The government has notified forms for filing tax returns for income earned in 2019-20, and made it mandatory for people to file ITR in case their deposits in a current account exceed Rs 1 crore or electricity bill in the fiscal is Rs 1 lakh or more.
The Central Board of Direct Taxes (CBDT) on May 30 notified Sahaj (ITR-1), Form ITR-2, Form ITR-3, Form Sugam (ITR-4), Form ITR-5, Form ITR-6, Form ITR-7 and Form ITR-V for the assessment year 2020-21 (income earned between April 1, 2019, to March 31, 2020).
The new ITR forms require taxpayers to furnish details of specified high-spend transactions, such as deposit of Rs 1 crore or more in a current account, expenditure of Rs 2 lakh or more on foreign travel or spending of Rs 1 lakh or more on the consumption of electricity, in case such persons are otherwise not required to income tax returns.
The department has also revised the I-T return forms to allow assessees to avail benefits of various timeline extension granted by the government following the COVID-19 pandemic.
Accordingly, the new ITR forms also require taxpayers to furnish details of tax saving investments/ donations made during June 2020 for 2019-20 separately.
The government has extended various timelines under the Income Tax Act, 1961, through the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020.
Accordingly, the time for making investment or payments for claiming deduction under Chapter-VIA-B of the I-T Act that include Section 80C (LIC, PPF, NSC etc.), 80D (Mediclaim) and 80G (Donations) for the financial year 2019-20 had been extended to June 30, 2020.
Nangia Andersen Consulting Director Shailesh Kumar said the benefit of simpler forms ITR 1, ITR 2 and ITR 4 would not be available to individuals, who are either director in a company or have invested in unlisted equity shares.
"The ITR forms are modified in line with new disclosure requirements made in the Income Tax Act for AY 2020-21." Taxpayers would need to be careful of these new disclosure requirements, before filing their ITR and to select an appropriate ITR form," Kumar said.
AKM Global Tax Partner Amit Maheshwari said this comes as a relief as now joint owners of house properties and big spenders can use the same Sahaj and Sugam forms, which are easier to fill.
"However, high spenders will have to disclose more information like foreign travel, electricity consumption and deposit in current account in the form itself," Maheshwari said.
Returns in ITR-1 Sahaj can be filed by an ordinarily resident individual whose total income does not exceed Rs 50 lakh, while Form ITR-4 Sugam is meant for resident individuals, HUFs and firms (other than LLP) having a total income of up to Rs 50 lakh and having presumptive income from business and profession.
While ITR-3 and 6 are filed by businesses, ITR-2 is filed by people having income from residential property; ITR-5 is filed by LLP and Association of Persons (AoP). ITR-7 is filed by person in receipt of income derived from property held under trust or other legal obligation wholly for charitable or religious purposes or in part only for such purposes.
Taxmann DGM Naveen Wadhwa said that for the assessment year 2020-21, the tax department has notified the ITR forms twice. In the month of January 2020, the department 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.
"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," Wadhwa said.
Usually, the income tax department notifies the ITR forms in the first week of April of the relevant assessment year. However, this year, the department had notified forms 1 and 2 in January. However, with exceptional circumstances arising out of the COVID-19 pandemic, the I-T department had to revise the forms and has now notified all ITR forms in the last week of May.
"The department has notified the forms without the return filing utility. Thus, a taxpayer, who is required to file the return, cannot do so until the return filing facility is made available on the e-filing portal," Wadhwa said.
Accounting solutions provider HostBooks founder and Chairman Kapil Rana said that in ITR-1, government employees have been bifurcated in state, central government and a new type as "NA" added to the list.
In ITR-4, PAN number is made optional if Aadhaar number is provided.
"It shows the intention that the government is putting all efforts to curb the tax leakages and also allowing law-abiding taxpayers to take benefit of the spent and investments made during the difficult time even if they are done after the completion of the assessment year. This also shows the intention to make the process simple and smoother," Rana added.
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