Key Amendments in Income Tax Return Forms
The Central Board of Direct Taxes has recently notified the Income Tax Returns (‘ITR’) forms applicable for Assessment Year 2019-20, vide Notification No.32/2019 dated April 01, 2019. Taxpayers are required to file their return of income in the applicable ITR form, based upon the prescribed criteria.
Certain changes have been made to the return forms as prescribed vis-à-vis last year, in respect of their applicability as well as disclosure requirements. The amended applicability criteria has been provided hereunder
ITR No. and Applicability
ITR 1 (SAHAJ)
For Individuals being a resident other than not ordinarily resident having Income from Salaries/ Pension or one house property or income from other sources and having total income upto Rs. 50 lakhs.
ITR 1 is not applicable to:
- an individual who is a director in a company
- an individual who has held unlisted equity shares at anytime during the previous year
- Income from business/ profession and capital gains
- Agricultural income exceeding Rs. 5,000/-.
- Assessees having foreign assets/ income/ signing authority in any foreign account.
- Double taxation relief claim under section 90/91/90A
- where there is brought forward loss or loss is to be carried forward
- income from other sources such as winnings from lottery, race horses or dividend income taxable under section 115BBDA, income under section 115BBE i.e. (cash credits, unexplained investments/money/ expenditure etc)
- loss under the head income from other sources (specified as per instructions of filing return of income)
- Individual who is taxable for an income in respect of which tax is deducted in the name of other person
For Individuals and HUFs not having income from profits and gains of business or profession.
For individuals and HUFs (including partner in a firm) having income from profits and gains of business or profession
ITR 4 (SUGAM)
For resident and ordinarily resident individuals and HUFs as well as Resident firms, (other than LLP) having presumptive income from business & profession under section 44AD (eligible business), 44AE (business of plying, hiring or leasing goods carriages) and 44ADA (specified professions) and having total income upto Rs. 50 lakhs.
ITR 4 (Sugam) is not applicable to:
- Individual who is either a director in a company
- has held unlisted equity shares at any time during the previous year
- Agricultural income exceeding Rs. 5,000/-
- Assessee’s having foreign assets/ income/ signing authority in any account located outside India.
- Income from speculative business/ agency business/ commission/ brokerage/ special income
- Income from Capital Gains,
- Income from more than one House Property
- Income from other sources such as winnings from lottery, race horses or dividend income taxable under section 115BBDA, income under section 115BBE i.e. (cash credits, unexplained investments/money/ expenditure etc)
- Loss under the head income from other sources (specified as per instructions of filing return of income)
- Where there is brought forward loss or loss is to be carried forward
- Double taxation relief claim under section 90/90A/91
- Individual who is taxable for an income in respect of which tax is deducted in the name of other person
For persons other than, (i) individual, (ii) HUF, (iii) company and (iv) person filing Form ITR 7 (i.e. for firm, LLPs, AOP etc.). This form is also applicable to Business Trusts and Investment Funds.
For Companies other than companies claiming exemption under section 11
For persons including companies required to furnish return under sections 139(4A) or 139(4B) or 139(4C) or 139(4D). (i.e. for charitable trust, research associations, universities, political parties etc.)
ITR 7 is not applicable to:
- Business Trusts
- Investment Funds
- Person required to pay MAT or AMT
Key changes made in the ITR forms prescribed for the AY 2019-20 have been summarised as under:
- Details with respect to days of stay in India
Under the new ITR 2 and 3 Form, individuals are required to disclose whether their duration of stay in the previous year as well as earlier years has exceeded the prescribed threshold for the purpose determination of residential status under the provisions of Section 6 of the Income-tax Act, 1961 (‘Act’). Furthermore, in case of non-resident individuals, additional details are also required to be reported by way of jurisdiction of residence and tax identification number.
- Modifications in relation to Salary income
- ITR 1, 2, 3 and 4 have introduced separate rows for all deductions allowable under Section 16, such as standard deduction, entertainment allowance and professional tax. Other columns have also been harmonised with Form 16 (Withholding Tax Certificate for Salaries) to facilitate easy reporting.
- Furthermore, in ITR 2 and 3, the TAN of employer is required to be disclosed instead of the PAN of the employer.
- A new row has been inserted in ITR-1, 2, 3 and 4, for claiming standard deduction of Rs. 40,000/- from salary income.
- Furnishing of information of Buyer of immovable property
ITR 2, 3, 5, 6 have been amended to seek additional information of the buyer of immovable property i.e. name of buyer, PAN of buyer, percentage of share (in case of more than one buyer), amount, address of property and pin code.
