120 days of filing the return or use digital signatures. Also, those who do not have an Aadhaar card will also have to use the existing system.

What is EVC and How does it work?

The Electronic Verification Code (EVC) consists of a string of characters in the form of a locator number that gives a unique identifier to electronic documents.

The income tax department intends to link the Income Tax Return submitted by a person to his Aadhaar number by generation of an Electronic Verification Code so that authentication of the return takes place automatically and electronically. Hence, an Aadhaar-based electronic verification code will be given to such taxpayers to authenticate their transaction.

A new row has been provided in the Income Tax Return (ITR) forms for assessment year 2015-16 to enable someone filing e-returns to provide his Aadhaar card number. Once the card number is punched in, the tax-payer will get a one-time password, or OTP, number on his or her mobile phone for verification. This verification number, then, has to be entered on the relevant ITR form to complete the process of e-filing. Visit https://incometaxindiaefiling.gov.in/eFiling/Portal/StaticPDF/e-Verification_User_Manual.pdf to get detailed guidelines on how to generate EVC.

Applicability of EVC

As per the Notification dated 15th April, 2015 issued by CBDT, it has been clarified that the Return of Income shall be furnished in the following manner:

Person Condition Manner of furnishing Return
          Individual or HUF   Accounts are required to be audited under section 44AB of the Act, ie Tax Audit applicable   Electronically under digital signature only
    In all other cases, where Tax Audit not applicable • Electronically under Digital Signature, or • Electronically under EVC, or • Electronically and thereafter submitting the verification of the return in Form ITR-V.
Company In all cases Electronically under digital signature only
    Firm or LLP or any other Association of Persons (AOP) or Co-operative Society   Accounts are required to be audited under section 44AB of the Act, ie Tax Audit applicable   Electronically under digital signature only
    In all other cases, where Tax Audit not applicable • Electronically under Digital Signature, or • Electronically under EVC, or • Electronically and thereafter submitting the verification of the return in Form ITR-V.
Political Parties     In all cases • Electronically under Digital Signature, or • Electronically under EVC, or • Electronically and thereafter submitting the verification of the return in Form ITR-V.
  Charitable Trust, Section 25 Company     In all cases • Electronically under Digital Signature, or • Electronically under EVC, or • Electronically and thereafter submitting the verification of the return in Form ITR-V.

Advantages of e-filing of Income Tax Returns under the EVC mechanism:

  • Online filing of tax returns becomes truly paperless as the EVC mechanism will do away with the need for sending physical copies for verification to the Centralised Processing Centre (CPC), Bengaluru.
  • Possibility of non-receipt or delay in receipt of the acknowledgement (ITR-V) at CPC shall now be completely evaded.
  • For sending the ITR-V, it had to be signed and printed properly so that the bar code was clearly visible. ITR-Vs that did not confirm to these specifications got rejected. The EVC mechanism will solve this problem.
  • Taxpayers will be relieved from the cost of making Digital Signatures.

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Form 15CA and Form 15CB – Compliance for Foreign Remittances

The Income Tax Law of our country requires authentication of foreign remittances (payments) made to a Non Resident or Foreign Company, for any amount which is taxable as per the existing laws. A person making a remittance (a payment) to a Non Resident or a Foreign Company has to submit Form 15CA. This form is submitted online.

In some cases, a certificate from a Chartered Accountant in Form 15CB is required before uploading Form 15CA online. Form 15CB is the Tax Determination Certificate where a Chartered Accountant determines the taxability of the remittance as per Income tax Act along with the provisions of Double Tax Avoidance Agreement with the Recipient’s Residence Country.

If the remittance is taxable, then the same shall be remitted only after deduction of withholding tax (ie, TDS). The information provided in Form 15CB mainly includes the details of the remitter, details of the remittee, nature of remittance (whether salary, commission, royalty etc) as per agreement between the two parties, Bank details of the remitter and Tax Residency Certificate from the remitter if DTAA (Double Taxation Avoidance Agreement) is applicable. Banks require these certificates before they make any remittance on your behalf outside India.

Filing Form 15 CA and Form 15 CB

The person making the payment, after obtaining the Certificate in Form 15CB from a Chartered Accountant shall furnish information in Form No. 15CA. Form 15CA is then required to be uploaded by the remitter electronically at the site of the Income-tax Department.

A signed printout of both Form 15CA and 15CB shall be submitted to the authorized dealer/banks, prior to remitting the payment. Authorized Dealers/ Banks are now becoming more vigilant in ensuring that such Forms are received by them before remittance is affected since a duty is casted on them to furnish Form 15CA received from remitter, to an income-tax authority for the purposes of any proceedings under the Income-tax Act.

It should be noted that even in cases, where Form 15CB is not required to be filed, Form 15CA has to be mandatorily furnished by the remitter before making the foreign remittance.

Cases where Form 15CB is not required:

In the following cases, Form 15CB is not required. However, Form 15CA is to be uploaded mandatorily.

  • When remittance does not exceed Rs 50,000 (single transaction) and Rs.2,50,000 (aggregate in a financial year).
  • When an application is made to the Assessing Officer by the person receiving the income to deduct tax at a lower rate or deduct no tax at all and a Certificate is obtained in this respect.
  • When the person responsible for making the payment considers that the whole of the remittance is not taxable and makes an application to the Assessing Officer to charge tax only on the taxable portion and Order is obtained from the Officer in this respect.

Cases in which both Form 15CA and 15CB are not required:

There is a List of 28 items where Form 15CA and Form 15CB are not required as per the Income Tax Rules:

  • Indian investment abroad -in equity capital (shares)
  • Indian investment abroad -in debt securities
  • Indian investment abroad -in branches and wholly owned subsidiaries
  • Indian investment abroad -in subsidiaries and associates
  • Indian investment abroad -in real estate
  • Loans extended to Non-Residents
  • Payment- for operating expenses of Indian shipping companies operating abroad
  • Operating expenses of Indian Airlines companies operating abroad
  • Booking of passages abroad -Airlines companies
  • Remittance towards business travel
  • Travel under basic travel quota (BTQ)
  • Travel for pilgrimage
  • Travel for medical treatment
  • Travel for education (including fees, hostel expenses etc)
  • Postal services
  • Construction of projects abroad by Indian companies including import of goods at project site
  • Freight insurance – relating to import and export of goods
  • Payments for maintenance of offices abroad
  • Maintenance of Indian embassies abroad
  • Remittances by foreign embassies in India
  • Remittance by non-residents towards family maintenance and-savings
  • Remittance towards personal gifts and donations
  • Remittance towards donations to religious and charitable institutions abroad
  • Remittance towards grants and donations to other Governments and charitable institutions established by the Governments
  • Contributions or donations by the Government to international institutions
  • Remittance towards payment or refund of taxes
  • Refunds or rebates or reduction in invoice value on account of exports Payments by residents for international bidding
In all other cases, if there is a remittance outside India, the person who is making the remittance will take a CA’s certificate in Form 15CB and after receiving the certificate submit Form 15CA to the government online.