Category: Business Compliances

🧾 Introduction

Equity trading has become a popular source of income in India, but many traders struggle with correct income tax return (ITR) filing. Whether you trade intraday, futures & options (F&O), or delivery-based equity, tax treatment and compliance rules differ.

This Saving Mantra guide explains the step-by-step process to file Income Tax Return for Equity Traders, covering applicable ITR forms, audit applicability, expense claims, and common mistakes to avoid.

---

📊 Types of Equity Trading & Tax Treatment

Before filing your return, identify your trading type:

1️⃣ Intraday Equity Trading

• Classified as Speculative Business Income
• Profit taxed as per slab rates
• Loss can be carried forward for 4 years

2️⃣ Futures & Options (F&O) Trading

• Classified as Non-Speculative Business Income
• Taxed as per slab rates
• Loss can be carried forward for 8 years

3️⃣ Delivery-Based Equity Trading

• Treated as Capital Gains
• Short-Term Capital Gain (STCG): 15% tax
• Long-Term Capital Gain (LTCG): 10% above ₹1 lakh

---

📝 Step-by-Step Process to File Equity Trader ITR

Step 1: Collect Required Documents

Keep the following ready:

• PAN Card
• Aadhaar Card
• Bank Statements
• Trading P&L statement from broker
• Capital gains statement
• Demat account statement
• Previous year ITR (if any)

---

Step 2: Prepare Trading Profit & Loss Account

Calculate:

• Turnover (absolute profit method for F&O)
• Net profit or loss
• Brokerage, STT, exchange charges
• Internet, laptop, advisory fees, office expenses

💡 Tip: Equity traders are allowed to deduct genuine business expenses.

---

Step 3: Check Tax Audit Applicability

Tax audit is applicable if:

• Turnover exceeds ₹10 crore (₹2 crore in some cases), or
• Profit is less than 6% (digital) and income exceeds basic exemption

If audit applies, Form 3CA / 3CB & 3CD must be filed.

---

Step 4: Choose Correct ITR Form

Trading Type	Applicable ITR
Intraday / F&O	ITR-3
Capital Gains only	ITR-2

---

Step 5: Fill ITR on Income Tax Portal

• Log in to Income Tax e-Filing Portal
• Select Assessment Year
• Choose applicable ITR form
• Enter:
  • Business income
  • Capital gains
  • Other income
  • Deductions under Chapter VI-A

---

Step 6: Claim Eligible Deductions

Equity traders can claim:

• Section 80C (LIC, ELSS, PPF, etc.)
• Section 80D (Health Insurance)
• Section 80G (Donations)

---

Step 7: Verify & Submit ITR

• Cross-check tax payable or refund
• Submit return
• Complete e-Verification via Aadhaar OTP / Net Banking

⚠️ Unverified returns are treated as invalid.

---

❌ Common Mistakes Equity Traders Should Avoid

• Filing ITR-1 instead of ITR-3
• Ignoring tax audit requirements
• Not reporting losses
• Incorrect turnover calculation
• Missing expense deductions

---

✅ Why Choose Saving Mantra for Equity Trader ITR?

• Expert handling of F&O & intraday cases
• Accurate turnover & audit assessment
• End-to-end compliance support
• Loss carry-forward optimization
• Dedicated CA & tax advisors

---

📞 Need Help Filing Equity Trader ITR?

Saving Mantra helps equity traders stay 100% tax-compliant while maximizing deductions and minimizing risk of notices.

👉 Connect with Saving Mantra today for hassle-free ITR filing.

---

⚠️ Disclaimer

This article is for informational purposes only and does not constitute legal or tax advice. Income tax laws are subject to change. Please consult a qualified tax professional or CA before filing your income tax return.

Who Is Considered an NRI for Income Tax?

You are treated as an NRI for income tax purposes if you do not satisfy the residential status conditions under the Income Tax Act. Residential status is determined based on number of days stayed in India during the financial year.

---

Is ITR Filing Mandatory for NRIs?

An NRI must file ITR in India if:

• Total Indian income exceeds the basic exemption limit
• TDS has been deducted and refund is to be claimed
• Capital gains arise from sale of Indian assets
• You want to carry forward losses
• Compliance is required for loans, visa, or documentation

---

Income Taxable for NRIs in India

Only income earned or received in India is taxable for NRIs, such as:

• Salary received for services rendered in India
• Rental income from Indian property
• Capital gains on Indian assets
• Interest from Indian bank accounts (except exempt NRE interest)
• Business income from India

Foreign income is not taxable in India for NRIs.

