Income Tax Return: Know the key changes in ITR Forms, filing processes before you start

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June 04, 2021 10:28 PM

Apart from a change in the e-filing site, some changes are also made in the ITR Forms for AY 2021-22, as well as in the process of filing return over the last assessment year.

income tax, income tax return, ITR, e-filing site, launch of new e-filing site, changes in ITR Forms, changes in ITR filing processThe all new e-filing site is scheduled to become functional from June 7, 2021.

The e-filing of Income Tax Return (ITR) has become standstill from June 1, 2021 due to the ongoing process of migration from the old ITR filing site – – to a all new e-filing site – – which is scheduled to become functional from June 7, 2021.

However, apart from the change in the e-filing site, some changes are also made in the ITR Forms for the Assessment Year (AY) 2021-22 in comparison to the last AY (2020-21) as well as in the process of filing your return of income over the last year.

According to Dr. Suresh Surana, founder, RSM India, following are some of the key changes in the ITR forms and Filing process for AY 2021-22:

1. Introduction of JSON Utility

The Income Tax Department has introduced a JSON utility for offline filing of Income Tax returns. This utility for offline return filing is expected to increase the return filing convenience. Also, the CBDT has announced immediate processing of ITR, more interactive return preparation software and also, new online tax payment system. The new e-filing portal will be integrated with immediate processing of Income Tax Returns.

2. Non-Permissibility to use ITR 1 in case of TDS Deducted u/s 194N

Section 194N of the IT Act provides for deduction of TDS in case of cash withdrawal by any person exceeding the specified limit as mentioned therein. However, in case of any person who is claiming TDS credit pertaining to Section 194N would not be eligible to file his return of income in ITR1.

Also, since TDS deducted u/s 194N of the IT Act can be only claimed as a refund pertaining to such year of deduction, the ITRs have been amended in order to restrict the carry forward of such TDS to subsequent assessment years.

3. Amendment in Schedule UD to give effect to section 115BAC

Section 115BAC provide for special tax regime for individuals or HUFs. These special tax regimes provide for concessional tax rates, however, the taxpayer is not eligible to certain deductions and exemptions under the IT Act. Since, these tax regimes have been made applicable by Finance Act, 2020 w.e.f. 1 April 2020 i.e. AY 2021-21, the ITRs have been revised in order to incorporate the optional tax regimes. Accordingly, the taxpayer would have to provide information Part-A (General Information) whether they would be opting for the Concessional Tax regime or not.

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Further, in order to avail these sections, the assessee has to forego the additional depreciation if it is forming part of unabsorbed depreciation for earlier years. However, a one time adjustment in the opening WDV is allowed in such case and accordingly the Schedule UD in ITR 3 has been revised to provide for such revision in the unabsorbed depreciation which represented additional depreciation on account of opting for section 115BAC.

As mentioned above, any person opting for the concessional tax regime would not be eligible to claim certain deductions and exemptions and also any losses attributable to such exemptions and deductions would not be allowed for the current as well as any subsequent years as the same would be deemed to have been given full effect to. Accordingly, the ITR Forms have been accordingly revised to provide for adjustment of such losses.

4. Incorporation of changes in the Dividend Regime

Earlier, the Company paid Dividend Distribution Tax (DDT) on Dividends and consequently, shareholders were taxed only in case of dividends exceeding the threshold limit of Rs. 10 lakhs. However, the Finance Act 2020 made an overhaul of the entire Dividend Tax regime by way of abolishing DDT and accordingly, Schedule OS (Other Sources) has been revised to provide for dividend taxable in the hands of the shareholders. Further, a quarterly breakup of dividend income would be required to be provided in all the ITR forms which would further enable computation of interest liability under section 234C. Correspondingly, Schedule EI (Exempt Income) which provided for exemption of dividend income up to Rs 10 lakh has been correspondingly revised.

5. Additional reporting requirement of nature of security

Schedule 112A and Schedule 115AD require reporting of various details in respect of long term capital gains arising on transfer of securities, being equity shares, units of equity-oriented mutual fund or units of business trust, provided transfer of such capital asset is chargeable to Securities Transaction Tax (STT). Now, a new column has been added under both the schedules for reporting the nature of security i.e. whether it is a share or unit. Further, since the gains in such a case is grandfathered till 31 January 2018, the relevant details pertaining to Sale price, FMV as on 31 January 2018, etc. in accordance with Section 55 of the IT Act would be required to be reported in the ITR.

6. Reporting of details of tax deducted under section 194M

Section 194M provides for TDS to be deducted at the rate of 5 per cent from the payment made to a contractor or commission agent or broker or professional by an Individual/HUF (who are not subjected to the tax deduction provisions under section 194C, 194H & 194J) and accordingly, for details of tax deducted under section 194M, certificate in Form 16D will be issued under Rule 31. The ITR forms have been amended to provide reference of Form 16D in case of tax deducted at source under section 194M. However, it is notable that no such deduction under this section shall be made if such sum or, as the case may be, aggregate of such sums, credited or paid to a resident during a financial year does not exceed Rs 50 lakh.

7. Other Changes

  • For employees who have received ESOPs from an eligible start-up referred to in section 80-IAC, the Part B of Schedule TTI now requires disclosure of the amount of tax which has been deferred relating to income on ESOP received as perquisite.
  • Separate effect of Marginal relief on Surcharge needs to be disclosed
  • Schedule DI required bifurcation of the tax investments in accordance with the extended due dates of last year has been removed from the ITR Forms as it is no longer applicable.
  • Earlier, all the income chargeable under section 115A read with section 194LC were subject to deduction of tax at a uniform rate of 5 per cent. As a result of the amendments brought about by the Finance Act, 2020, the rate of deduction is now 4 per cent in respect of interest payable in certain circumstances. This leads to two separate rates for deducting tax from income chargeable under section 115A read with section 194LC. Consequent changes have been made for separate disclosures in the ITR Forms.

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