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Tax Return Preparer Scheme – Complete Guide

Tax Return Preparer Scheme – Complete Guide

The Tax Return Preparer Scheme (TRPS) is a program announced by the Income Tax Department which has the objective of helping small and marginal taxpayers to prepare and file their income tax returns. As per the scheme, over 5000 candidates are trained as Tax Return Preparers. Totally, one hundred and twenty centres have been established across India to create a large legion of qualified persons who can help the assessees to file an income tax return. In order to implement the scheme, the Income Tax Department has created a tie-up with NIIT and Taxmann. In this article, we provide an explanation of the Tax Return Prepare Scheme. The category of people who primarily benefit from the services of TRPs is salaried persons and pensioners. The article also explains the procedure for becoming a qualified Tax Return Preparer according to the scheme.

How to Become a Tax Return Preparer

  • Any person between the age of twenty-one and thirty-five can apply for the scheme. The applicant should have a degree in Law, Economics, Statistics, Mathematics, Commerce, Management or Business Administration. Applicants who have qualified with more than fifty per cent score are eligible to become a Tax Return Preparer. Eligible candidates should periodically visit the Tax Return Preparer website and look for openings announced.
  • Approximately, once in every two years, the scheme calls for enrolling of new Tax Return Preparers. Once an announcement is made, eligible candidates can download the application form from the TRP website. The application form must then be submitted with a demand draft for Rs.100 in favour of “NIIT Limited-TRPSCHEME”. The application forms are processed and up to 5000 candidates will be trained at each of the 120 centres across the country. Once the training is complete, 500 candidates from each centre will be selected for taking the enrolment test based on the marks scored.
  • The candidates are then required to successfully pass the enrolment test, the rest of which is posted on the TRP website. Finally, successful candidates are required to make a security deposit of Rs.1000 and complete a rigorous training program, including web-based study material. On completion of the program and the assessment exam, the person is certified as a “Tax Return Preparer” or TRP. The TRP is then provided access to a knowledge portal and help desk to file income tax returns.

Income Tax Returns – Filing by Tax Return Preparers

  • Tax return preparers are allowed to prepare the income tax return for any person whose return of income must be filed as per Section 139 of the Income Tax Act. However, Tax Return Preparers are not allowed to prepare income tax returns of persons carrying on business or profession whose accounts are required to be audited under section 44AB of the Income Tax Act. Also, tax return preparers are not allowed to file the income tax return of any person who is not a resident of India during the previous financial year.
  • To obtain the facility of filing the return, the assessee shall visit the Tax Return Preparer and submit details relating to the income and expense details. Based on the information, an income tax return would be prepared. The tax return preparer would then affix a signature and furnish all the relevant information to the Assessing Officer having jurisdiction over the assessee. The person for whom the return was filed would also receive a copy of the return.

Fee Earned by Tax Return Preparers

Tax return preparers earn a fee as fixed by the Income Tax Department. Tax return preparers can earn a fee equal to three per cent of the tax paid on the returns prepared and filed for every new assessee in the first year. However, this amount shall be subject to a maximum ceiling limit of one thousand rupees. Additionally, the TRP is eligible to obtain two per cent of the tax paid on the returns prepared and filed for every new assessee in the second year and one per cent of the tax paid on the returns prepared and filed in the third year. Tax return preparers are eligible to receive a remuneration of two hundred and fifty rupees for the returns prepared and filed for the assessees who are falling under the category of a senior citizen. The additional fee for the belated filing of tax return should not be charged from the person for whom the tax return is prepared and filed if the amount of fee earned by the Tax Return Preparer is in excess of two hundred and fifty rupees. If the fee earned by the Tax Return Preparer is less than two hundred and fifty rupees, in such cases a fee amount which is equivalent to two hundred and fifty rupees can be charged by the Tax Return Preparer.

To know about the offenses which attract prosecution under the Income Tax Act, click here.

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