Errors in processing ITR inflates tax liability on capital gains: Report

Technical glitches in processing income tax returns (ITR) have led to several discrepancies such as inflated tax liability on capital gains, reports The Economic Times.

Hundreds of taxpayers have been notified by the Income Tax (I-T) Department that their returns have not been processed. The I-T Department’s software failed to compute long-term capital gains (LTCG), especially gains from multiple stocks, the report said.

The errors took place at the department’s Central Processing Zone (CPC) in Bengaluru, a source told the paper.

Moneycontrol could not independently verify the story.

There were errors in computing LTCG on securities acquired between February 1, 2018 and March 31, 2018, with the system calculating capital gains higher than it should be.

Senior accountants have informed Central Board of Direct Taxes (CBDT) Chairman Pramod Chandra Mody about the problem, the report said.

“The I-T return form and the computer system processing the returns are not compatible with the provisions of the law as well as the legal positions on some of the matters. Not only is this causing hardship, but the objective to minimise litigation may also suffer a setback,” senior chartered accountant Dilip Lakhani told the paper.

Denial of credit for tax deducted at source (TDS) is another discrepancy, according to the report.

Several companies have received notices that there returns are defective because their tax audit has not been filed, the report said. “This, despite the tax audit report having been filed in time,” Ameet Patel, Chairman, Taxation Committee of the Bombay Chartered Accountants' Society, told the paper.

The Bombay Chartered Accountants’ Society has taken up the matter with the CBDT, the report added.