It may be mentioned that furnishing of PAN is mandatory if tax has been deducted under section 194-IA or if the PAN is quoted by the buyer in the registration documents.
- Enhanced reporting in relation to House Properties
Option of ‘deemed let out’ property has also been inserted in ITR-1 and 4 in respect of the house property which has not been claimed as ‘self-occupied’ by the assessee.
A new row has been inserted in all the ITR forms (1, 2, 3, 4, 5, 6 and 7) for arrears/unrealised rent. Earlier, the arrears/unrealised rent were required to be reported for all the properties in aggregate. In the new ITR forms, arrears/unrealised rent are to be reported separately in respect of each property.
- Bifurcation of Gross Receipts
ITR 3, 5 and 6 have been amended to report gross receipts in two parts i.e. through account payee cheque/ draft/ ECS and secondly, through any other mode in case where books of accounts are not maintained under section 44AA of the Act.
- Income tax department seeks more information regarding speculative business
A new schedule has been inserted in ITR 3, 5 and 6 for separate disclosure of income/loss from speculative activities.
- Reporting of Pass through Income
Persons holding units of business trusts and investment funds are liable to tax on certain income which are considered as pass through in the hands of such Business Trust and Investment Funds. ITR 2, 3, 5, 6 and 7 have introduced new columns for reporting of pass through income in Schedule OS (Income from Other Sources), Schedule HP (Income from House Property), Schedule CG (Income from Capital Gains), Schedule SI (Income chargeable to tax at special rates) and Schedule EI (Details of Exempt Income). Such information shall flow from Schedule PTI (Pass Through Income) and is required to be reported separately under each head of income.
- Presumptive taxation on the basis of tonnage capacity
Section 44AE, which is a presumptive scheme applicable for businesses engaged in plying, hiring or leasing goods carriages, was amended by the Finance Act, 2018 with effect from April 01, 2019. In terms of such amendment, a presumptive scheme of computation of taxable income based on tonnage capacity of the vehicle was introduced. Necessary changes have been incorporated in ITR 2,3,4,5,6 and 7 to facilitate computation of income based on such tonnage capacity.
- Insertion of New Section 112A in the Income Tax Act
Vide the Finance Act, 2018, the exemption on long term capital gains from arising from transfer of securities being equity share, units of equity oriented mutual funds, available under Section 10(38) of the Act was withdrawn. Furthermore, a new Section 112A was inserted, in terms of which, tax shall be levied at a concessional rate of 10% on long term capital gains arising from transfer of securities being equity share, units of equity oriented mutual funds or units of business trust, if such long term capital gain exceeds Rs. One lakh. The ITR 2, 3, 5 and 6 have been accordingly amended to incorporate the provisions of Section 112A of the Act.
- Agricultural income exceeding Rs. 5 lakhs
Additional details are required to be reported by assesses in ITR-2, 3, 5 and 6 if their net agricultural income earned during the year exceeds Rs.5 lakhs, such as, the name of the district where the agricultural land is situated, whether the land is owned or leased, measurement of land in acres etc.
- Reporting of GST turnover
A new schedule (Schedule GST) has been inserted in ITR-3, 4, 5 and 6 to report GSTIN of the assessee and outward supplies as per GST return. It may be mentioned that in the ITR 6 applicable for earlier years, details with respect to transactions entered with registered or unregistered suppliers under GST were required to be reported. Such requirement has now been done away with.
- Enhanced reporting in relation to Foreign Assets
Schedule FA in ITR 2, 3, 5, 6, 7 has been amended to include details of Foreign Depository accounts, Foreign Custodial accounts, Details of investment held in equity or debt funds of a foreign entity along with details of any foreign cash value insurance contract or annuity contract held by the assessee.
Moreover, extensive details have been sought in respect of such additional disclosures, such as Country name, Code, address of the financial institution, account number etc.
- Bifurcation in statement of Profit and Loss
In ITR 3, 5, and 6, manufacturing account and trading account has been added in addition to the existing profit and loss account statement. Additional details are required to be furnished, such as, details of direct wages, direct expenses and factory overheads.
- Enhanced reporting requirements by start-ups and Unlisted companies
- In the new ITR form 5 and 6, start-ups are required to mention registration number allotted by Department for Promotion of Industry and Internal Trade (DPIIT), date of filing of Form 2 with DPIIT and certificate number of the certificate received from the ‘Inter Ministerial Board’.
- New Schedule SH 1 and 2 have been inserted in ITR-6 for unlisted company and for start-ups, respectively. Under these schedules, details of existing shareholder as well as of persons who were shareholders at any time during the previous year, such as name, PAN, number of shares held, type of shares, face value and issue price of shares etc, are required to be mentioned.
