Income Tax Return filing: Revised instructions for filing ITR Forms 2, 3, 5, 6 & 7

December 14, 2020 12:21 PM

To help taxpayers and make the ITR filing experience smooth, the Income Tax Department has issued revised instructions for filing ITR forms for A.Y. 2020-21.

income tax return budget 2021At present, the acknowledgement of ITR Form V does not contain the details of exempt income. Representational image

During the last 3-4 months the government has made significant changes in the taxation structure, introduced a few new forms and a few new steps. Fundamentally, these changes are brought to make the taxation system automate, independent and to interlink other fiscal systems with which the other related financial information can be accumulated for better financial analysis.

To help taxpayers and make the ITR filing experience smooth, the Income Tax Department has issued revised instructions for filing ITR forms for A.Y. 2020-21.

Below are the form-wise instructions issued by the Income Tax Department to fill the ITRs:

ITR-2

Eligibility – For an Individual or HUF not eligible to file ITR-1 and not having income from business or profession.

ITR-3

Eligibility – For an Individual or HUF not eligible to file ITR-1, ITR2 or ITR-4 and having income from business or profession.

Manner of filing– In case of an assessee whose accounts are liable to be audited under section 44AB, it is mandatory to file the digitally signed return. In case of an assessee who is required to furnish audit report under sections 10AA, 44AB, 44DA, 50B, 80-IA, 80-IB, 80-IC, 80-ID, 80JJA, 80LA, 92E, 115JB or 115JC, such report to be furnished electronically on or before the date of filing ITR.

ITR-5

Eligibility– This form can be used by person being a – Firm, LLP, Association of Persons (AOP), Body of Individuals (BOI), Artificial Juridical Person (AJP), Local authority, Co-operative Society, Society registered under Societies Registration Act, 1860, Trust other than trusts eligible to File ITR-7, Estate of deceased person, Estate of insolvent, Business trust, Investment fund.

A person who is required to file ITR u/s 139(4A) or 139(4B) or 139(4C) or 139(4D) cannot file ITR-5.

Manner of filing – In case of an assessee whose accounts are liable to be audited under section 44AB, it is mandatory to file the digitally signed return. In case of an assessee who is required to furnish audit report under sections 10AA, 44AB, 44DA, 50B, 80-IA, 80-IB, 80-IC, 80-ID, 80JJA, 80LA(1), 80LA(1A), 92E, 115JB or 115JC, such report to be furnished electronically on or before the date of filing ITR.

ITR-6

Eligibility– This ITR form can be used by companies as per section 2(17) of the Income Tax Act. This form is filed by companies other than companies required to file return in Form ITR-7.

As per section 2(17) of the Income Tax Act, company means Indian Company, Body corporate incorporated by or under the laws of country outside India, Any institution, association or body, whether incorporated or not and whether Indian or Non-Indian which is declared by general or special order of the board to be company etc.

Manner of filing and verification – Return form can be filed electronically on the e-filing portal i.e. www.incometaxindiaefiling.gov.in and can be verified by way of a Digital signature only.

ITR-7

Eligibility– This return form can be used by persons including companies required to furnish return under section 139(4A), 139(4B), 139(4C) or 139(4D).

Category of persons whose income is exempt u/s 10 and who are not mandatorily required to file ITR may use this form for filing return such as – Local authority u/s 10(20), Regimental fund or Non-public fund established by the Armed forces of the Union u/s 10(23AA), etc.

Manner of filing – A political party shall compulsorily furnish the return by using Digital Signature. In case of an assessee who is required to furnish audit report under sections 10(23C)(iv), 10(23C)(v), 10(23C)(vi), 10(23)(via), 12A(1)(b), 92E such report to be furnished electronically on or before the date of filing ITR. Audit report in Form 10B/10BB has to be e-filed at least 1 month prior to the due date of filing ITR u/s 139.

Some common instructions to fill up all the ITR forms (ITR 2, 3, 5 and 7) are as follows:

Assessment year

This return form is applicable for A.Y. 2020-21 i.e. income earned in the F.Y. 2019-20

Manner of filing and verification

Return form can be filed electronically on the e-filing portal i.e. www.incometaxindiaefiling.gov.in and can be verified using any of these methods Digital signature or By way of Electronic verification code (EVC) or Aadhaar OTP or By sending the signed copy of ITR-V through post at CPC Bangalore Address (should reach within 120 days of filing of ITR form).

Obligation to file ITR (applicable for ITR 2 and 3)

Every Individual/HUF whose total income before allowing deductions under Chapter VI-A exceeds the basic exemption limit is mandatory required to file ITR.

Basic exemption limit for A.Y. 2020-21 for:

  • Resident Individual having age of 60 years or more but less than 80 years at any time during the previous year is Rs 3,00,000
  • For Resident Individual having age of 80 years or more at any time during the previous year is Rs 5,00,000
  • Any other Individual or HUF is Rs 2,50,000

Exception to above: (applicable for ITR 2 and 3)

If a person whose total income before allowing deductions under Chapter VI-A or deduction of capital gains (54 to 54GB) does not exceed the basic exemption limit but who fulfills any one of the following conditions is mandatory required to file ITR as per seventh proviso to section 139(1):

  • Deposit of amount in current accounts exceeds Rs 1 crore during the previous year
  • Expenditure on travel to foreign country for himself or any other person exceeds Rs 2 lakh during the previous year
  • Expenditure on consumption of electricity exceeds Rs 1 lakh during the previous year.

(By Kapil Rana, Founder & Chairman, HostBooks Ltd)

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