New Income Tax Return (ITR) forms for AY 2020-21 notified; Check details

CBDT has notified the new ITR forms for FY 2019-20/ AY 2020-21 in line with the amendments made by the Finance Act, 2019.

Good news for taxpayers looking to file income tax return (ITR) for the Financial Year 2019-20. The Central Board of Direct Taxes (CBDT) has notified the new Income Tax Return (ITR) forms for FY 2019-20/ AY 2020-21 (i.e. ITR 1 Sahaj, 2, 3, 4 Sugam, 5, 6, 7 and ITR-V), vide Income-Tax (12th Amendment) Rules, 2020, in line with the amendments made by the Finance Act, 2019, according to CA Club.

Usually, the Income Tax Department notifies the ITR forms in the first week of April of the relevant assessment year. However, “this year, due to the exceptional circumstances, the Dept. has notified all ITR forms in the last week of May. The Dept. has notified the forms without the return filing utility. Thus, a taxpayer, who is required to file the return, cannot do so until the return filing facility is made available on the e-filing portal,” says CA Naveen Wadhwa, DGM, Taxmann.

It should be noted that for the assessment year 2020-21, the I-T Dept. has notified the ITR forms twice. In the month of January 2020, the Dept. had notified two ITR forms (ITR-1 and ITR-4). Now, in the month of May 2020, all ITR Forms (ITR-1 to ITR-7) have been notified which eventually replace the two previously notified forms.

“When the ITR Forms (ITR 1 and ITR 2) were notified in January 2020, Rule 12 was amended to provide that ITR-1 cannot be used by a person falling under two categories, namely, First, who owns a house property in joint-ownership and second, who has entered into specified transactions mentioned in the seventh proviso to section 139(1), that is, payment of electricity bill in excess of Rs 1 lakh, a deposit of more than Rs 1 crore in a current account, etc. However, a person falling under the second category is allowed to furnish a return in ITR-4,” informs Wadhwa.

Immediately after notifying the changes to Rule 12, the government announced to withdraw the prohibition on filing of return in ITR-1 and ITR-4 by a person falling in the above referred categories. The recent notification maintains status-quo by removing these prohibitions. Thus, a person owning a property in joint-ownership or covered under the seventh proviso can file return in ITR-1 or ITR-4 if they fulfil other conditions.

Further, in the new ITR forms, a new Schedule DI has been inserted to seek details of the investment, deposit and payments made during the extended period till June 2020 for claiming deduction under Chapter VI-A or for rollover of investment in the Financial Year 2019-20.

Here are some details of the new forms:

ITR 1 Sahaj: This form is for individuals being a resident (other than not ordinarily resident) having total income upto Rs 50 lakh, having Income from salaries, one house property, other sources (Interest etc.), and agricultural income up to Rs 5000 (Not for an individual who is either a director in a company or has invested in unlisted equity shares).

ITR 2: This form is for individuals and HUFs not having income from profits and gains of business or profession.

ITR 3: For individuals and HUFs having income from profits and gains of business or profession.

ITR 4 Sugam: For individuals, HUFs and Firms (other than LLP) being a resident having a total income upto Rs 50 lakh and having income from business and profession which is computed under sections 44AD, 44ADA or 44AE.

ITR 5: For persons other than (i) individual, (ii) HUF, (iii) company and (iv) person filing Form ITR-7.

ITR 6: For Companies other than companies claiming exemption under section 11.

ITR 7: For persons including companies required to furnish return under sections 139(4A) or 139(4B) or 139(4C) or 139(4D) only.

Talking about the new ITR forms, Kapil Rana, Chairman and Founder, HostBooks Limited, says, “There are few major changes incorporated in the Income Tax Return forms released by the Government yesterday. In ITR-1, Government employees have been bifurcated in State, Central Government and a new type as “NA” added to the list. Also, information like deposit more than Rs 1 crore in the account, foreign travel spending more than Rs 2 lakh, expenses in electricity more than Rs 1 lakh and a statement for amount investment/ deposited/ payment made during the period from 01.04.2020 to 30.06.2020 are to be provided in the return form.”

New Schedule “Schedule DA” has been added in relation to the above investment deposited/payment made during the above-specified periods. In ITR-4, PAN number is made optional if the Aadhaar number is provided; in section 44AD, one new clause has been added as the electronic mode in addition to electronic clearance and reduced the presumptive income from 8% to 6%. In section 44AE for presumptive income from goods carriages, the celling of maximum row is removed and a new validation “Number of vehicles should not exceed 10 vehicles at any time during the year” is added.

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It is clear, thus, that the government is putting all efforts “to curb the tax leakages and also allow law-abiding taxpayers to take the benefit of the spent and investments made during the difficult time even if they are done after the completion of the assessment year. This also shows the government’s intention to make the process simple and smoother,” adds Rana.

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