ITR-1 has been modified to include deductions being claimed under Chapter VI A for investments being made during April to June 2020. This is in line with the extended timeline being announced as part of Covid-related relaxations.
The Income Tax Department has notified the new Income Tax Return (ITR) forms for FY 2019-20/ AY 2020-21 twice. In the month of January 2020, the I-T Dept had notified two ITR forms — ITR-1 and ITR-4. Now, in the month of May 2020, all ITR forms (ITR-1 to ITR-7) have been notified, which eventually replace the two previously-notified forms.
When the ITR Forms (ITR 1 and ITR 4) were notified in January 2020, Rule 12 was amended to provide that ITR-1 cannot be used by a person falling under two categories, namely, First, who owns a house property in joint-ownership and Second, who has entered into specified transactions mentioned in the seventh proviso to section 139(1), that is, payment of electricity bill in excess of Rs 1 lakh, a deposit of more than Rs 1 crore in one or more current accounts, etc. However, a person falling under the second category is allowed to furnish a return in ITR-4.
“Immediately after notifying the changes to Rule 12, the government announced to withdraw the prohibition on filing of return in ITR-1 and ITR-4 by a person falling in the above referred to categories. The recent notification maintains status-quo by removing these prohibitions. Thus, a person owning a property in joint-ownership or covered under the seventh proviso can file return in ITR-1 or ITR-4 if they fulfil other conditions. Further, in the new ITR forms, a new Schedule DI has been inserted to seek details of the investment, deposit and payments made during the extended period till June 2020 for claiming deduction under Chapter VI-A or for rollover of investment in the Financial Year 2019-20,” says CA Naveen Wadhwa, DGM, Taxmann.
The new ITR forms have introduced new additional columns and schedules. These changes have been introduced to capture new, yet essential information. Some changes are consequential to the amendments made to the Income-Tax Act by the recent Finance Acts.
So far as the ITR-1 is concerned, it has now been modified to include deductions being claimed under Chapter VI A for investments being made during April to June 2020. This is in line with the extended timeline being announced as part of Covid-related relaxations.
Saraswathi Kasturirangan, Partner, Deloitte India, says, “The ITR-1 issued in January sought detailed information with respect to salary income as well as house property income such as TAN, Name of employer and address, tenant details like name Pan or Aadhaar. However, these details are no longer being sought as per the current ITR-1. The ITR-1 also now captures information on whether the taxpayer has cash deposits exceeding Rs 1 crore, expenditure on foreig travel exceeding Rs 2 lakh or electricity expenses exceeding Rs 1 lakh since these trigger tax filing requirements even where the taxpayer does not have taxable income.”
The above changes relating to investments made during extended timeline, tax return filing triggered in account of specified deposits/ expenses are also reflected in ITR 2. Further ITR 2 provides the option to indicate either the Aadhaar no or PAN of the deductee where the taxpayer has withheld taxes on rent paid exceedings Rs 50,000 per month or purchase of property of value exceeding Rs 50 lakh.
“The new ITR 2 form also seeks information such as type of company in which the tax payer were a director/ or held unlisted equity shares and detailed details in case of sale of equity shares. These are not new requirements since these details were part of the excel utility for last year,” says Kasturirangan.
Here we are taking a look at the new ITR-1 Sahaj form for AY 2020-21 and what details or additional info it seeks from taxpayers.
1. Income Details
# Income from salary/pension (for ordinarily resident person)
# Income or loss from one house property (excluding brought forward losses and losses to be carried forward)
# Family Pension (for ordinarily resident person)
# Income from other sources (other than income chargeable to tax at special rates including winnings from lottery and race horses or losses under this head)
2. New ‘Schedule DI’ to furnish details of investments made during the extended period
The Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020, promulgated by the President of India on 31-03-2020, has extended the time-limit till 30-06-2020 to make investments, deposits, payments, etc. for the financial year 2019-20 for claiming deduction under Chapter VI-A, section 10AA and section 54 to 54GB. As exceptional circumstances due to the COVID-19 pandemic have arisen for the first time, the existing ITR forms had no option to allow the deduction if investments are made by the taxpayers after the end of the financial year. Thus, a new Schedule DI has been inserted in the ITR forms to allow taxpayers to avail the deduction for the investments/deposits made during the extended period.
‘Schedule DI’ is bifurcated into the following three parts:
(a) Part A seeks details of the investment, deposit, or payments made to claim deduction under Chapter VI-A;
(b) Part B seeks detail of eligible amount of deduction available under section 10AA; and
(c) Part C seeks details of payment, acquisition, purchase or construction made to claim deduction under Sections 54 to 54GB.
“It must be noted that though the time limit for making investments has been extended by 3 months, but there is no increase in the threshold limit available under respective sections. Example, if a taxpayer is claiming deduction under section 80C, the aggregate amount of deduction for investment/ payment made during the period of 01-04-2019 to 31-03-2020 and 01-04-2020 to 30-06-2020 shall not exceed Rs 150,000,” informs Wadhwa.
3. Additional details to be furnished by a person who is filing return under the Seventh proviso to section 139(1)
To ensure that individuals, entering into certain high-value transactions, furnish the income-tax return, the seventh proviso to section 139 was inserted by the Finance (No. 2) Act, 2019. The provision requires every person, who is otherwise not required to file the return due to the reason that his income does not exceed the maximum exemption limit, to file the return of income if during the previous year he has:
(a) deposited more than Rs. 1 crore in one or more current account maintained with a bank or a co-operative bank;
(b) incurred more than Rs. 2 lakh for himself or any other person for travel to a foreign country; or
(c) incurred more than Rs. 1 lakh towards payment of electricity bill.
If an assessee is required to file the return of income in the circumstances covered under the seventh proviso to Section 139(1), he is required to furnish the relevant details in ITR form, that is, amount deposited in the current account, the amount incurred on the foreign travel or amount paid toward electricity bill.