Key Changes In ITR Forms For Assessment Year

Transcription

1 Key Changes In ITR For Assessment Year

2 Background The Central Board of Direct Taxes (CBDT) has notified revised Income-tax Returns (ITR) forms for Assessment Year (AY) on 31 st March As a measure of rationalization and simplification, the existing nine ITR forms have been reduced to seven. The key changes in the ITR forms are summarized below Amendments/ Rationalization Simplified One Page ITR ITR 1 (Sahaj) - Introduced for individuals earning income from salary, pension, one house property and income from other sources. This ITR is for Individuals having total income below Rs. 50 Lakhs. - New 'ITR-1 Sahaj' has retained those deductions which are most frequently used by the taxpayers, viz, under Section 80C, 80D, 80G and 80TTA. However, if the taxpayer wants to claim deduction under any other provision of chapter VI-A, he can specify the relevant section in the column titled 'Any other' deduction. - Schedules of TDS and TCS have been merged into one in order to make ITR 1 shorter and simpler. - Further, new columns have been provided to report dividend income (below 10 lakhs) and long-term capital gains exempt under Section 10(34) and Section 10(38) of the Income-tax Act, 1961 (the Act) respectively. - Further Asset & Liability Schedule, Gender, Type of bank account, Details of Tax Return Preparer, Unique withholding tax certificate number of withholding tax deductor have been excluded. Merger Of ITR 2, ITR 2A & ITR 3 ITR 2 - The existing ITR 2, 2A, 3 have been rationalized and a single ITR 2 has been notified in place of these forms. - individuals who are not eligible to use ITR-1 will have to use the new ITR-2 form provided they do not have income from business or profession.

3 Renumbering Of Old ITR 4 & ITR 4S and status of existing ITR (ITR 5, 6, 7) New ITR 3 & ITR 4 (Sugam) Quoting of Aadhaar Number # ITR 1, 2, 3, 4 (Sugam), 5, 7 Disclosure of cash deposits during demonetization ITR 1, 2, 3, 4 (Sugam), 5, 6, 7 - As existing ITR 3 Has been merged with New ITR 2, The existing ITR 4 has been renumbered as ITR 3. The New ITR 4(Sugam) also called as ITR 4S previously has been introduced with changes. - New ITR-3 can be used in cases where the individual has income from business or profession and similarly new ITR-4(Sugam) can be used in cases where the individual has income from business and profession and opts for presumptive taxation. - The existing ITR ITR 5, 6, 7 have been retained with modifications. - The Finance Bill, 2017 as passed by Lok Sabha has introduced a new Section 139AA requiring every person to quote Aadhaar number in the return of income. If any person does not possess the Aadhaar Number but has applied for the Aadhaar card then he can quote Enrolment ID of Aadhaar application in the respective ITR. - It may be noted that firms are also required to Quote Aadhaar number of their Partner/members in new ITR 5. - Further, in case of trust Aadhaar number of Author(s) / Founder(s) / Trustee(s) / Manager(s), etc., are required to be specified in new ITR 7. - A new column has been introduced in all ITR to report on cash deposited by taxpayers in their bank accounts during the demonetization period, i.e., from November 9, 2016 to December 30, However, taxpayer are required to fill up this column only if they have deposited Rs 2 lakh or more during the demonetization period.

4 Income Taxable At Special Rates - Unexplained Income Income Taxable At Special Rates - Dividend above Rs 10 lakhs Income Taxable At Special Rates - Patent Income Deduction under section 80EE Declaration of value of assets and liabilities by Individuals/HUF earning above Rs 50 lakhs ITR 2, 3, 5, 6, 7 - As per Section 115BBE any unexplained credit or investment attracts tax at 60% (plus surcharge and cess, as applicable), irrespective of the slab of income. - Now new columns have been inserted in ITR under 'Schedule OS' to report such unexplained income under 'Schedule SI'. - It may be noted that any taxpayer having unexplained income cannot opt for ITR-1 Sahaj. ITR 2, 3, 5 - As per Section 115BBDA the dividend received from domestic company is taxable at rate of 10% if aggregate amount of such dividend exceeds Rs. 10 lakhs. New column has been inserted in ITR to declare such dividend income in 'Schedule OS'. - It may be noted that any taxpayer having dividend income above Rs 10 lakhs and covered under Section 115BBDA cannot opt for 'ITR-1 Sahaj'. ITR 2, 3, 5, 6, 7 - A new column has been inserted in ITR forms to declare royalty income from patent developed and registered in India and chargeable to tax at 10 per cent under Section 115BBF of the Act. ITR 2, 3, 4 (Sugam) ITR 2, 3, 4 (Sugam) - Section 80EE allows deduction on home loan interest for first time home buyers. This deduction is over and above the INR2 lakh limit covered under Section 24(b) of the Act. - A new field has been provided in new ITR forms under Schedule VI-A deductions to claim home loan interest under Section 80EE of the Act. - During 2016, the Government had introduced a new schedule requiring individuals/hufs to declare the value of assets and liabilities

