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How to Become an Income Tax Return Preparer


How to Become an Income Tax Return Preparer

An Income Tax return preparer is a professional approved by the Income Tax Department to help taxpayers to file income tax returns. Taxpayers should note that the role of tax return preparers primarily governs filing the returns of individual and HUF assessees. Assessees who are corporates, assessees having a business income, and assessees who are governed by the requirement for tax audit should not use the services of tax return preparers. The Income Tax Department has a special scheme under which it has designated certain persons as Income Tax Return Preparers to help taxpayers with filing their income tax returns. Mainly individual taxpayers who are not required to obtain a tax audit or any other audit can avail the services of an income tax return preparer to file an income tax return.

Tax Return Preparers are allowed to prepare and file their Income Tax Return for any individual who requires their return of income to be filed as stated under Section 139 of the Income Tax Act. However, TRPs are not permitted to prepare the Income Tax Returns of individuals, running a business or a profession, whose accounts are required to be audited according to Section 44AB of the Income Tax Act. It should also be noted that Tax Return Preparers are not permitted to file the Income Tax Return for any individual who is not a resident of India during the previous financial year.

Tax Return Preparer Scheme (TRPS)

The Tax Return Preparer Scheme (TRPS) is a service initiated by the Income Tax Department in order to file taxes efficiently. With the introduction of TRPS, the process of filing taxes has been more comfortable and comparatively simple for a taxpayer as it offers these services at their doorstep. The scheme employs certified professionals who are trained by the Income Tax Department to assist small and marginal taxpayers with the preparation and filing of their tax returns for a small fee or, at times, free of cost. This article highlights the various aspects of the Tax Return Preparer Scheme (TRPS) and its essentials.

Objectives of the Scheme

The Income Tax Department launched the TRPS with the intention to meet the following objectives.

  • To provide employment for the unemployed or partially employed graduates in India.
  • To bring down the compliance costs for small taxpayers.
  • To increase the taxpayer base.
  • To create awareness among the citizens regarding tax laws.
  • To encourage the participation of the community.

Tax Return Preparer (TRP)

A Tax Return Preparer or a TRP is a professional who is trained by the Income Tax Department in order to assist taxpayers concerning their returns filing by offering services in the comfort of their own home. However, for cases where a tax audit is compulsory, TRPs shall not be able to file tax returns.

Eligibility for Becoming Income Tax Return Preparer

Any individual who holds a graduate degree from a recognised Indian Univerisity in the fields of Business Administration or Management or Commerce or Economics or Law or Mathematics or Statistics can become an Income Tax Return Preparer. In addition to the educational qualification, the person will also have to fulfil certain training and certification to become an Income Tax Return Preparer.

Who Can File Income Tax Return through Income Tax Return Preparer

Individual taxpayers can use the services of an Income Tax Return preparer to file income tax returns. However, income tax returns cannot be prepared and filed by an Income Tax Return Preparer, if any of the following circumstances are prevailing:

  • The taxpayer is carrying out business or profession during the previous year and accounts of the business or profession for that previous year are required to be audited under the Income Tax Act.
  • The taxpayer is not a resident in India during the previous year.
  • The taxpayer is required to file an income tax return in response to a notice under Section 142(1)(i) or Section 148 or Section 153A.

Also, income tax return preparers cannot file revised income tax return unless the taxpayer filed the original return through an Income Tax Return Preparer.

Duties of Income Tax Return Preparer

The following are the duties that should be executed by a Tax Return Preparer.

  1. The return of a taxpayer must be prepared by keeping due diligence in mind.
  2. The return of a taxpayer that has been prepared must contain the signature of the concerned TRP.
  3. A TRP must submit the returns to the relevant Assessing Officer or a concerned agency that has been verified by the Resource Centre.
  4. TRPs should acquire an acknowledgement copy as it serves as a proof of submission of the return.
  5. A TRP has the responsibility to maintain a record of specific details concerning all the returns prepared by them.
  6. A statement of particulars must be submitted to the Resource Centre on or before the 7th of every month.

It should be noted that while maintaining a record of specific details with regard to all the returns prepared by them, the concerned professional should ensure the following information is included in the record:

  • The name of the individual whom the TRP has prepared the returns for.
  • The PAN of the Assessee
  • The year of the assessment
  • The date when the return has been submitted or furnished.
  • The number indicated on the acknowledgement slip.
  • The jurisdiction of the assessing officer.
  • The total income amount which is declared in the return filing.
  • The total tax amount which is payable by the taxpayer.
  • Every amount related to any charges or fees due to the TRP according to the terms of the Scheme.

