The new ITR forms seek more transparency and disclosure in terms of income, investments and assets. Here's all you need to know.
Income Tax Return(ITR) filing has become relatively easier in recent years, but for many individual salaried taxpayers and pensioners, it remains a dreaded activity which they put off until the last minute —even beyond 31 July, the due date for filing tax returns. From this year onward though, the late filing will result in a penalty of Rs 5000. The steps have been taken to inspire the commoners to not fall for procrastination. Not only this, there has been a change in the Income Tax forms too.
It is apparent that the new Income Tax Return (ITR) forms for Financial Year 2017-18 shift the onus on the taxpayers to prove their claim for deductions, expenses or exemptions. These ITR forms seek more information from trusts, taxpayers who opted for presumptive taxation scheme, investors in shares of unlisted companies, so on and so forth.
The detailed changes in the Income Tax forms have been mentioned below:-
ITR 1 (Sahaj Form)
- It was applicable to both Residents, Residents not ordinarily resident (RNOR) and Non-residents. Now, ITR 1 is applicable only for resident individuals.
- It is applied on an individual having income from salaries, one house property and income from other sources( other than winnings from lottery and race horses) having total income up to Rs 50 lakh continues.
- The taxpayers are required to fill the break- up of the salary. The details would appear only in form 16 before and the breakup of the return was not required to mention.
- Individuals are required to furnish a break –up of Income under house property which was mandatory only in ITR-2 and other forms.
- There is an additional field for furnishing the details of TDS as per Form 26QC for TDS made on rent. There is a provision for quoting PAN of tenant for such rent cases has also been made.
- This one page ITR-1 is an initiative to make tax return filing simpler.
- Residents not ordinarily residents (RNOR) and non-residents have to file their income-tax return using ITR-2
- You are not required to file with ITR 2 if you have earned income from business and profession, income from presumptive business and Income earned in the form of interest, salary, bonus, commission or share of profit from a partnership firm.
- Income or loss from more than one house property, agricultural income exceeding Rs. 5000 and total income exceeding Rs. 50 lacs, dividends income exceeding Rs. 10 lacs taxable under section 115BBDA, unexplained credit or unexplained investments taxable at 60% under sections 68, 69, 69A etc shall be reported under ITR2
- Income from other sources( including winnings from lottery and racehorses or losses under the head) and capital gains/loss on sale of investments/property needs disclosure with ITR-2
- Similar to ITR-1, ITR-2 has an additional field for furnishing details of TDS as per Form 26QC for TDS made on rent. There is a provision for quoting PAN of Tenant for such rent cases has also been made.
- Also, there is a requirement for furnishing details of anyone foreign bank account has been provided for the purpose of credit or refund.
- It has been prescribed for individuals and HUF having “Income from profits and Gains from business and profession”
- A field relating to Section 115H has been added which relates to benefit being availed under certain cases even after the taxpayer becomes a resident.
- There is an additional requirement to quote GSTR Number and turnover/gross receipts as per GST return filed. Interlinking of direct and indirect tax has been done to bring more transparency and
- The income tax department wants information of an assesses related to the particular additional information 1) Partners/Members Capital b) Secured Loan c) Unsecured Loan d) Advances e) Fixed Assets. Earlier, the old ITR 4 sought only 4 financial particulars a) total creditors b) total debtors c) total stock-in-trade and 4) cash balance
- For assessee opting for presumptive taxation under section 44AD, 44 ADA or 44AE, filling of return in form ITR 4 is required.
- The new ITR Forms introduce specific columns to report each capital gain exemption separately. Details of each capital gains exemption under Sections 54, 54B, 54EC, 54EE, 54F, 54GB and 115F shall be reported in its applicable column now. Further, a taxpayer availing of these capital gains exemptions is required to mention the date of transfer of original capital asset which was missing in earlier ITR Forms.
- In the case of capital gain arising on transfer of unquoted shares, it would now be mandatory for the investors to obtain the valuation report. To ensure that investors correctly report the capital gains from unlisted shares, the new ITR Forms require the taxpayer to provide figures of actual sales consideration and FMV as determined by a Merchant Banker or CA.
- Until last year, if a taxpayer failed to file the ITR before the end of the assessment year, a penalty under Section 271F could be imposed by the Assessing Officer only after initiating the penalty proceedings. After omission of this penalty provision by the Finance Act, 2017, late fees are levied under Section 234F if a taxpayer does not furnish the ITR in time. The taxpayer shall now be required to pay late filing fees under section 234F along with interest under section 234A, 234B and 234C before filing the ITR.
- For the Assessment Year 2018-19, an individual or a HUF, who is a partner in a firm, shall be required to file his ITR in Form ITR 3 only. Last year the partners were required to file a return in ITR 2.