Representation Regarding Glitches In The Income Tax Portal

Karnataka State Chartered Accountants Association (KSCAA), established in 1957 under the Karnataka Societies Registration Act, represents Chartered Accountants and addresses their professional challenges. In a recent communication to the Chairperson of the Central Board of Direct Taxes, they highlighted critical technical glitches in the Income Tax portal affecting taxpayers and professionals filing returns for the Assessment Year 2024-25. They emphasized delays in processing revised TDS returns, inaccuracies in purchase details on Form AIS, discrepancies in reported share sale values, and confusion over Section 87A rebate applicability. These issues lead to incorrect tax assessments, financial discrepancies, and undue burden on taxpayers. Urging prompt intervention, KSCAA appealed for immediate rectification and clearer guidelines to ensure accurate tax filings and alleviate the hardships faced by taxpayers and professionals in Karnataka. The representation was also copied to key officials including the Finance Minister and Revenue Secretary for their attention. Also Read Representation dated 15th July 2024: Representation to CBDT to Fix Glitches on Income Tax Portal

KARNATAKA STATE CHARTERED ACCOUNTANTS ASSOCIATION (R)

To,
Shri Ravi Agarwal,
Chairperson,
The Central Board of Direct Taxes

Date: 22ⁿd July 2024

SUBJECT: REPRESENTATION REGARDING GLITCHES IN THE INCOME TAX PORTAL

The Karnataka State Chartered Accountants Association (R) (in short ‘KSCAA’) is an association of Chartered Accountants, registered under the Karnataka Societies Registration Act, in the year 1957. KSCAA is primarily formed for the welfare of Chartered Accountants and represents before various regulatory authorities to resolve the professional problems faced by Chartered Accountants and the business community.

In the past, we have written to your good selves many times populating various issues, challenges and hardships being faced by taxpayers and Chartered Accountants and suggesting possible solutions on the same. We now bring to your attention issues and concerns related to technical glitches and anomalies encountered by assessees, taxpayers and professionals while filing return of income under the Income Tax Act, 1961 (“the Act”).

1. INTRODUCTION:

Section 139(1) of the Income Tax Act mandates that Income Tax Returns for the Assessment Year 2024-25 must be filed by July 31, 2024, for assesses not subject to audit under any law. We are writing to urgently address the significant challenges taxpayers are currently encountering on the income tax website. Attached for your reference is our earlier communication dated July 15, 2024, provided as Annexure – 1, wherein we highlighted several issues faced by assesses during the filing of their IT Returns. While we appreciate the resolution of OTP generation issues, there are still unresolved matters that require attention. Additionally, we wish to highlight other pressing concerns that stakeholders have faced while attempting to submit their returns.

2. CHALLENGES FACED:

• Non-updation of TDS Data and Delayed Processing of Revised TDS Returns:

There is a noticeable delay in processing revised TDS returns, resulting in a significant lag before corrections are reflected in Form AIS and Form 26AS. This delay creates inconvenience for deductors who cannot issue Form 16/16A promptly, and deductees who are unable to reconcile deductions with their accounts and data. Moreover, discrepancies between reported and actual TDS credits due to these delays can lead to erroneous demands and unwarranted repercussions.

• Inaccurate Reflection of Purchases:

It has been observed that the details of purchases, as reported on the GST website are being displayed on a gross basis in Form AIS, without accounting for essential adjustments, such as credit notes and debit notes, which are crucial for providing an accurate representation of net purchase values. Such inaccuracies can lead to significant issues for taxpayers, including potential misstatements in their financial reports and complications in their tax return filings.

• Issues with Sale of Shares Details:

There are significant discrepancies concerning the details of shares sold as reported in Form AIS. The values reflected in Form AIS often differ from those provided by brokers, with Form AIS frequently indicating higher sale values than those reported by the brokers. This mismatch poses challenges for taxpayers in accurately reporting their capital gains. Such inconsistencies can lead to incorrect capital gains reporting, potentially resulting in either under-reporting or over-reporting of income. These errors can create undue complications for taxpayers, including the risk of incorrect tax assessments and unnecessary scrutiny.

• Lack of Clarity on Section 87 Rebate on Capital Gains:

There is an immediate need for the rectification of errors in the income tax utility concerning the applicability of Section 87A of the Act. Additionally, clear and detailed guidelines regarding rebate on capital gains is required, especially in light of recent changes made in the income tax return utility. Taxpayers are currently confused in applying this rebate due to the incorrect view adopted by the Income Tax Department in the latest utility. This new utility reflects a shift in interpretation from previous versions, resulting in significant confusion. Further, there is uncertainty regarding the treatment of returns that were filed prior to the change in the income tax return utility. This lack of consistency and explicit instructions is leading to improper application of the rebate, which may affect taxpayers’ ability to choose the correct scheme of taxation and ultimately impact the final tax payable.

We request that the Income Tax Department review and correct this erroneous view on Section 87A of the Act. Comprehensive and clear guidance should be issued to address both the current utility and returns filed prior to its implementation, ensuring that taxpayers can accurately understand and apply the rebate.

3. REPRESENTATION:

• Considering the aforementioned issues, taxpayers and professionals are facing immense pressure to meet imminent filing deadlines. These challenges are placing a substantial burden on time management and resources required to submit returns within the specified timeframe. Professionals are working tirelessly despite being under significant time constraints to complete the filings promptly. Therefore, we kindly request your prompt intervention to address these technical issues and streamline the filing process effectively.
• In light of the difficulties and hardships faced, we the members of Karnataka State Chartered Accountants Association, on behalf of the entire Chartered Accountants community and also on behalf of the trade and industry in the state of Karnataka, earnestly appeal to you to kindly consider our aforementioned request.

Yours sincerely,

For Karnataka State Chartered Accountants Association ®

Cc to:

1. Nirmala Sitharaman, Hon. Union Minister of Finance and Corporate Affairs, Government of India

2. Pankaj Choudhary, Hon’ble Minister of State, Finance.

3. Sanjay Malhotra, Hon’ble Revenue Secretary

4. Shelley Jindal, PCCIT, Karnataka and Goa

5. Govind Lal, Director General of Income Tax (Systems) (OSD)

6. Zakir Thomas, DGIT(Systems)(OSD), Bengaluru

7. Commissioner of Income Tax, CPC, Bengaluru