---

Step-by-Step Process to File Income Tax Return for NRI

Step 1: Collect Required Documents

Keep the following ready:

• PAN card
• Passport (for residential status)
• Form 16 / Form 16A
• Form 26AS and AIS
• Bank statements
• Capital gain statements (if applicable)

---

Step 2: Login to Income Tax e-Filing Portal

Visit the official income tax e-filing website and log in using:

• PAN
• Password
• Captcha

---

Step 3: Select “File Income Tax Return”

Go to:
e-File → Income Tax Returns → File Income Tax Return

Choose:

• Assessment Year
• Online mode

---

Step 4: Select Residential Status as NRI

While filing the return, select your residential status as Non-Resident correctly. This step is critical to ensure correct tax computation.

---

Step 5: Choose the Correct ITR Form

NRIs generally file:

• ITR-2 – If income includes capital gains or more than one house property
• ITR-3 – If income includes business or professional income

ITR-1 is not applicable for NRIs.

---

Step 6: Enter Income and Tax Details

Fill in:

• Indian income details
• TDS deducted
• Deductions under Chapter VI-A (if applicable)
• Capital gains details

Ensure data matches Form 26AS and AIS.

---

Step 7: Calculate Tax Liability

The portal will auto-calculate:

• Tax payable or refund
• Interest, if applicable

Pay additional tax if required before submission.

---

Step 8: Verify and Submit the ITR

Submit the return and verify using:

• Aadhaar OTP
• Net banking
• Digital Signature Certificate (DSC)

Unverified returns are treated as invalid.

---

Due Date for NRI ITR Filing

• 31 July – If audit is not applicable
• 31 October – If audit is applicable

Late filing may attract penalties and interest.

---

Common Mistakes NRIs Should Avoid

• Selecting wrong residential status
• Filing incorrect ITR form
• Ignoring capital gains tax
• Not reporting TDS correctly
• Missing e-verification

---

Benefits of Filing ITR for NRIs

• Claim income tax refunds
• Avoid income tax notices
• Maintain clean compliance record
• Useful for loans, visas, and repatriation

---

Why Choose Saving Mantra for NRI Tax Filing?

Saving Mantra offers specialized NRI taxation services including:

• Residential status evaluation
• Accurate ITR filing for NRIs
• Capital gains and DTAA advisory
• End-to-end compliance support

---

Disclaimer

This article is for informational purposes only and does not constitute legal or tax advice. Income tax laws are subject to change and interpretation. NRIs are advised to consult a qualified tax professional before filing their Income Tax Return. Saving Mantra shall not be responsible for any loss arising from reliance on this information.

What Is Advance Tax?

Advance Tax means paying income tax in advance on income earned during the financial year. It applies to:

• Salaried individuals with additional income
• Freelancers and professionals
• Business owners and self-employed individuals
• Taxpayers with capital gains, rental income, or interest income

If your total tax payable after TDS is ₹10,000 or more in a financial year, advance tax payment becomes mandatory.

---

Advance Tax Due Dates

Advance tax must be paid in the following instalments:

Due Date	Advance Tax Payable
15 June	15% of total tax
15 September	45% of total tax
15 December	75% of total tax
15 March	100% of total tax

Presumptive taxpayers can pay 100% advance tax by 15 March.

---

Step-by-Step Process to Pay Advance Tax on Income Tax Portal

Step 1: Visit the Income Tax e-Filing Portal

Go to the official income tax e-filing website and log in using:

• PAN
• Password
• Captcha code

---

Step 2: Go to e-Pay Tax

Navigate to:
Dashboard → e-Pay Tax → New Payment

---

Step 3: Select Income Tax as Payment Type

Choose Income Tax and click on Proceed.

---

Step 4: Select the Correct Challan

Choose Challan No. ITNS 280 for advance tax payment.

Select:

• Tax applicable: (Income Tax – Other than Companies / Companies)
• Type of payment: Advance Tax (100)

---

Step 5: Enter Assessment Year and Payment Details

Fill in:

• Assessment Year
• Address and contact details
• Mode of payment (Net Banking / Debit Card / UPI)

---

Step 6: Enter Advance Tax Amount

Enter the advance tax amount you wish to pay based on your estimated income and tax liability.

---

Step 7: Make Payment

Proceed to payment and complete the transaction through your selected bank.

