The new ITR form requires taxpayers to provide detailed information of their income—break-up of salary and income from house property, thereby limiting the reasons for further scrutiny assessment.
Every year the government comes up with changes in income tax return forms (ITRs) which is a personal disclosure of one’s income and assets. By notifying the new ITR forms just before the commencement of the tax filing season, the CBDT has provide sufficient time to taxpayers for filing tax returns.
It is important to understand the changes in ITR forms for assessment year 2018-19 and their impact.
Corporate taxpayers having turnover less than Rs 10 million will have to provide detailed break-up of total expenditure with GST registered and non-registered entities. However, taxpayers covered under the composite scheme of GST may not have maintained such break-up. This additional compliance to provide the break-up in the ITR form will burden the taxpayers.
Individual tax payers
The new ITR forms require taxpayers to provide detailed information of their incomes—break-up of salary and income from house property. The ITR will now show a detailed computation of income, thereby limiting the reasons for further scrutiny assessment.
The scope of reporting details of assets held in business has been expanded substantially for taxpayers covered under the presumptive taxation. An obligation to submit balance sheet details is contrary to the legislative intent of simplifying the compliance requirement for such taxpayers and is also contrary to the provisions under the Act which exonerate such taxpayers from maintaining detailed books of account.
However, the new ITR form doesn’t require an assessee to disclose their interest held in the assets of a firm or association of persons (AOP) as a partner or member, in the Assets and Liability Schedule (required where income exceeds `50 lakh). This
relaxation in disclosure requirements shall provide relief to the taxpayer, since valuation of interest in the assets of a firm / AOP was a challenge.
Small corporate taxpayers
Definition and scope of turnover for GST levy is materially different from that in financial statement and hence the additional disclosure requirement of GST turnover will entail additional effort. This is particularly owing to the fact that the taxpayer may have to keep the reconciliation between turnover and other details as per financial statements and GST returns readily available for future inquiry from the income tax department.
In order to overcome the challenge faced by the income tax department in identifying the real owner of shares and funds through the presence of a web of intermediary companies, in case of unlisted companies, it has adopted a look-though approach by ignoring individual identity/existence of intermediary corporates. Now the unlisted companies are required to provide details of ultimate beneficial owners of shares, being natural persons, during the relevant year.
Changes for non-resident taxpayers
To ensure that capital gain tax exemption / beneficial rate is claimed only in genuine cases, additional details are required to be furnished where a non-resident is claiming the beneficial provisions of the Double Taxation Avoidance Agreement (DTAA). Also, Section 50CA was introduced by Finance Act 2017 providing that in case of unquoted shares, fair market value shall be considered as full value of consideration if it is higher than consideration received. In light with this, full value of consideration, fair market value determined in the prescribed manner needs to be reported and accordingly, computation shall be made.
Where a non-resident is claiming concessional tax under Section 115-H, he shall be required to furnish additional details to substantiate the claim.
Additionally, to strengthen and fasten the process of refund to non-residents, the new ITR form allows the non-resident taxpayer to submit details of any one foreign bank account for the purpose of crediting tax refund due. This shall address the long standing concern of non-resident taxpayers seeking tax refund, where an Indian bank account was required to be furnished to receive the tax refund. This may help them receive timely tax refunds.
So, now a taxpayer can no longer be casual about the information given by him. Through stringent measures the government is closing all loopholes in income tax rules that encouraged tax evasion.
The writer is executive director,
Nangia & Co LLP