Breaking from tradition of notifying income tax return (ITR) forms in April or May, the Income Tax (I-T) department has done so in the beginning of the calendar year itself. Forms ITR-1 (Sahaj) and ITR-4 (Sugam) — the simplest of the lot — were notified recently. It is a surprising move, but one that tax consultants say will work in favour of return-filers.
“Release of forms early on will help taxpayers comply on time,” says Archit Gupta, Founder and CEO, Cleartax.in. The detailed instructions and e-filing utilities, besides other ITR forms, could follow.
Here are the six significant changes this year.
Jointly own a house? Use ITR-2
Until assessment year 2019-20, you could use ITR-1 if you were a salaried employee or a pensioner with income of less than Rs 50 lakh, including interest income from savings/fixed deposits and owned one house property, subject to restrictions. “Now, you cannot use this form if you jointly own a house property,” says Kuldip Kumar, Partner, PwC.
It is common for couples to jointly buy houses to enhance loan eligibility and optimise tax benefits on housing loans. In assessment year 2020-21, they will have to fill the ITR-2 that requires extensive disclosures. This restriction is also valid for ITR-4.
Quote your passport number
The new forms now ask you whether you hold an Indian passport. If you do, you will have to mention your passport number. This is applicable to both ITRs 1 and 4, and perhaps also to other forms that will be notified in due course.
The flipside of taking foreign holidays
If you have taken international vacations with your family in the financial year 2019-20, brace yourselves for more disclosures. “If you have spent Rs 2 lakh or more on foreign travel, you cannot use ITR-1,” points out Gupta. If the form applicable to you is ITR-4, you will have to mention the amount in the form.
Disclose heavy usage of electricity
Similarly, ITR-4 seeks to know if your electricity consumption during the financial year 2019-20 topped Rs 1 lakh. If you answer in the affirmative, you will have to state the amount. Such individuals, too, cannot use ITR-1.
Huge deposits in current account
Have you deposited over Rs 1 crore in your current accounts during the year? If yes, you will not be allowed to use ITR-1. You will need to disclose the aggregate amount deposited in 2019-20 across current accounts in ITR-4.
Sugam and not-so-sugam disclosures
The new-look ITR-4 has phased out certain disclosures, while requiring some additional information in certain cases. “In the case of 44AD or 44ADA or 44AE (dealing with presumptive income), now the assessee will be required to give opening balance of cash in hand and opening balance of bank accounts and also will be required to give total amount received in cash during the year,” says Parizad Sirwalla, Partner and Head, Global Mobility Services, Tax, KPMG India. Closing balances, too, will have to be declared. On the other hand, some requirements have been relaxed.
“Now there will be no need to provide figures of unsecured loans, sundry debtors, sundry creditors, amount of closing stock, etc. as was required in the earlier years,” she adds.