---

Step 8: Download Challan Receipt

After successful payment:

• Download the challan receipt
• Note the BSR code, challan number, and payment date
  These details are required while filing your Income Tax Return.

---

Important Points to Remember

• Advance tax is based on estimated income, not actual income
• Capital gains tax should be paid in the next instalment after the gain arises
• Late or non-payment attracts interest penalties
• Challan details must be correctly reported in the ITR

---

Interest for Non-Payment of Advance Tax

• Section 234B: Interest for non-payment or short payment of advance tax
• Section 234C: Interest for delay in payment of advance tax instalments

Timely payment helps you avoid unnecessary financial burden.

---

Benefits of Paying Advance Tax on Time

• Avoid interest and penalties
• Better cash flow management
• Smooth income tax return filing
• Improved financial discipline

---

Why Choose Saving Mantra?

Saving Mantra provides expert income tax services including:

• Advance tax calculation and planning
• Online tax payment assistance
• End-to-end ITR filing support
• Compliance advisory for individuals and businesses

---

Disclaimer

This article is for informational purposes only and does not constitute legal or tax advice. Tax laws and due dates may change from time to time. Readers are advised to consult a qualified tax professional before making advance tax payments. Saving Mantra shall not be responsible for any loss arising from reliance on this information.

What Is Advance Tax?

Advance Tax means paying income tax in advance on income earned during the financial year. It applies to:

• Salaried individuals with additional income
• Freelancers and professionals
• Business owners and self-employed individuals
• Taxpayers with capital gains, rental income, or interest income

If your total tax payable after TDS is ₹10,000 or more in a financial year, advance tax payment becomes mandatory.

---

Advance Tax Due Dates

Advance tax must be paid in the following instalments:

Due Date	Advance Tax Payable
15 June	15% of total tax
15 September	45% of total tax
15 December	75% of total tax
15 March	100% of total tax

Presumptive taxpayers can pay 100% advance tax by 15 March.

---

Step-by-Step Process to Pay Advance Tax on Income Tax Portal

Step 1: Visit the Income Tax e-Filing Portal

Go to the official income tax e-filing website and log in using:

• PAN
• Password
• Captcha code

---

Step 2: Go to e-Pay Tax

Navigate to:
Dashboard → e-Pay Tax → New Payment

---

Step 3: Select Income Tax as Payment Type

Choose Income Tax and click on Proceed.

---

Step 4: Select the Correct Challan

Choose Challan No. ITNS 280 for advance tax payment.

Select:

• Tax applicable: (Income Tax – Other than Companies / Companies)
• Type of payment: Advance Tax (100)

---

Step 5: Enter Assessment Year and Payment Details

Fill in:

• Assessment Year
• Address and contact details
• Mode of payment (Net Banking / Debit Card / UPI)

---

Step 6: Enter Advance Tax Amount

Enter the advance tax amount you wish to pay based on your estimated income and tax liability.

---

Step 7: Make Payment

Proceed to payment and complete the transaction through your selected bank.

---

Step 8: Download Challan Receipt

After successful payment:

• Download the challan receipt
• Note the BSR code, challan number, and payment date
  These details are required while filing your Income Tax Return.

---

Important Points to Remember

• Advance tax is based on estimated income, not actual income
• Capital gains tax should be paid in the next instalment after the gain arises
• Late or non-payment attracts interest penalties
• Challan details must be correctly reported in the ITR

---

Interest for Non-Payment of Advance Tax

• Section 234B: Interest for non-payment or short payment of advance tax
• Section 234C: Interest for delay in payment of advance tax instalments

Timely payment helps you avoid unnecessary financial burden.

---

Benefits of Paying Advance Tax on Time

• Avoid interest and penalties
• Better cash flow management
• Smooth income tax return filing
• Improved financial discipline

---

Why Choose Saving Mantra?

Saving Mantra provides expert income tax services including:

• Advance tax calculation and planning
• Online tax payment assistance
• End-to-end ITR filing support
• Compliance advisory for individuals and businesses

---

Disclaimer

This article is for informational purposes only and does not constitute legal or tax advice. Tax laws and due dates may change from time to time. Readers are advised to consult a qualified tax professional before making advance tax payments. Saving Mantra shall not be responsible for any loss arising from reliance on this information.

What Is Rectification of Income Tax Return?

Rectification of Income Tax Return is a facility provided under Section 154 of the Income Tax Act, 1961, that allows taxpayers to correct mistakes or errors in an already filed Income Tax Return (ITR) or in an intimation/order issued by the Income Tax Department.

