Verification of Income Tax Returns (ITRs) is a statutory requirement under the Income Tax Act, 1961. Without verification, an ITR is incomplete and invalid. Below is a detailed analysis covering legal provisions, timelines, modes, exemptions, scenarios, and practical insights.
Section 140 of the Income Tax Act, 1961
Section 140 specifies who is authorized to verify an ITR, depending on the nature of the taxpayer (e.g., individual, HUF, company). Key provisions include:
- Individuals: Verified by the individual, or in special cases, by an authorized representative with a valid Power of Attorney.
- HUF: Verified by the karta or, in their absence, by any adult family member.
- Companies: Verified by the Managing Director or, in certain cases, by another director or an authorized representative (e.g., insolvency professional during insolvency).
- Firms/LLPs: Verified by the managing/designated partner or, in their absence, by another partner.
- Others: Includes associations, local authorities, political parties, etc., with specific rules for verification by the principal officer or authorized personnel.
For a complete reading of Section 140, refer to the Income Tax Act, 1961.
Modes of Verification
ITR verification can be done digitally or physically. Below is a detailed comparison:
1. Digital Methods (E-Verification)
| Method | Process | Prerequisites |
|---|---|---|
| Aadhaar OTP | OTP sent to the linked mobile number for Aadhaar. | PAN-Aadhaar linkage, registered mobile number. |
| Net Banking | Login through bank's net banking portal and generate EVC. | Active net banking account with PAN linked to the account. |
| Bank Account EVC | Generate EVC via pre-validated bank account. | Pre-validated account in the Income Tax portal. |
| Demat Account EVC | Generate EVC through a pre-validated Demat account. | Pre-validated Demat account. |
| Digital Signature (DSC) | Verify return using Class 2/3 DSC with PAN registration. | Active DSC registered on the portal. |
| Mobile App OTP | OTP-based verification through the Income Tax Department's mobile app. | Updated mobile number on the portal. |
2. Physical Mode
- ITR-V Submission:
- Download and sign the ITR-V acknowledgment.
- Send it via speed post to Centralized Processing Centre (CPC), Bengaluru.
- Must reach CPC within 30 days of filing.
Timelines for Verification
| Scenario | Timeline for Verification |
|---|---|
| ITR filed on time | Within 30 days from the date of filing. |
| Revised or belated return | Within 30 days of filing the revised/belated return. |
| Return filed under Section 148 (notice) | Within 30 days of filing the return in response to the notice. |
| Extended deadlines | Follow specific notifications for extensions by the CBDT. |
Note: Failure to verify within the specified timeline will render the return invalid.
Special Scenarios and Exemptions
Non-Resident Indians (NRIs):
- NRIs can verify returns digitally or authorize representatives in India using Power of Attorney (PoA).
Insolvent Companies:
- Returns are verified by the Insolvency Professional appointed under the Insolvency and Bankruptcy Code.
Deceased Taxpayer:
- Legal heir must register on the portal and verify the return on behalf of the deceased.
Minors or Mentally Incapacitated Individuals:
- Guardian or a legally authorized person verifies the return.
Consequences of Non-Verification
| Issue | Impact |
|---|---|
| Return considered invalid | Treated as if the return was not filed. |
| Tax refunds delayed | Refunds are processed only after successful verification. |
| Re-filing obligations | Taxpayer may need to file the return afresh, potentially incurring penalties for late filing. |
| Interest on taxes | Additional interest under Section 234A/B/C for any outstanding tax liability. |
Illustrative Examples
| Scenario | Authorized Person for Verification |
|---|---|
| An individual, Ashu, is abroad and authorizes her brother to verify her ITR via Power of Attorney. | Brother verifies the return using Aadhaar OTP or physical ITR-V submission. |
| The Kumar HUF's karta is incapacitated due to illness. | The eldest adult member of the HUF verifies the return. |
| XYZ Ltd. is under corporate insolvency resolution. | The appointed Insolvency Professional verifies the return as per IBC provisions. |
| A widow acting as the guardian of her minor son's inherited property income verifies the return. | The widow signs and verifies the return digitally or physically. |
Practical Insights and Best Practices
Ensure Timely Aadhaar-PAN Linkage:
- Mandatory for Aadhaar OTP-based verification.
Pre-Validate Bank/Demat Accounts:
- Essential for generating EVC via banking channels.
Use Digital Methods:
- Faster, efficient, and avoids postal delays.
Double-Check Contact Details:
- Updated mobile number and email ensure smooth OTP/EVC processing.
Monitor Deadlines:
- Be aware of filing and verification deadlines, especially for belated or revised returns.
Attach PoA for Representatives:
- Always attach a valid Power of Attorney for verification by authorized persons.
Key Takeaways
- Verification is a non-negotiable requirement for completing the ITR filing process.
- Multiple digital and physical modes cater to diverse taxpayer needs and preferences.
- Delays in verification lead to invalidation of the return, resulting in non-compliance and penalties.
- For special cases (e.g., minors, NRIs, incapacitation), authorized representatives can verify returns under prescribed rules.