The requirement for disclosing assets has also been extended to companies by introduction of Schedule AL-1 in ITR 6. It may be mentioned that this schedule is mandatory only for unlisted companies.
Under such schedule, following details are required to be reported:
- Details such as details of land and building,
- Details of listed/ unlisted equity shares,
- Details of securities,
- Details of capital contribution to other entity,
- Details of loans and advances to any other concern,
- Details of motor vehicle, aircraft, yacht or other mode of transport
- Arising from transfer of securities being equity share, units of equity oriented mutual funds Jewellery, archaeological collections, drawings, paintings, sculptures, any work of art or bullion
- Details of loans, deposits and advances taken from a person other than financial institution.Also, Schedule AL-2 has been inserted for start-ups which have filed declaration in Form 2 under paragraph 5 of the DPIIT notification. Under this schedule, following details have been sought with respect to start-ups.
- Details of building or land appurtenant thereto, or both, being a residential house/ not being a residential house acquired since incorporation
- Details of Loans & Advances/ capital contribution made to any other entity since incorporation
- Details of acquisition of shares and securities
- details of motor vehicle, aircraft, yacht or other mode of transport, the actual cost of which exceeds Rs 10 lakhs since incorporation
- Details of Jewellery acquired since incorporation
- Details archaeological collections, drawings, paintings, sculptures, any work of art or bullion acquired since incorporation
- Details of loans, deposits and advances taken from a person other than financial institution
- Furnishing information regarding holding in Unlisted company
A new table has been inserted in ITR-2, 3 and 5 in terms of which, if an assessee holds unlisted equity shares at any time during the previous year, details such as name of the company, PAN of the company, number and cost of shares held at the beginning of the year, purchased / sold during the year, and held at the end of the year, are required to be reported.
- Information about Partnership firms also required to be furnished
Schedule IF has been inserted in the amended ITR 5 to seek additional information from partners of a partnership firm, such as, name of the firm, PAN of the firm, whether the firm is liable for tax audit or transfer pricing audit, profit sharing ratio in the firm, share of profit from the firm and capital balance as on 31st March of the previous year.
- Enhanced disclosure requirements to curb shell companies and ghost directors
If a person is a director in a company at any time during the previous year, such director is required to furnish the PAN, DIN, name of the company and whether the shares of the company in which he is a director are listed or unlisted. ITR 2 and 3 have been amended to reflect the aforesaid requirements. As such, ITR 1 and 4 cannot be used by such director to file their personal tax return.
- Persons liable to pay Alternate Minimum Tax (AMT)
If an Individual or HUF, not having income from business or profession is liable to pay AMT, ITR 2 shall be applicable, in which, the relevant Schedule AMT has been inserted.
- Marketed to Market Losses
Vide the Finance Act, 2018, marketed to market losses were made an admissible expenditure under section 36(1)(xviii) of the Act. The necessary amendments have been made in ITR 3, 5 and 6 to facilitate such deduction.
- Changes applicable only to ITR-6
- Finance Act, 2018 has increased the turnover limit from Rs. 50 crores to Rs. 250 crores to avail benefit of tax at concessional rate of 25%. The ITR-6 has been amended accordingly to incorporate such amendments.
- If a foreign company is covered under presumptive income provisions, being Section 44B, 44BB, 44BBA or 44BBB of the Act, it is required to report gross receipts as well as net profits from such business.
- A new row has been inserted in ITR 6 for dividend distribution tax leviable at the rate of 30% on deemed dividend under section 2(22)(e) of the Act.
- Foreign companies are required to provide details of their immediate and ultimate parent company such as name, address, country of Residence, PAN (if allotted), Taxpayer’s registration number or Unique Identification Number.
- Changes applicable only to Trusts in ITR 7
- Details of Registration other than Income Tax- In the new ITR form, trusts registered under Income Tax Act are mandatorily required to report details of registration or approval under any law other than Income Tax Act.
- Schedule AI, ER & EC required to be filed by specific persons- Under the erstwhile return forms, the Schedule AI, ER and EC were required to be filled by all persons filing ITR 7 (except Political Parties and Electoral Trust). In the new return form, the list of persons required to fill such Schedule has been specified to persons claiming exemption under sections 11, 12 or 10(23C)(iv), (v), (vi), (via).
- Detailed reporting in Schedule ER and EC Statement- The scope of Schedule ER and EC have been expanded to include reporting of source of funds used to meet revenue and capital expenditure and have been bifurcated into two categories i.e. Establishment and Administrative Expenses and Expenses incurred on objects of trust/ institutions.