Rectification is applicable only for apparent errors, such as calculation mistakes, TDS mismatches, or incorrect data entry — not for major revisions or new claims.

---

When Can You File Income Tax Rectification?

You can file a rectification request if:

• Tax demand is raised due to TDS mismatch
• Incorrect tax calculation in 143(1) intimation
• Income or deduction considered incorrectly
• PAN/TAN or assessment year error
• Clerical or arithmetical mistake by the department

⚠️ Rectification cannot be used to:

• Change income head
• Claim new deductions
• Revise return beyond allowed timelines

---

Who Can File Rectification Request?

• Individuals
• Companies
• LLPs
• Partnership firms
• Trusts & NGOs
• Co-operative societies

Provided that:

• ITR is already filed
• Intimation/order is issued

---

Time Limit for Filing Rectification

• Rectification can be filed within 4 years from the end of the financial year in which the order was passed.

---

Documents Required for Income Tax Rectification

• Copy of ITR acknowledgment
• Section 143(1) intimation or order
• Form 16 / Form 26AS / AIS
• Bank statements
• Proof of deductions or income
• Challan details (if tax paid)

---

Step-by-Step Process for Filing Rectification of Income Tax Return

Step 1: Login to Income Tax Portal

• Visit the official income tax e-filing portal
• Login using PAN and password

---

Step 2: Go to Rectification Section

• Click on Services → Rectification
• Select Income Tax Rectification

---

Step 3: Select Assessment Year

• Choose the relevant Assessment Year
• Select the order/intimation to be rectified

---

Step 4: Choose Rectification Type

Select one of the following:

• Tax Credit Mismatch Correction
• Return Data Correction (XML/JSON upload)
• Reprocess the Return

Choose carefully based on error type.

---

Step 5: Provide Rectification Details

• Select mistake category
• Enter corrected details
• Upload supporting documents if required

---

Step 6: Submit Rectification Request

• Review details carefully
• Submit rectification request online

---

Step 7: Verify Rectification Request

• Verify using:
  • Aadhaar OTP
  • Net banking
  • EVC

⚠️ Request is invalid without verification.

---

Step 8: Track Rectification Status

• Login → View Filed Rectifications
• Check processing status:
  • Submitted
  • In Progress
  • Rectified
  • Rejected

---

What Happens After Rectification Is Filed?

• Department reviews the request
• Revised intimation/order is issued
• Refund may be released or demand reduced/removed

Processing time may vary.

---

Common Mistakes to Avoid

• Filing rectification for ineligible changes
• Selecting wrong rectification type
• Uploading incorrect data/XML
• Ignoring mismatch with AIS
• Missing verification step

---

Benefits of Filing Rectification

• Removal of incorrect tax demand
• Faster refund processing
• Correction of departmental errors
• Clean tax records
• Avoid unnecessary appeals

---

Why Choose Saving Mantra for Income Tax Rectification?

• Expert analysis of 143(1) intimations
• Correct identification of error type
• Accurate rectification filing
• End-to-end portal handling
• Notice-to-resolution support

---

Disclaimer

This blog is for informational purposes only and does not constitute legal or tax advice. Rectification under Section 154 is limited to apparent mistakes and is subject to verification by the Income Tax Department. Outcomes depend on case-specific facts. Saving Mantra recommends consulting a qualified tax professional before filing a rectification request.

What Is Notice 143(1) Under Income Tax?

Notice under Section 143(1) is an intimation issued by the Income Tax Department after processing your Income Tax Return (ITR).
It is not a scrutiny notice, but a communication informing the taxpayer about the outcome of return processing.

This notice confirms whether:

• The return filed matches departmental records
• There is a tax payable, refund, or no demand / no refund

---

Why Is Notice 143(1) Issued?

Notice 143(1) is issued to:

• Verify arithmetical accuracy of ITR
• Check internal consistency of data
• Match income and TDS with Form 26AS / AIS
• Adjust incorrect claims, if any

It is automatically generated by the system after ITR processing.

---

Types of Intimation Under Section 143(1)

1. No Demand – No Refund

✔ Return accepted as filed
✔ No action required

2. Refund Intimation

✔ Excess tax paid
✔ Refund credited to bank account

3. Demand Notice

⚠ Additional tax payable due to:

• Income mismatch
• Incorrect deduction claim
• TDS mismatch

Tax must be paid within the specified time.

