Know the changes in newly notified income tax forms for AY22

In the Finance Act, 2020, dividends have been made taxable in the hands of taxpayers.
In the Finance Act, 2020, dividends have been made taxable in the hands of taxpayers.
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 2 min read . Updated: 07 Apr 2021, 03:45 PM IST Renu Yadav

NEW DELHI: The tax department has notified the new forms for filing Income Tax Return (ITR) for assessment year 2021-22. In a notification, the tax department said it has not made any significant changes in the forms this year given the pandemic. However, there are certain changes which have been brought in line with the Finance Act, 2020.

Here are some of the changes you should know about:

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1) Dividend to be declared as income from other sources. In the Finance Act, 2020, dividends have been made taxable in the hands of taxpayers instead of the dividend distribution tax deducted by the company or payment or declaration of dividend. The dividend income has to be disclosed under “Income from other sources".

"Till AY21, only dividend income which was not exempt was required to be disclosed in the section 'Income from other sources'. Now all types of dividend incomes are required to be disclosed in the section," said a note from Taxmann, a tax research firm.

2) Earlier dividend income up to ₹10 lakh was exempt from tax under Section 10(34). Taxpayers were required to show such income under the exempt income section. The reference to dividend income up to ₹10 lakh from a domestic company has been removed from the exempt income section.

3) In the Finance Act, 2020, employees receiving ESOPs from eligible startups were allowed to defer taxes, not required to pay taxes at the time of exercising the option. "The TDS on the ‘perquisite’ stands deferred to earlier of the following events, expiry of five years from the year of allotment of ESOPs, date of sale of the ESOPs by the employee or date of termination of employment. Such employees will not be able to file ITR-1, they will have to file ITR-2. The respective ITRs have been amended accordingly.

4) Section 194N requires banks, post offices and co-operative banks to deduct TDS of non-filers of ITR. "As per the newly notified forms such taxpayers will not be able to file ITR 1," said the note from Taxmann.

5) The newly notified tax forms don’t have the Schedule DI (Details of investments). Last year, due to the pandemic, the tax department had extended the deadline for making tax saving investments for FY20 till 30 June. A special column was introduced for taxpayers to give the details of the investment to be claimed in FY20 and done between 1 April and 30 June. The schedule has been removed in the newly notified ITR forms.

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6) Opting for a new tax regime: In FY20, the government introduced a new concessional tax regime under Section 115BAC which gave taxpayers the option to pay tax at lower slab rates but forgo around 70 deductions. In part-A of the tax forms, the taxpayer is required to choose if he or she is opting for concessional tax regime under Section 115BAC.

(Do you have personal finance queries? Send them to mintmoney@livemint.com and get them answered by industry experts)

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