Income Tax 2025

Appearance

Scheme for submission of returns through tax return preparers. ​

264(1) ​

The Board may make a Scheme for furnishing returns of income through a tax return preparer and such Scheme shall be notified, which—

  • (a) may enable any specified class or classes of persons in preparing and furnishing returns of income through a tax return preparer authorised to act as such under the Scheme;
  • (b) may be made irrespective of provisions of section 263.

264(2) ​

In this section,—

  • (a) “tax return preparer” means any individual, not being a person referred to in section 515(3)(a)(ii) or an employee of the “specified class or classes of persons”, who has been authorised to act as a tax return preparer under the Scheme made under this section;
  • (b) “specified class or classes of persons” means any person, other than a company or a person, whose accounts are required to be audited under section 63 or under any other law, who is required to furnish a return of income under this Act.

264(3) ​

Every notification for the Scheme referred to in sub-section (1) shall be issued as per section 534 of this Act.

Explanation

Section Summary: ​

This section allows the Central Board of Direct Taxes (CBDT) to create a Scheme that enables certain individuals or classes of taxpayers to file their income tax returns through authorized "tax return preparers." The Scheme is designed to simplify the return filing process for specific taxpayers who may not have the expertise or resources to file their returns independently. The Scheme operates independently of Section 263, which deals with the revision of orders by the Principal Commissioner or Commissioner.

Key Changes: ​

  1. Introduction of Tax Return Preparers: This section formalizes the role of tax return preparers, who are authorized individuals (not employees of the taxpayer or disqualified persons under Section 515(3)(a)(ii)) to assist in preparing and filing income tax returns.
  2. Exclusion of Certain Taxpayers: The Scheme does not apply to companies or individuals whose accounts are required to be audited under Section 63 or any other law.
  3. Notification Process: The Scheme will be notified under Section 534, ensuring it is formally recognized and implemented.

Practical Implications: ​

  1. For Taxpayers:
    • Taxpayers who fall under the "specified class or classes of persons" can now use authorized tax return preparers to file their returns, reducing the burden of self-filing.
    • This is particularly beneficial for small taxpayers, individuals, or businesses with straightforward tax situations.
  2. For Tax Return Preparers:
    • Individuals can now act as authorized tax return preparers, provided they meet the criteria set by the Scheme.
    • This creates a new professional role in the tax ecosystem.
  3. For Compliance:
    • The Scheme simplifies the return filing process for eligible taxpayers, potentially increasing compliance rates.
    • It also ensures that preparers are accountable under the Scheme.

Critical Concepts: ​

  1. Tax Return Preparer: An individual authorized under the Scheme to prepare and file income tax returns on behalf of taxpayers. They cannot be employees of the taxpayer or fall under the exclusions mentioned in Section 515(3)(a)(ii).
  2. Specified Class or Classes of Persons: Refers to taxpayers who are not companies or individuals requiring audit under Section 63 or other laws. Essentially, this includes small taxpayers, individuals, and businesses with simpler tax filings.
  3. Section 263: This section deals with the revision of orders by tax authorities. The Scheme operates independently of this provision, meaning it does not interfere with the revision process.

Compliance Steps: ​

  1. For Taxpayers:
    • Identify if you fall under the "specified class or classes of persons."
    • Engage an authorized tax return preparer if eligible.
    • Ensure the preparer is authorized under the Scheme and not disqualified under Section 515(3)(a)(ii).
  2. For Tax Return Preparers:
    • Obtain authorization under the Scheme.
    • Adhere to the guidelines and procedures outlined in the Scheme.
    • Ensure accurate and timely filing of returns on behalf of taxpayers.

Examples: ​

  1. Scenario 1: A small business owner with annual turnover below the audit threshold (e.g., ₹1 crore) can use a tax return preparer to file their income tax return. The preparer ensures the return is accurate and filed on time, reducing the business owner's compliance burden.
  2. Scenario 2: An individual with income from salary and minor investments can engage a tax return preparer to handle their return filing, especially if they are unfamiliar with tax laws or filing processes.

This section introduces a practical and taxpayer-friendly mechanism to simplify return filing for eligible individuals and businesses, while also creating a new professional role in the tax compliance process.