---

Is Notice 143(1) Mandatory for Every Taxpayer?

Yes.
If you have filed an income tax return, the department may issue a 143(1) intimation:

• Via registered email
• On the income tax portal

However, if no intimation is received within 9 months from the end of the financial year, the return is deemed accepted.

---

Difference Between 143(1) and Scrutiny Notice

Particulars	Section 143(1)	Scrutiny Notice
Nature	Intimation	Investigation
Personal hearing	No	Yes
Documents required	No	Yes
Serious proceeding	No	Yes

---

How to Check Notice 143(1) on Income Tax Portal (Step-by-Step)

Step 1: Login to Income Tax Portal

• Visit the official income tax e-filing portal
• Login using PAN and password

---

Step 2: Go to e-Proceedings / View Notices

• Click on Pending Actions or e-Proceedings
• Select View Notices / Intimations

---

Step 3: Select Assessment Year

• Choose the relevant Assessment Year
• Look for Intimation under Section 143(1)

---

Step 4: Download the Notice

• Click on download
• Open the PDF using password (PAN + DOB)

---

Step 5: Review the Intimation Carefully

Check:

• Income as per return
• Income as per department
• Tax payable or refund
• Adjustments made, if any

---

What to Do After Receiving Notice 143(1)?

If No Demand / Refund

✔ Keep the notice for records

If Refund Is Issued

✔ Track refund status
✔ Ensure bank account is validated

If Demand Is Raised

• Pay tax within due date
• Or file rectification request if incorrect

---

Can Notice 143(1) Be Rectified?

Yes.
If the notice contains errors due to:

• TDS mismatch
• Data entry mistakes
• Incorrect adjustments

You can file a rectification request under Section 154 on the income tax portal.

---

Common Mistakes to Avoid

• Ignoring 143(1) demand notice
• Not verifying ITR data with AIS
• Missing tax payment deadline
• Assuming 143(1) is scrutiny notice

---

Why Choose Saving Mantra for Income Tax Notices?

• Expert review of 143(1) intimations
• Demand vs rectification analysis
• End-to-end notice handling
• Fast resolution & compliance support
• Notice-to-closure assistance

---

Disclaimer

This blog is for informational purposes only and does not constitute legal or tax advice. Intimation under Section 143(1) is subject to the Income Tax Act, 1961, and automated system processing. Outcomes may vary based on individual return data. Saving Mantra recommends consulting a qualified tax professional before taking action on any income tax notice.

What Is Income Tax Appeal?

An Income Tax Appeal is a legal remedy available to a taxpayer who is not satisfied with an order passed by the Assessing Officer (AO), such as:

• Assessment order
• Penalty order
• Rectification order
• Demand order

Appeals are filed online before the Income Tax Department through the faceless e-appeal system, ensuring transparency and paperless compliance.

---

Who Can File an Income Tax Appeal?

An income tax appeal can be filed by:

• Individuals
• Companies
• LLPs
• Partnership firms
• Trusts & NGOs
• Co-operative societies

If the taxpayer believes that the order is incorrect, excessive, or unjustified, an appeal may be filed.

---

When Can an Income Tax Appeal Be Filed?

You can file an appeal against:

• Addition of income
• Disallowance of deductions
• Excess tax demand
• Penalty imposed
• Incorrect assessment

⚠️ Appeal must be filed within 30 days from the date of receipt of the order.

---

Applicable Form for Income Tax Appeal

• Form 35 is used for filing income tax appeals online

Form 35 is mandatory for appeals before:

• Commissioner of Income Tax (Appeals)
• National Faceless Appeal Centre (NFAC)

---

Documents Required for Filing Income Tax Appeal

• Copy of assessment / penalty order
• Notice of demand
• Income Tax Return (ITR)
• Computation of income
• Challan details (tax paid)
• Supporting documents & evidence
• Statement of facts and grounds of appeal

---

Step-by-Step Process for Filing Income Tax Appeal (Form 35)

Step 1: Review the Order Carefully

• Identify disputed additions or penalties
• Note the order date and appeal deadline
• Calculate disputed tax amount

---

Step 2: Prepare Grounds of Appeal

• Draft clear legal and factual grounds
• Avoid vague or general statements
• Grounds should directly address issues raised

---

Step 3: Login to Income Tax Portal

• Login using PAN credentials
• Go to e-File → Income Tax Forms → File Income Tax Forms

---

Step 4: Select Form 35

• Choose Form 35 – Appeal to Commissioner (Appeals)
• Select the relevant assessment year

---

Step 5: Fill Appeal Details

Enter:

• Order details
• Section under which order passed
• Disputed tax and relief claimed
• Grounds of appeal
• Statement of facts

---

Step 6: Upload Supporting Documents

• Assessment order
• Computation
• Evidence and explanations

Ensure documents are clear and relevant.

