Receiving income tax deductions under the new rules

LEGAL DIGEST, NEWS \ 17.12.2021

The President of the Russian Federation has signed a Law that simplifies the procedure for granting tax deductions for income tax starting from January 1, 2022.

The simplified procedure implies electronic interaction with the federal tax service (FTS) authorities through a personal account on the FTS website and applies to the following types of tax deductions:

• investment (operations on an individual investment account);
• property (construction or purchase of residential houses, apartments, rooms, shares in them, acquisition of land, repayment of interest on targeted loans and credits actually spent on new construction or purchase of residential property).

At the same time, the right to such deductions should arise starting from January 1, 2020.

To receive deductions in a simplified procedure, it is necessary to submit an application through the taxpayer’s personal account on the FTS website indicating the details of the individual’s open bank account.

Please note that in order to receive a deduction, it is necessary that the tax authority has information confirming the fact that the payer has credited funds to the account specified in the application. This information is reported by the tax agent (banks and credit organizations).

Having received the relevant information, the FTS posts data in the personal account for automatically filling in the application or sends through it a message about the impossibility of obtaining a tax deduction in a simplified procedure, indicating the reasons in the following terms:

• not later than March 20 of the year following the expired tax period (in relation to information submitted by a tax agent or bank before March 1);
• within 20 working days after the submission of information (in relation to information submitted after March 1 of the year following the expired tax period).

Verification of applications for compliance with the requirements for obtaining a deduction is carried out in the form of a desk tax audit. If, based on its results, no violations are revealed, the tax authority within three calendar days after the end of the audit makes a decision on the provision of a deduction. On the basis of the decision taken by the FTS authorities, the amount of tax to be returned to the taxpayer to the bank account specified in the application is determined.

In other words, the simplified procedure for obtaining property and investment deductions does not cancel the general procedure for their provision – by submitting a 3-NDFL declaration. Its main change is that when an individual applies with a written application to the employer, confirmation of the right to receive deductions will be send immediately to the tax agent, and not to the employee.

For social deductions for training and treatment, even with a simplified procedure, apart from the application, it is necessary to provide supporting documents. And for property and investment ones, tax authorities collect a number of information on their own.

In the matters of granting tax deductions, please contact Acsour experts. Our specialists are ready to answer your questions on this topic.