5 Registration number of Chartered Accountant Firm Bifurcation of receipt/expenses from business and profession in no account case. Deduction of additional depreciation in case of asset put to use for less than 180 days in preceding year If there total income exceeds 50 lakhs. - Taxpayers were required to mention the cost of immovable property, jewellery, bullion, vehicles, shares, bank and cash balance, etc. - Now taxpayers are also required to disclose description and address of the immovable property and movable assets in new ITR forms. - Further, new fields have been introduced in ITR forms for disclosure of I terest held in the assets of a firm or Association of Person (AOP) as a partner or e ber. Such members /partners are also required to disclose the name, address, PAN of the firm or AOP. ITR 3, 5, 6 - Now taxpayers are required to provide registration number of the firm of Chartered Accountant which has done an audit in ITR forms. ITR 3, 5 - In existing ITR there was no option to bifurcate income and expense of business and profession separately. All receipts were to be clubbed together and shown in ITR. - Now in new ITR forms, there is an option to show receipts from business and profession separately. ITR 3, 5, 6 - In case of purchase of an asset which is put to use for less than 180 days, additional depreciation shall be restricted to 50% for that year and remaining would be allowable in the succeeding year. - In existing ITR, no column was there under 'Schedule DPM' to claim unutilized 50% additional depreciation in succeeding year. Now in new ITR such column has been inserted to claim unutilized 50% depreciation.

6 Segregation of digital receipts and other receipts under presumptive taxation scheme ITR 4 (Sugam) - As per the presumptive taxation scheme under Section 44AD, 8% of gross receipts or turnover will be deemed as income of the taxpayer. However, in 2017 Union Budget such limit has been proposed to be reduced to 6% for digital receipts of taxpayer. - In new ITR form, new columns have been inserted to show turnover received through digital mode. Consequently, columns have been inserted to show presumptive income at 6% and 8%. - The Finance Act 2016, had introduced the presumptive taxation scheme for professionals as well. Now new ITR 4 shows an option to avail such presumptive taxation scheme for professionals under Section 44ADA. Details of receipts as mentioned in 26AS under TDS schedule ITR 4 (Sugam) - ITR 4 which is now applicable for taxpayer opting for presumptive taxation scheme has a new column under the 'Schedule TDS2' to show the receipts as mentioned in 26AS. - TDS2 shows details of TDS on income other than salary. Details of tax collected at source ITR 4 (Sugam) - Details of the amount paid as mentioned Disallowance for non-deducting or non-payment of Equalisation levy in 26AS are required to be disclosed. ITR 3, 5, 6 - The Finance Act, 2016 has introduced new provision to deduct 1% Equalization Levy on payment made for certain advertisement services paid to non-residents. - Any default in deduction or payment of Equalization levy would attract disallowance of Section 40(a)(ib). In new ITR a new column has been inserted under 'Part A-OI' to mention such disallowance under section 40(a)(ib).

7 Disallowance of any amount payable for the use of railway assets Reference to the balance sheet as on the date of dissolution Reporting of private discretionary trust New schedule to report 'receipt and payment' account of a company under liquidation Additional Information - Whether domestic company opting for reduced corporate tax Additional Information To disclose Turnover/Gross Receipts. Reporting of balance sheet as on the date of amalgamation ITR 3, 5, 6 - Any sum payable by the taxpayer to the Indian Railways for the use of railway assets shall be allowed as a deduction on actual payment basis as per Section 43B of the Act. - A new column has been inserted under Part A-OI for disallowance under Section 43B in the case of non-payment of such amount on or before the due date of furnishing return of income. ITR 5 - ITR 5 has been amended to include reference to the balance sheet as on the date of dissolution, if any, if it is prior to the last date of the financial year. ITR 5 - In the case of a private trust, the new ITR form requires reporting details such as whether the trust is specific or discretionary and whether the trust has business income. ITR 6 - A new schedule 'Part A-OL' has been inserted in ITR 6 to furnish details of 'receipt and payment' account of company under liquidation. ITR 6 - The new ITR has added an additional question whether in case of domestic company they are opting for Section 115BA (which provides for reduced corporate tax rate of 25 per cent subject to non-claiming of deductions and depreciation) ITR 6 - There is an additional requirement in the case of the domestic company if total turnover/gross receipts in the previous year exceeds Rs. 5 crore. ITR 6 - The new ITR form requires reporting of the balance sheet as on the date of amalgamation. This is applicable to the amalgamating company.