---

Step 7: Pay Appeal Fees

• Pay prescribed appeal fee (based on income)
• Enter challan details in Form 35

---

Step 8: Submit & Verify Appeal

• Submit Form 35
• Verify using:
  • Aadhaar OTP
  • Net banking
  • DSC (where applicable)

⚠️ Appeal is invalid without verification.

---

Step 9: Respond to Appeal Notices

• Reply to notices issued by NFAC
• Attend virtual hearings if scheduled
• Submit additional clarifications when required

---

Step 10: Receive Appeal Order

• Appeal order is issued online
• Relief, confirmation, or modification of demand communicated digitally

---

Important Time Limits

• Appeal filing: Within 30 days of order receipt
• Response to notices: As mentioned in portal notice

Delay may lead to dismissal of appeal unless condoned.

---

Common Mistakes to Avoid

• Missing appeal deadline
• Weak or generic grounds of appeal
• Non-submission of supporting documents
• Ignoring portal notices
• Filing appeal without tax computation

---

Benefits of Filing Income Tax Appeal

• Opportunity to correct unjust additions
• Reduction or deletion of tax demand
• Fair hearing under faceless system
• Protection from coercive recovery
• Legal remedy against errors

---

Why Choose Saving Mantra for Income Tax Appeals?

• Expert drafting of grounds & statements
• End-to-end Form 35 filing
• Representation before appellate authorities
• Notice & hearing management
• Strong legal and compliance approach

---

Disclaimer

This blog is for informational purposes only and does not constitute legal or tax advice. Income tax appeal procedures and timelines are governed by the Income Tax Act, 1961, and are subject to change. Outcomes depend on case-specific facts and legal interpretation. Saving Mantra recommends consulting a qualified tax professional before filing an income tax appeal.

What Is Transfer Pricing Assessment?

A Transfer Pricing Assessment is a scrutiny process conducted by the Income Tax Department to examine whether international and specified domestic transactions between related parties are conducted at an Arm’s Length Price (ALP) as required under the Income Tax Act, 1961.

During this assessment, the tax authorities evaluate transfer pricing documentation, benchmarking analysis, and transaction pricing to ensure that profits are not shifted out of India through related-party arrangements.

---

When Does Transfer Pricing Assessment Arise?

A transfer pricing assessment may arise when:

• An entity enters into international transactions with associated enterprises
• Specified domestic transactions exceed prescribed thresholds
• Income tax return is selected for transfer pricing scrutiny
• Transfer Pricing Officer (TPO) is appointed by the Assessing Officer (AO)

---

Who Conducts Transfer Pricing Assessment?

The assessment is carried out by:

• Assessing Officer (AO) – Initiates assessment
• Transfer Pricing Officer (TPO) – Examines ALP and pricing methodology

The TPO issues a separate order determining whether pricing adjustments are required.

---

What Transactions Are Examined?

Transfer pricing assessment covers:

• Sale or purchase of goods
• Provision or receipt of services
• Royalty and license fee payments
• Loans, guarantees, and financial transactions
• Cost-sharing and management fee arrangements
• Use or transfer of intellectual property

---

Objective of Transfer Pricing Assessment

The key objectives are to:

• Verify compliance with Arm’s Length Principle
• Ensure fair pricing between related parties
• Prevent base erosion and profit shifting
• Determine correct taxable income in India

---

Documents Reviewed During Transfer Pricing Assessment

• Transfer pricing study report
• FAR analysis (Functions, Assets, Risks)
• Benchmarking and comparability analysis
• Agreements with associated enterprises
• Invoices and supporting documents
• Financial statements
• Form 3CEB audit report

---

Step-by-Step Process of Transfer Pricing Assessment

Step 1: Selection for Scrutiny

• Case selected for transfer pricing scrutiny
• Notice issued under Income Tax Act

---

Step 2: Reference to TPO

• AO refers the case to the Transfer Pricing Officer
• TPO initiates independent examination

---

Step 3: Issue of Notices

• TPO issues notices seeking:
  • TP documentation
  • Transaction details
  • Benchmarking justification