Fee for Income Tax Return Preparer

Income Tax Return Preparers can earn a fee and commission for the income tax returns filed.

In case of filing of income tax return of the first year, 3% of the tax paid by the assessee subject to a maximum of Rs.1000 will be provided as commission. In case of filing of income tax return of the second year, 2% of the tax paid by the assessee subject to a maximum of Rs.1000 will be provided as commission. In case of filing of income tax return of the third year, 1% of the tax paid by the assessee subject to a maximum of Rs.1000 will be provided as commission. If the income tax return of an existing assessee is filed, then a commission of Rs.250 will be provided per return.

Avail Services of a TRP

A taxpayer has to follow the procedure given below in order to avail the services of a Tax Return Preparer.

Step 1: Visit the official website for the Tax Return Preparer Scheme (TRPS).

Step 2: Click on the Register for Home Visit on the right side of the page. According to this initiative, a TRP would visit the taxpayer’s residence and assist them in preparing their returns.

Step 3: The following fields on the next page must be completed precisely. This page would then require the taxpayer to outline the kind of assistance that they require along with the date and time allotted for the TRP to visit.

Step 4: Complete the captcha and check the boxes below the form. Click on the Submit icon to complete the submission.

Step 5: Once the form is submitted, the help desk would identify the closest TRP available to the taxpayer’s area of residence and book an appointment over the phone. The appointment would be confirmed.

Appointment with a TRP

Taxpayers may fix an appointment with a TRP by visiting the official TRPS website. The taxpayer may opt to avail the services of the relevant TRP based on the city they reside in. TRP appointments may also be made by calling the helpline at 1800-10-23738 or by sending a mail to [email protected].

Signing up to be a TRP

The following steps would give an individual a rough idea about registering themselves as a TRP.

  1. The Income Tax Department announces the Scheme at regular intervals. This may happen once in two years approximately.
  2. The application form for the scheme may be filled from the official TRPS website of designated NIIT centres once the scheme is announced.
  3. Application forms can be found to be advertised in various newspapers as well.
  4. The interested candidates are required to include a demand draft of INR 100  in favour of NIIT Limited-TRPSCHEME Account along with the completed application form.
  5. About 5,000 candidates would be trained at 120 centres all across the country. Although, this may vary according to the scheme announcement.
  6. Selection of the candidates for the training shall be conducted in each centre individually.
  7. A maximum of 500 candidates would be shortlisted in each centre. The shortlisting would be conducted based on the marks obtained by the candidate in their bachelor’s examination. The shortlisted candidates would then be contacted for an enrollment text.
  8. An applicant is permitted to apply for three centres which should be mentioned in the application form in order of preference. The selection would be conducted centre wise.
  9. If a candidate is shortlisted for more than one training centre for the enrollment test, then they would be allotted according to the preference they entered in their application form.
  10. The result of the enrolment test would be posted on the official TRPS website.
  11. Selected candidates would have to submit a security deposit of INR 1000 with NIIT. This amount would be refunded once the training is completed successfully by the candidate.
  12. The selected candidates would go through a rigorous training program which would include web-based and classroom-based training programs. Study materials would be provided as well. Post the training program; the candidates would have to go through an assessment examination and would be certified as Tax Return Preparers.
  13. The candidates would also receive subsequent help through a web-based Knowledge Portal and help desk for the filing of returns.
  14. This scheme offers entirely free training for the candidates. Although, the candidates are required to make arrangements for their stay and transportation themselves.

Charges of a TRP

Most of the time, TRPs assist taxpayers in filing their returns for a small amount as they are paid by the Income Tax Department directly. The remuneration of a TRP depends on the amount of tax payable by the taxpayer they assist. The following are the charges of a TRP based on various factors.

TRPs would receive:

  • Three per cent of the tax paid on the returns prepared and filed for every new assessee for the first year. This remuneration is limited to a maximum of INR 1000 for each assessee.
  • Two per cent for every assessee for the second year.
  • One per cent for every assessee for the third year.
  • INR 250 for every assessee from the fourth year onwards.