The government has notified new Income-Tax Return (ITR) forms for 2018-19. These forms require some additional disclosures from assessees. Archit Gupta helps understand these changes in this article.
The income tax department, this time, has been very prompt in releasing the ITR forms for income tax return filing for the Financial Year (FY) 2017-18 in just about five days from the beginning of the new FY. Even though only the PDF version has been issued, very soon we can expect the excel utility/ schema/ instructions for respective forms so that e-filing can begin.
Here are some of the significant changes that have been introduced in the ITR forms this year for the Assessment Year (AY) 2018-19:
ITR 1:
Similar to AY 2017-18, a one-page simplified ITR Form-1 (Sahaj) has been notified for AY 2018-19 with certain modifications.
ITR-1, for AY 2018-19 can be filed only by a resident Indian with an income of up to Rs. 50 lakh (salary and other sources like property or interest). Therefore non-residents cannot file this form for reporting income of FY 2017-18.
Details of a break up of salary has been called for in the return which one is easily available in form 16. Such information can be auto-populated by using platforms such as ClearTax.Earlier, there was no requirement to furnish these details. Further, parts relating to house property have also been rationalized calling for a little more details pertaining to house property income.
The Finance Act 2017 introduced a mandatory levy of a fee under Section 234F for a delay in filing of return of income. Therefore, to accommodate this, an additional field for entering the fee under 234F has been added to the return
The Finance Act 2017 also introduced TDS on rent paid in excess of Rs 50,000. Therefore, to claim credit of such TDS, a field has been introduced to disclose this in the return.
ITR 2:
Since a non-resident cannot file his return in ITR-1 for AY 2018-19, he will have to file ITR-2 or other forms as the case may be
Further, this form, for AY 2018-19, would be applicable for individuals or HUF for reporting their income other than income from “Profits and Gains from Business or Profession” Therefore this form does not have Schedule ‘Business or Profession’ Further, field for interest held in the assets of a firm or association of person in Schedule AL has been removed as well.Partners of firms who could filed ITR 2 earlier can no longer file ITR-2.
ITR 3:
This form can be used by individuals and HUF receiving income under the head “Profits and Gains from Business or profession” in FY 2017-18
In the general information tab, an option to select section 115H (who is a non-resident Indian in any previous year, becomes assessable as resident in India in respect of the total income of any subsequent year) has been added.
The depreciation rate has been limited to 40% in all depreciation related Schedules. This has been done to give effect to Notification 103/2016 dated 7 November 2016 where the CBDT has restricted the rate of depreciation on plant and machinery to 40% only.
ITR 4 (Sugam):
This return is meant for the presumptive tax payers i.e. those who can declare income as a specific percentage of their gross receipts or turnover and pay taxes accordingly.;
For the presumptive taxpayers, furnishing of GST related details is now mandatory viz GST Registration No., GST Turnover etc
In the tab for financial particulars the assessee has to declare the following additional information.
1.Partners/ Members Capital
2.Secured Loan
3.Unsecured Loan
4.Advances
5.Fixed Assets
Common to all forms:
This time, there is no requirement to furnish details of cash deposit for a specific period as was provided for in ITR Form for AY 2017-18 post demonetization. This field has been completely done away with.
These returns forms are due by 31st July 2018. Even though there is still time, make sure you file by the due date; unlike previous FYs, you will be levied a mandatory penalty under 234F of Rs 5,000 if you file it before 31 December of the AY or Rs 10,000 if you file it anytime after that, in case you fail to file your income tax returns by the due date. A specific field for this has also been provided for in the return.
The way of filing your tax returns remains the same. You must file electronically with the only exception being for the following taxpayers filing ITR - 1 or ITR -4
(i) A taxpayer who is of age 80 and above at any time during the previous year; or
(ii) a person or HUF whose annual income is not more than Rs. 5 lakhs, and who has not claimed any refund in the Return of Income so far.
Filing your return online has many advantages and is the preferred way to go about your tax returns.
Some key questions answered
1. What was the income level below which you could file a paper return last year? This year, it is Rs 500,000 and age of 80 years.
There is no change in this aspect when compared to last year. Even last year, if income was below Rs 5 lakhs and the taxpayer does not have any refund claim in the return and is filing either ITR 1 or ITR 4, he could furnish a paper return
2. Is the condition that Sahaj forms can be used by only those with an income up to Rs 5 million a new condition?
No, this condition was prevalent even last year, the only change being, this year, Sahaj is applicable only for residents whereas last year, this form was applicable to residents and non-residents.
3. How complicated will it be for ordinary return filers to mention the Form 16 details separately? Are we pushing the ordinary tax payers to chartered accountants?
The details being called for in ITR 1 pertaining to salary income viz: value of perquisites, profit in lieu of salary etc are not very complex to fill in as they can be sourced from the taxpayer’s Form 16 itself, external help from chartered accountants would not be needed.
4. For those who rely on Form 16 A, is the mention of GST compulsory?
Not all taxpayers in receipt of Form 16A have to furnish GST details. Only those taxpayers filing ITR 4 i.e. those who offer a specified percentage of their turnover/gross receipts as their income and pay taxes accordingly i.e those covered under Section 44AD or 44ADA , need to furnish their GST details. This measure has been taken by the CBDT probably with an objective to match the direct and indirect tax figures and check tax evasion.
To sum up, most of the changes in the ITR forms this time, have been made more in line with and to accommodate the various amendments brought about in Finance Budget 2017. For the salaried, yes, a little more details have been sought for in the return ITR 1, which of course would readily be available in their form 16.
A little of a challenge for non-residents who can no more file the simple ITR-1 and have to necessarily report their income in ITR-2 or other forms as applicable. Presumptive tax payers who generally report a percentage of their turnover as their income and can get away without maintaining books have an additional compliance going forward in terms of reporting their GST number, turnover etc.
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The author is Founder & CEO at ClearTax. Views expressed are his own