---

Step 4: Submission of Documentation

• Taxpayer submits:
  • TP study report
  • Agreements and invoices
  • Explanatory notes

---

Step 5: Comparability & ALP Analysis

• TPO examines:
  • Pricing method used
  • Comparable companies
  • Margin or price adjustments

---

Step 6: Draft TP Order

• TPO passes order proposing:
  • No adjustment, or
  • Transfer pricing adjustment

---

Step 7: Assessment Order by AO

• AO incorporates TP order
• Final assessment order issued
• Tax demand raised if adjustment made

---

Consequences of Transfer Pricing Adjustment

If adjustment is made:

• Increase in taxable income
• Additional tax liability
• Interest and penalties
• Potential litigation and appeals

---

Remedies Against Transfer Pricing Adjustment

Taxpayer may:

• File objections before Dispute Resolution Panel (DRP)
• File appeal before Commissioner (Appeals)
• Seek rectification where applicable

---

Importance of Strong Transfer Pricing Documentation

Proper documentation:

• Reduces adjustment risk
• Strengthens defense during scrutiny
• Speeds up assessment proceedings
• Minimizes penalties and disputes

---

Why Choose Saving Mantra for Transfer Pricing Assessment Support?

• Expert handling of TP scrutiny cases
• Robust documentation and benchmarking
• Representation before TPO and AO
• Adjustment mitigation strategies
• End-to-end compliance and litigation support

---

Disclaimer

This blog is for informational purposes only and does not constitute legal, tax, or professional advice. Transfer pricing assessment procedures are complex and subject to frequent amendments. Applicability depends on transaction nature, value, and jurisdiction. Saving Mantra recommends consulting a qualified transfer pricing or tax professional before responding to assessment notices.

What Is Transfer Pricing Audit?

A Transfer Pricing Audit is an income tax compliance review conducted to verify whether international and specified domestic transactions between related parties are carried out at an Arm’s Length Price (ALP), as required under the Income Tax Act, 1961.

The objective of a transfer pricing audit is to ensure that profits are not shifted outside India by manipulating prices in transactions between associated enterprises (AEs).

In India, transfer pricing provisions are administered by the Income Tax Department.

---

Who Is Required to Comply with Transfer Pricing Provisions?

Transfer pricing provisions apply to:

• Indian companies dealing with foreign group entities
• Indian entities having international transactions
• Entities with specified domestic transactions exceeding prescribed limits
• Multinational enterprises (MNEs)
• Indian subsidiaries of foreign companies

---

What Are International Transactions?

International transactions include:

• Purchase or sale of goods
• Provision or receipt of services
• Payment of royalties or fees
• Transfer of intellectual property
• Loan, guarantee, or financing arrangements
• Cost-sharing arrangements

---

What Is the Purpose of Transfer Pricing Audit?

The audit ensures that:

• Prices charged between related parties are fair
• Transactions follow the Arm’s Length Principle
• Taxable income is correctly reported in India
• Global profits are not artificially shifted

---

Key Transfer Pricing Compliance Requirements

Entities covered under transfer pricing must comply with:

• Maintenance of transfer pricing documentation
• Filing Form 3CEB (CA-certified report)
• Submission of Local File and Master File
• Filing Country-by-Country Report (CbCR), where applicable

---

When Is Transfer Pricing Audit Mandatory?

A transfer pricing audit becomes mandatory when:

• International transactions exist with associated enterprises
• Specified domestic transactions exceed statutory thresholds
• Entity is selected for transfer pricing scrutiny

---

Documents Required for Transfer Pricing Audit

• Details of associated enterprises
• Nature and value of transactions
• Transfer pricing study report
• FAR analysis (Functions, Assets, Risks)
• Benchmarking analysis
• Financial statements
• Agreements and invoices
• Form 3CEB

---

Role of Form 3CEB in Transfer Pricing Audit

Form 3CEB is a mandatory audit report:

• Certified by a Chartered Accountant
• Filed electronically
• Confirms compliance with transfer pricing provisions

Without Form 3CEB, the income tax return is treated as defective.

---

Consequences of Non-Compliance

Failure to comply with transfer pricing provisions may result in:

• Adjustment to taxable income
• Additional tax demand
• Penalty up to 2% of transaction value
• Interest and litigation
• Prolonged scrutiny and assessments

---

Benefits of Proper Transfer Pricing Audit

• Reduced risk of tax disputes
• Strong compliance framework
• Accurate global profit allocation
• Improved credibility with tax authorities
• Smooth assessments and audits

---

Why Transfer Pricing Is Critical for MNCs

• Cross-border transactions attract close scrutiny
• Regulatory expectations are high
• Documentation standards are strict
• Penalties are significant

Proactive compliance avoids costly disputes.