8 Total number of saving and current bank accounts held in India Key changes related to ITR 7 ITR 7 ITR 2, 3, 4, 5, 6, 7 - Details of total number of savings and current bank accounts held by the taxpayer at any time during the previous year (excluding dormant accounts) are no longer required to be stated in the income tax return. Various changes have been introduced in the new ITR 7 form applicable to a charitable trust. Now trusts are required to furnish following additional details in new ITR 7 Registration number and date of registration for business trusts registered with the Securities & Exchange Board of India. Reporting of an aggregate of income on account of charitable activities referred to in Section 11 and 12 excluding voluntary contribution. Reporting of the amount applied to charitable or religious purposes (revenue account). Reporting amount applied to charitable or religious purposes (capital account). Schedule 115TD to report accreted income of the trust in relation to exit tax levy on charitable trusts on violation of certain conditions under Section 115TD of the Act Manner Of filing Of Returns ITR 1, 2, 3, 4, 5, 6, 7 - The option of filing income tax return in paper form which is only available in ITR- 1 (Sahaj) and ITR-4 (Sugam) has been allowed to: - Super senior citizens (i.e. an individual of an age of 80 years or more during relevant financial year) or - An individual/ Hindu Undivided Family whose total income does not exceed Rs. 5 Lakhs and there is no claim of refund.

9 # Making Aadhaar as a mandatory requirement to file a tax return in India is a significant change and will impact all those individuals who have tax filing obligation but are not having Aadhaar as yet. Even though who have Aadhaar, need to get it linked with their PAN. If by any chance, the details as per PAN are not matching with Aadhaar details, the same would need to get rectified immediately. For expatriate employees this could be another compliance requirement to obtain an Aadhaar number. The Finance Act, 2017 has made it mandatory to enroll for Aadhaar in order to file a return in India or apply for a PAN or keep the existing PAN active. This change is effective from 01 July, 2017 and applies to those who are eligible for Aadhaar. Under the Aadhaar Act, individuals who are in India for more than 182 days in aggregate in the past 12 months, become eligible to obtain Aadhaar. Those expatriate who have already left India or NRIs who are not physically present in India and have a tax filing obligation, may face practical challenges to obtain Aadhaar. They should consider either filing the return before 01 July, 2017 or they may be required to visit India for Aadhaar. One may expect clarification from the Government to either relax this requirement for such individuals or make some arrangement where such individuals are able to obtain Aadhaar overseas. Snapshot Of New ITR ITR Description ITR 1 - For individuals earning income from salaries, one house property, other sources (interest, etc.) and having total income up to INR50 lakh. ITR 2 - Individuals and HUFs not carrying out business or profession under any proprietorship. ITR 3 - For individuals and HUFs having income from a proprietary business or profession. ITR 4 - For presumptive income from business and profession. ITR 5 - For persons other than (i) individual, (ii) HUF, (iii) company and (iv) person filing ITR. ITR 6 - For companies other than companies claiming exemption under Section 11 of the Act. ITR 7 - For persons including companies required to furnish return under Sections 139(4A) or 139(4B) or 139(4C) or 139(4D) or 139(4E) or 139(4F) of the Act.

10 Page Intentionally Has Been Left Blank DISCLAIMER This publication contains general information which is provided on an as is basis without warra ties of a ki d, e press or i plied a d is ot intended to address any particular situation. The information contained herein may not be comprehensive and should not be construed as specific advice or opinion. This publication should not be substituted for any professional advice or service, and it should not be acted or relied upon or used as a basis for any decision or action that may affect you or your business. It is also expressly clarified that this publication is not intended to be a form of solicitation or invitation or advertisement to create any adviser-client relationship. Whilst every effort has been made to ensure the accuracy of the information contained in this publication, the same cannot be guaranteed. We accept no liability or responsibility to any person for any loss or damage incurred by relying on the information contained in this publication. Copyright 2017 CRK & ASSOCIATES Chartered Accountants. All Rights Reserved.

11