ITR 1-Sahaj, ITR 4-Sugam for AY 2020-21: What’s new and why ITR Forms are notified early

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Published: January 9, 2020 12:30:34 PM

Filing of Income Tax Returns (ITR) for the assessees, who needn't get their income audited, starts from April 1 every year just after the financial year ends on March 31.

income tax, income tax return, ITR, ITR Forms, ITR-1, ITR 1-Sahaj, ITR-4, ITR 4-Sugam, ITR-2, ITR-3, filing of ITR, ITR schema, passport number, electricity bill, foreign travelThe new ITR Forms seek more information and more people would have to file ITRs.

Filing of Income Tax Returns (ITR) for the assessees, who needn’t get their income audited, starts from April 1 every year just after the financial year ends on March 31. So, the Income Tax Department generally notifies the ITR Forms around the last week of March and releases the schema of ITRs in the beginning of April. For example, the original schemas of ITR 1-Sahaj and ITR 4-Sugam for the Assessment Year (AY) 2019-20 were released on April 9, 2019, but release of the original schema of other Forms were got delayed and the original schema of ITR-2 was released on May 2, 2019, while that of ITR-3 was released only on May 10, 2019.

However, this time the Income Tax Department has notified ITR-1 and ITR-4 for the AY-2020-21 as early as in the first week of January 2020.

“Every year government notifies Income Tax Return Form (ITR) either during last week of March or in the month of April. This time government has issued ITR-1 and ITR-4 well in advance to avoid any last minute rush in issuing these forms as well as extending the due date of filling income tax returns due to delay in issuance of ITR Forms,” said Gopal Bohra, Partner, NA Shah Associates LLP.

The new ITR Forms also seek some additional information like passport number and to bring more people in the tax rate, filing of ITR has been made mandatory for account holders who have deposited Rs 1 crore in current account in a year or for those who have spent over Rs 2 lakh on foreign travel in a year or for those who have paid more than Rs 1 lakh as electricity bill in a year.

“The new ITR form requires taxpayer to provide details of his passport number, foreign travel if spending is more than Rs 2 lakh in a year, actual electricity consumption if annual electricity bills in aggregate exceeds Rs 1 lakh, etc. With use of artificial intelligence the tax department will be able to map the income declared by the taxpayer with lavish spending on foreign travel or electricity and on mismatch of profile will automatically select the cases for assessment. Further, due to mandatory filling of income tax return by such person, the tax base will also increase,” said Bohra.

Although, the new ITR Forms seek more information and more people would have to file ITRs, but what would be the objective of notifying the Forms almost three months before start of the filing process?

“The early release of new ITR forms will enable the tax payers to understand the new reporting requirements and will have sufficient time to collate the data which are to be given in the new Forms. Further, if any clarification is required by the stakeholders in relation to reporting requirement the same can be addressed through FAQ or Circular by the government well before the start of tax return filling date of April 1, 2020,” said Bohra.

“Last year in the tax return form for the financial year 2018-19, government has asked the tax payer to provide details of holding of unlisted shares, directorship in companies etc, which has created lot of confusion amongst the taxpayer such as whether unlisted shares of foreign company or directorship in foreign company is required to be given in ITR both by resident or non-resident taxpayer etc. The same was later on clarified by the Central Board of Direct Taxes through FAQ issued on 08.08.2019 and 27.08.2019 and due to that last date of filling income tax return was extended from 31.7.2019 to 31.8.2019. It appears that this time in order to avoid such challenges government has issued these forms well in advance,” added Bohra.

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