---

Why Choose Saving Mantra for Transfer Pricing Audit?

• Expert CA-led transfer pricing audits
• End-to-end documentation support
• Benchmarking & FAR analysis
• Form 3CEB filing assistance
• Representation during assessments

---

Disclaimer

This blog is intended for informational purposes only and does not constitute legal, tax, or professional advice. Transfer pricing regulations are complex and subject to amendments. Applicability depends on transaction nature, value, and jurisdiction. Saving Mantra recommends consulting a qualified tax or transfer pricing professional before making compliance decisions.

What Is an Updated Return (ITR-U)?

An Updated Return, filed using ITR-U, allows taxpayers to voluntarily correct or update their income tax return after the original, belated, or revised return deadline has passed.
This facility was introduced by the Income Tax Department under Section 139(8A) of the Income Tax Act, 1961.

ITR-U helps taxpayers disclose missed income, correct errors, and regularize past non-compliance while avoiding heavy penalties and litigation.

---

Who Can File an Updated Return?

You can file an Updated Return if you:

• Missed filing the original ITR
• Reported incorrect income
• Selected the wrong ITR form
• Missed declaring interest, salary, or other income
• Want to reduce the risk of notices

⚠️ Updated Return can be filed only to increase tax liability, not to reduce it.

---

Who Cannot File ITR-U?

ITR-U cannot be filed if:

• It results in a refund or increases refund amount
• It reduces tax liability
• Assessment, search, or survey proceedings are initiated
• Information is received under international agreements
• Prosecution proceedings have started

---

Time Limit for Filing Updated Return

• Within 24 months from the end of the relevant assessment year

Example:
For AY 2022-23, ITR-U can be filed up to 31 March 2025.

---

Additional Tax Payable on ITR-U

• 25% of tax + interest → If filed within 12 months
• 50% of tax + interest → If filed after 12 months but within 24 months

---

Documents Required for Filing Updated Return

• PAN & Aadhaar
• Original / Belated / Revised ITR (if filed earlier)
• Income details missed earlier
• Bank statements
• Form 16 / Form 26AS / AIS
• Challan details of tax paid

---

Step-by-Step Process for Filing Updated Return (ITR-U)

Step 1: Identify the Reason for Update

• Income missed
• Wrong income head
• Incorrect deductions
• Non-filing earlier

Select the correct reason code while filing ITR-U.

---

Step 2: Compute Revised Income

• Recalculate total income
• Compute additional tax and interest
• Add applicable 25% or 50% additional tax

---

Step 3: Pay Due Tax

• Pay total tax liability using challan
• Keep challan details ready

---

Step 4: Login to Income Tax Portal

• Login using PAN
• Go to e-File → Income Tax Returns → File Updated Return

---

Step 5: Select Relevant ITR Form

• ITR-1 / ITR-2 / ITR-3 / ITR-4 / ITR-5 / ITR-6 / ITR-7
• Select ITR-U along with applicable return

---

Step 6: Fill Updated Return Details

Enter:

• Updated income figures
• Tax paid details
• Reason for filing ITR-U

Ensure data matches AIS and Form 26AS.

---

Step 7: Validate and Submit

• Validate all fields
• Submit the Updated Return

---

Step 8: Verify the Return

• Aadhaar OTP
• Net banking
• DSC (where applicable)

⚠️ ITR-U is invalid without verification.

---

Important Points to Remember

• ITR-U can be filed only once for an assessment year
• It always results in additional tax payment
• Filing early reduces penalty impact
• Accurate disclosure avoids future scrutiny

---

Benefits of Filing Updated Return

• Avoid income tax notices
• Regularize non-compliance
• Peace of mind
• Clean tax records
• Reduced litigation risk

---

Why Choose Saving Mantra for Updated Return Filing?

• Expert review of past returns
• Accurate tax recomputation
• End-to-end ITR-U filing
• AIS & notice-prevention checks
• Complete digital support

---

Disclaimer

This blog is for informational purposes only and does not constitute legal or tax advice. Provisions relating to Updated Return (ITR-U) under Section 139(8A) are subject to change and depend on individual facts and circumstances. Saving Mantra recommends consulting a qualified tax professional before filing an updated return.