The clock is ticking towards the tax filing due date of July 31, for financial year 2015-16. Release of the tax return forms by the revenue authorities triggers the tax return filing process. We have discussed a few of them applicable for individual taxpayers.
Schedule AL in ITR 1, ITR 2A, ITR 2 and ITR 4S: Till financial year 2014-15, declaring assets and its related liabilities was required only for individual taxpayers either being partner in firms (filing ITR 3) or having income from proprietary business or profession (filing ITR 4) and having income above R25 lakh. Further, Finance Act 2015 abolished wealth tax provisions; hence, in order to keep a track of the assets of individual taxpayers, the government has introduced requirement of reporting assets for all individual taxpayers in ‘Schedule AL’.
Now every individual taxpayer needs to declare assets if their total income is above R50 lakh. Schedule AL has been introduced in ITR 1 (for individual with income from salary or one house property or income from other sources), ITR 2A (for individual and HUF who do not income from business or profession, capital gain and do not hold any foreign assets), ITR 2 (For salaried individuals and HUFs), and ITR 4S (For reporting presumptive business income). The assets to be reported include land, building, jewellery, bullion, vehicles, yachts, boats, aircraft, and cash in hand, etc. It has been clarified that the amount to be reported would be cost of such asset and if such assets is received as gift or under a will etc., cost of the previous owner aggregated with cost of improvement would have to be reported. Additionally, the taxpayers also have to report any liabilities.
Deduction for NPS contribution: New provision was introduced in Finance Act 2015 to provide additional deduction of R50,000 on contribution to NPS by the taxpayer. The new ITR forms have introduced a new row for claiming additional deduction of up to R50,000 for investment in NPS by taxpayer, which is over and above the traditional deduction limit of R150,000 under section 80C, 80CCC and 80CCD(1).
New schedule Tax Collected at Source (TCS) in ITR 1, 2 and 2A: Seller of bullion and jewellery collects TCS at 1% of sale consideration from buyer if such sale consideration is received in cash and it exceeds R2 lakh in case of bullion and R5 lakh in case of jewellery. Previously, individual taxpayer could claim credit by filing ITR3, 4 or 4S. For the tax year 2015-16, taxpayers would now be able to claim credit of TCS even by filing ITR 1, ITR 2 and 2A.
New Schedule PTI (Pass Through Income): This schedule seeks details of pass through income received by investor from business trust or investment funds. Apart from the details of trust/ fund, the taxpayer would need to provide breakup of income under specified head viz., income from house property, capital gains and other sources. The above income would also need to be declared in respective schedules.
Disclosure of income as per ICD standards in ITR 4: Individuals and HUFs having income from a proprietary business or profession are required to file their return in ITR 4, which now requires reporting effect of Income Tax Computation & Disclosure Standards (ICDS) wherever applicable as per the Centre’s notification.
Collation of cost of assets could be a cumbersome exercise especially for taxpayers who have not acquired the asset but received by gift or inheritance. However, by releasing the tax return forms on 30 March 2016 as compared to a tradition of releasing forms toward end of May, the government has given enough breathing space to the taxpayers before tax filing due date. Also, barring assets disclosure, there has not been any substantial change in the tax forms from the last year which should be welcomed by taxpayers.
The author is tax partner, EY India