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Changes in ITR Forms

With the dawn of the new financial year, new changes have been introduced in the income tax return forms. Through these changes, the government has made an effort to simplify the process of tax filing for taxpayers. The Central Board of Direct Tax, the income tax regulator, has notified new ITR forms. These forms will be applicable for income earned for the financial year 2016-17 i.e. for the period from 1st April 2016 to 31st March 2017 (Assessment Year 2017-18). This change is supposed to encourage the potential taxpayers to file their tax returns.

The total number of ITR forms has been reduced from 9 to 7. The previous ITR-2, ITR-2A and ITR-3 have been done away with and merged to new ITR-2. The previous ITR-4 is now ITR-3, and ITR-4S (Sugam) is henceforth ITR-4 (Sugam).

The changes in the new ITR forms are mentioned below:

Simplified one-page ITR Sahaj (Form 1) for Salaried taxpayers

Out of all the changes, the major change is the simplified one-page ITR Sahaj (Form 1) for individuals with income up to Rs.50 lakhs. The form will apply to individuals, whose income includes the following:

  • Income from salary/pension
  • Income from one house property
  • Income from other sources like interest income, etc.

But, this form will not find applicability if, the taxpayer’s income includes:

  • Dividend income exceeding Rs. 10 lakh
  • Unexplained cash credit or investment

The government has removed those columns that are not used frequently by the taxpayers. However, it has retained the deductions columns that are often used by the taxpayers under Section 80C, 80D, 80G and 80TTA. In case a taxpayer wishes to claim deduction under another provision of chapter VI-A, then he/she can mention that section in the column titled as ‘Any Other.’

Also, schedules of TDS and TCS have been merged in one.

New columns have been inserted in the new ITR 1 to report dividend income as well as long-term capital gains exempt under Section 10(34) and Section 10(38) respectively.

The form ITR-1 no longer has the asset and liability column. Before this, taxpayers were required to declare their assets and liabilities while filing ITR, if their income exceeded Rs.50 lakhs in a financial year. From now on, a person with income exceeding Rs.50 lakhs cannot file ITR-1. However, other forms continue to have this column.

Disclosure of cash deposited during demonetisation

Please provide the details of all the savings and current accounts held by you at any time during the previous year. However, it is not mandatory to provide details of dormant accounts which are not operational for more than 3 years. Please indicate the account in which you would like to get your refund credited irrespective of whether you have refund or not. The account number should be as per Core Banking Solution (CBS) system of the bank. The amount of cash deposited during 09.11.2016 to 30.12.2016 in the said bank accounts should also be filled. In case cash is deposited during 09.11.2016 to 30.12.2016 in any account other than the current and savings account (viz. loan accounts etc.), then details of such account indicating the cash deposited in the said account during the said period should also be provided. It may be noted that details of cash deposited are to be provided, if the aggregate amount of cash deposited during 09.11.2016 to 30.12.2016 is Rs.2 lakh or more.

Mandatory quoting of Aadhaar Number (ITR 1, 2, 3 & 4)

The new Section 139AA requires every taxpayer to quote Aadhaar number or Aadhaar enrolment number while filing income tax return.

Income taxable at special rates

  • Unexplained income

According to section 115BBE of the IT Act, any unexplained credit or investment is taxable at 60% (along with surcharge and cess, as applicable), irrespective of the income slab. Hence, a new field has been inserted in the revised forms ITR 2, 3, 5, 6 and 7, under the ‘Schedule OS’ to report unexplained income under ‘Schedule SI.’

  • Dividend exceeding Rs. 10 lakhs

Dividend income received from a domestic company, exceeding Rs.10 lakhs covered under Section 115BBDA of the Income tax Act attracts tax at 10%. Such dividends must be declared in ‘Schedule OS.’

Registration number of CA firm

With respect to the revised ITR 3, 5 and 6, taxpayers must disclose the name and the membership number of CA signing audit report in addition to the name, registration number and PAN of audit firm.

Deduction under section 80EE

There is an addition of a new field in the new ITR forms 2, 3 and 4 under schedule VI-A deduction to claim home loan interest under Section 80EE of the IT Act.

Declaration of value of assets and liabilities by Individuals/HUF earning more than Rs.50 lakhs

In the case of the revised return forms ITR 2, 3 and 4, taxpayers must disclose the following:

  • Description and address of the immovable property and movable assets,
  • Interest held in the assets of a firm or Association of Person (AOP) as a partner or member,
  • The name, address, PAN of the firm or AOP

Apart from this new ITR-2 form also requires the individuals to report details of their Financial Assets like Bank Deposits, Shares/Securities, Insurance Policies, Loans, Cash in hand, etc. which was not required in old ITR-1,2 or 3.

Segregation of digital receipts and other receipts under presumptive taxation scheme

According to the presumptive taxation scheme under section 44AD, 8% of the gross receipts/turnover is considered as the income of the taxpayer. Government’s thrust on digital India can be seen in the Union Budget 2017, where the limit has been proposed to be reduced to 6% for digital receipts of the taxpayer. Hence, in the new ITR 4 form, new columns have been inserted to show presumptive income at 6% (for turnover received through digital mode) and 8%.

Also, the revised ITR 4 form provides an option to professionals to avail presumptive taxation scheme under Section 44ADA.

Bifurcation of receipt/expenses from business and profession in no account case

The new ITR forms 3 and 5, provides an option to show receipts from business and profession separately.

Details of receipts in Form 26AS under TDS schedule

There is an addition of a new column in the ITR 4 form under the ‘Schedule TDS2′ to show the receipts as mentioned in the Form 26AS

Option to file physical return for Senior Citizens

People, who are over 80 years of age or individual and HUF with total income less than Rs.5 lakh, have the option to file tax return in paper form.

The below table specifies the applicability of the revised ITR forms:

Form No. Applicability
ITR 1 Individuals and HUFs earning income from salaries, one house property, and other sources (interest etc.) with total income up to Rs.50 lakhs.
ITR 2 Individuals and HUFs not carrying out business or profession under any proprietorship. ITR 2 is applicable for individuals and HUFs, who are partner in partnership firm.
ITR 3 Individuals and HUFs having income from Proprietary Business or Profession
ITR 4 Presumptive Income from Business or Profession as per section 44AD/44ADA/44AE
ITR 5 Firm (including limited liability partnership firm), Cooperative Society, Private Discretionary Trust, BOI (Body of Individuals), AJP (Artificial Judicial Person).
ITR 6 Company (other than companies claiming exemption u/s 11)
ITR 7 For Person specified u/s 139(4A), 139(4B), 139(4C), 139(4D), 139(4E), 139(4F)

 

The overall changes made to the old ITR forms seems to be a welcome move as it will minimise the compliance burden on the part of the taxpayer.

 

HRBlockIndia
HRBlockIndia
H&R Block India strives to blend tax expertise with a strong focus on continually improving the client experience to provide all its clients with an unparalleled value proposition for filing their Income Tax Online.

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