Trusts are required to mention the following sources of funds:-
- Income derived from the property/income earned during previous year
- Income deemed as application in any previous year
- Income of earlier years up to 15% accumulated or set apart
- Borrowed Fund
- New Schedule for reporting Income and Expenditure- The new form requires the different trusts/institutions registered under different sections of Income Tax Act, to report their income and expenditure statement in Schedule IE-1, IE-2, IE-3 and IE-4 depending upon the section under which such exemption is claimed. Further, separate fields have been provided for claiming exemption under section 10(23AAA), (23EC),(23ED),(29EE) and (29A).
- Aggregate annual receipts from projects/institutions run by charitable trust/institutions are no longer required to be reported under the General information Schedule.
- Changes pertaining to Exemption- Exemption claimed under Section 11(1A) of the Act is now required to be reported in Schedule EC (Application of income on Capital Account) instead of Schedule CG (Capital Gains).
- Reporting of MAT or AMT- The schedule relating to MAT or AMT has been removed from ITR 7. As such, persons liable to pay MAT or AMT shall be required to file ITR 5 or 6, as the case may be.
- Separate reporting for violation of provisions of Section 13(1)(c)/(d)- ITR 7 requires separate reporting if exemption under section 11 is denied due to use of trust’s income for the benefit of its founders, trustees and their relatives, or investments / deposits made other than through the prescribed modes.
- Payment in cash in excess of Rs. 10,000/- disallowed- From the AY 2019-20, provisions of Section 40(a)(ia), 40A(3) and 40A(3A) are applicable on income of trusts and institutions. As such, trusts or institution making payment in excess of Rs. 10,000/- are required to follow the provisions of TDS and make such payment through banking channels only. Necessary changes in the return form have been made to reflect such disallowances.
- Amendments relating to separate reporting of some incomes
- In ITR 3, if the assessee is liable for audit under any Act other than Income Tax Act, then the assessee is required to furnish details regarding the Act, and provision under which audit is required and date of furnishing the Audit Report.
- In ITR 2, 3, 5, 6 and 7, details of Provident Fund withdrawals are to be reported assessment year wise and additional details relating to income benefit and tax benefit are also required to be reported.
- In ITR 1 and ITR 4, nature of income taxable under the head other sources and deduction claimed under section 57(iia) in respect of family pension is required to be specified.
- New columns have been inserted in all ITR forms (ITR 1, 2, 3, 4, 5, 6 and 7) for separate reporting of interest income from saving bank deposit, fixed deposits etc., Income-tax refund, income in the nature of pass through income etc.
- New columns have been inserted in ITR-2, 3, 5 ,6 and 7 to report income from dividend taxable under section 115BBDA, by the way of winnings from lotteries etc as per accrual or receipt of such income so that liability of advance tax can be determined.
- New rows for presumptive taxation under section 44AE (Income from Goods Carriage) have been inserted in profit and loss account of ITR 3, 5 and 6 wherein the assessee is required to mention the name, description, code as well as details about the carriage owned/ leased / hired. New rows have also been inserted in Profit & Loss account for computation of income under section 44AD (presumptive income from business) / 44ADA (presumptive income from profession) in ITR 3 and 5 wherein details such as Name, description, code, gross turnover/receipts etc are required to be reported.
- General revisions in ITR forms
- A new row has been inserted in ITR 1, 2, 3 and 4 for claiming deduction under the newly inserted section 80TTB, in terms of which senior citizens are allowed deduction of Rs. 50,000 in respect of interest income earned from deposits with banks post office or co-operative banks.
- In ITR 3, 5 and 6, if the assessee claims bad debts of more than Rs.1 lakh in respect of a debtor, then the assessee is required to report PAN of such debtor and if the PAN of the debtor is not available, the name and address of such debtor is required to be reported therein.
- A new row has been inserted in Part A OI (Other Information) of ITR 3, 5 and 6 seeking separate reporting of amount disallowed under section 14A.
- Capacity (such as legal heir, manager, guardian and other) under which a representative assessee is filing a return is also now required to be furnished in ITR 2, 3, 4, 5, 6 and 7).
- A new schedule has been inserted in ITR -1, 2, 5 and 6 for claiming deduction under section 80GGA i.e. donation towards scientific and rural development. Assessee making such donation are required to furnish the name, address and PAN of the donee, amount of donation made in cash or in other mode as well as and relevant clause under which deduction is claimed.
- New columns have been inserted in ITR 1, 2, 3, 4, 5 and 6 for amount of donation made in cash and any other mode for claiming deduction under section 80G by the assessee.
Senior Manager – Tax Advisory
Tel: +91 11 47103378