In the recent economic package announced by the Centre, the due dates for filing income tax returns were pushed to November 30. However, it would be advisable for you to begin the groundwork and avoid the eleventh hour rush. This is because, the new Income Tax Return (ITR) forms for assessment year 2020-21, notified in the last week of May, require numerous additional details.
The information required in various additional columns and schedules in the new ITR forms, stem from the recent changes made to the tax law. Take, for instance, the recent announcement which allowed taxpayers an extended window ― until June 30, 2020, to make their investments for tax savings. A new Schedule DI has hence, been inserted in all ITRs (1 to 6), where the details of investments made during the extended period have to be mentioned.
Here is a lowdown on the important changes in the new ITR forms, that can come in handy while filing your returns for assessment year 2020-21.
Eligibility tweaks
The IT department had, in January 2020, notified two forms ― ITR 1 and ITR 4 ― for assessment year 2020-21. Initially, the applicability of ITR-1 was tweaked to exclude joint owners of a house property and assessees who have entered into certain specified transactions during the year.
The transactions referred to are deposits exceeding ₹1 crore (singly or in aggregate) in one or more current accounts, and, expenditure of ₹2 lakh for foreign travel or over ₹1 lakh for electricity bills in a year.
However, both these eligibility restrictions were rolled back. The rollback of these restrictions holds good even for the new forms notified in May.
Hence, joint owners of house property or those entering into the said transactions can continue to file ITR-1.
However, post a recent amendment in the IT Act, persons who have entered into the said transactions are required to file their income tax returns, even if their income is below the exemption limit. In the new notified forms (ITR-1, ITR-2, ITR-3 and ITR-4) such persons are required to specify the amounts in each of the transactions mentioned above.
The new returns have also been tweaked to give effect to the amendments made in 2019, that can now be claimed as a deduction from total income. The additional deduction of interest on housing loans and interest on loan taken for buying electric vehicle (under sections 80EEA and 80EEB) are some examples. The Schedule of Deductions under Chapter VI-A has been tweaked in all ITRs (1 to 6), to give effect to this change.
Investment details
Keeping in mind the hardships caused by the pandemic, the Centre had extended the last date for making tax-saving investments to June 30, 2020 from March 31. This includes both investments made for chapter VI A deductions and for deductions in capital gains (sections 54 to 54GB).
The new forms also require additional disclosures (in Schedule DI), for tax-saving investments made during the extended period.
That apart, if you have investments in unlisted equity shares, you will now have to also provide details about the type of company while filing ITR-2 or ITR-3.
Trust income
Investors in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) are now required to specifically mention incomes received from such entities, in Schedule PTI (Pass Through Income), in the new ITRs. This is because the interest received from the special purpose vehicle (SPV), and rental income earned directly by a REIT are taxable incomes for a unit-holder upon distribution.
However, the dividend income from such trusts, is taxable for a unit-holder only if the (dividend-paying) SPV has opted for a lower rate of corporate tax (i.e. 25.17 per cent under Section 115BAA). Otherwise, the dividend income shall be exempt for a unit-holder. Hence, investors are required to show such income separately in Schedule PTI.
Additional surcharge
If your income exceeded ₹2 crore, surcharge is levied on your income tax at 25 per cent, compared to 15 per cent earlier. This surcharge shall be at 37 per cent (as against 15 per cent earlier) if your income exceeds ₹5 crore. In a bid to placate investors, the higher surcharge was withdrawn for individuals, on short-term or long-term capital gains on sale of listed equity shares. Considering this, the ITR forms 2, 3 and 5 have been revised, where separate columns have been provided for reporting such incomes, while calculating the surcharge.
Multiple accounts
You are required to furnish the details of all bank accounts held, in your ITR. For the purposes of refund, where only one account could be selected earlier, you can now select multiple bank accounts in the new ITRs. This was amended to avoid the occurrence of tax refund failures owing to technical glitches, such as a mismatch or incorrect details of the bank account selected for the purposes of refund.
The new forms now allow interchangeability of Aadhaar with PAN, in various schedules. In some cases, the forms require the PAN of another party, such as a tenant or an auditor, etc. Now, in such cases, you can provide the Aadhaar number of the said party, in lieu of PAN.
To maintain a proper audit trail of all the communications of the department with the taxpayer, the CBDT had mandated authorities to quote Document Identification Number (DIN) in all the correspondences issued by the IT Department. Hence, if you are filing the ITR in response to a notice, you should now quote the DIN of the said notice in the return.
Other disclosures
The new ITR forms require several other disclosures such as details of employer, including the name, nature, address, and TAN (TDS/TCS account number).
If you own a house property and have let it out, a separate column has been introduced in ITR-1, to declare the unrealised rent. In the past, one had to deduct the unrealised rent from the total rent received/receivable and declare only the net amount. Also, the name and PAN or Aadhaar of the tenant, and the address of the property need to be mentioned.
A separate disclosure on interest earned on any compensation received (treated as ‘Income from other sources’) and deduction claimed thereon are also added this year to ITR-1. The Income Tax Act allows a deduction of 50 per cent on such income. Earlier, assessees claiming this deduction could not use ITR-1.
Factbox :
What's new?
- New schedule for investments made after March 31
- Tweaks in returns to give effect to recent amendments
- Option to select multiple bank accounts for refund