Here Are The Five Key Changes In Income Tax Forms That You Must Know

The Income Tax Department has notified changes to ITR-1 and ITR-4 forms which are applicable for individuals, firms and a Hindu undivided family. The revised forms will be applicable for assessment year 2020-21 and will come into effect from April 1.

The changes are in line with the government’s recent push to simplify collection and filing of information in a consolidated manner.

Here are the five key changes...

Who Can File ITR-1 And ITR-4?

Revised form ITR-1 is applicable for resident individuals with annual income less than Rs 50 lakh. The income can arise from salary, one house property, income from other sources and agricultural income below Rs 5,000. The form isn’t applicable for individuals who are considered “not ordinarily resident” under the Income Tax Act.

Similarly, the amended Form ITR-4 will be applicable for resident individuals, Hindu undivided families and firms having total income below Rs 50 lakh and an income from business and profession computed as per the specified method under Section 44 of the Income Tax Act.

Individuals having joint ownership of house property with two or more persons can no longer utilise FORM ITR-1 Sahaj or ITR-4 Sugam for filing of their income tax returns.

Section 139 of the Income Tax Act mandates filing of returns by an individual, company or a firm if their income is above taxable limit. However, an individual, company or a firm with spending above specified thresholds must file their returns in a separately prescribed format, according to Section 139(1) of the Act.

The revised rules prescribe that individuals covered under Section 139(1) cannot file ITR-1 if they:

• Deposit an amount exceeding Rs 1 crore in current accounts maintained with a bank or a co-operative bank.
• Incur expenditure of Rs 2 lakh or more on foreign travels.
• Spend more than Rs 1 lakh on electricity.

Taxpayers meeting the above criteria must file form ITR-4 and specify details of these expenditures.

Passport And Employer Details

The scope of general information related to a taxpayer in ITR-1 has been revised. Taxpayers must specify their passport number in the form if they hold a valid Indian passport. Revised forms ITR-1 and ITR-4 require taxpayers to additionally furnish the following information relating to their employers:

• Employer’s tax deduction and collection account number (TAN).
• Nature of employer—whether government, public sector unit or other.
• Full address of the employer.

The revised forms also allow individuals having more than one employer during an assessment year to add multiple rows while adding details on gross salary. The form allows taxpayers to pre-fill data once the TAN is added in the form.

Details Of Tenant And House Property

The revised ITR forms are only applicable for taxpayers having a single house property. As per the revised forms, a taxpayer must provide full address of his house property in the return. If the house property is let out for rent, the taxpayer must additionally provide the following information:

• Name of the tenant.
• Permanent account number or Aadhaar number.
• Amount of unrealised rent, if any.

Disclosure By Partners And Partnership Firms

Taxpayers organised as partnership firms must file returns of their income in the revised ITR-4. As per the amendment, additional information relating to a partner must be provided in a partnership firm’s tax return. Individual taxpayers must also provide the details of partnership firm in which they are partners.

Following details have been introduced in the amended form ITR-4

Information relating to the partnership firm in which taxpayer is a partner:

• Name of the partnership firm.
• Permanent account number.

Information relating to a partner in the tax return of partnership firm:

• Name, address, PAN and Aadhaar number.
• Percentage of shares and rate of interest on capital.
• Remuneration paid/payable to the partner.

Disclosures Relating To Presumptive Taxation

Section 44AE of the Income Tax Act deals with presumptive taxation of an assessee who owns “less than ten goods carriages” and is engaged “in the business of plying, hiring or leasing goods carriages”. As per the revised form, a taxpayer must provide the amount of income actually earned by it during a financial year. Such assessees will have to file revised ITR-4.

The earlier requirement of providing certain financial details of the business like total assets, liabilities and capital employed has been removed. Assessees covered under the presumptive taxation scheme are no longer required to provide such details in their tax returns.