New Income Tax Forms — The Four Key Changes You Will Observe

The CBDT or Central Board of Direct Taxes came up with a notification for Income tax return forms ITR 1 and ITR 4 for the Financial Year 2019-20 or the Assessment Year 2020-21. The notification was published on 2 January 2020. The Income Tax Department was prompt in publishing the income tax forms. This early release has helped many taxpayers to start preparing early by gathering the required information and the documents to file the income tax return form for FY 2019-20 (AY 2020-21).

However, this early notification arrived with news of a few changes being introduced in the ITR Forms for the FY 2019-20 (AY 2020-21). The changes, though minor, are still noteworthy.

*Note: Latest Update

CBDT relaxes the eligibility requirements for filing ITR 1 and ITR 4 for the FY 2019-20 (AY 2020-21).

Mentioned below are the provisions rolled back by the CBDT:

• If the taxpayer is the joint owner of a house property, then they are eligible to file ITR 1 as well as ITR 4 to declare their income from their house property for the FY 2019-20 (AY 2020-21), if they meet the other specified conditions.
• ITR 1 Form for FY 2019-20 is applicable to taxpayers with deposits of more than ₹1 crore in all their bank accounts in the FY 2019-20  or incurred expenses of ₹2 lakhs or ₹1 lakh on foreign travel or electricity respectively in FY 2019-20.

So, let us discuss the latest changes introduced to the relevant Income Tax Return Forms for the FY 2019-20 (AY 2020-21):

1) ITR 1

• The taxpayer with a carry forward/brought forward loss under the heading ‘Income from house property’ should not use the ITR 1 Form to file their income tax returns for FY 2019-20 (AY 2020-21).
• If the property has been put on rent, then the taxpayer has to submit the tenant’s name, Aadhaar and PAN details while filing the  ITR 1 form.
• A disclosure is added to Part A- General Information in ITR 1 Form. The taxpayer has to notify whether they possess a valid Indian passport, and provide their passport number if they do.
• The ‘Nature of Employment’ part has been shifted from Part A- General Information to Part B- B1: Salary Schedule of ITR-1 Form.
• For interest earned on compensation or enhanced compensation under Section 56(2)(viii), a different column altogether has been added under the heading ‘Income from other sources’.

2) ITR 4

• The taxpayer with a carry forward/brought forward loss under the heading ‘Income from house property’ cannot use the ITR 4 Form to file their income tax returns for FY 2019-20 (AY 2020-21).
• If the house has been put on rent, then the taxpayer has to submit the tenant’s name, Aadhaar or PAN details while filing the  ITR 4 form.
• A disclosure is added to Part A- General Information in ITR 4 Form. The taxpayer has to notify whether they possess a valid Indian passport, and provide their passport number if they do.
• The Income Tax Department needs a few more additional details of taxpayers filing ITR 4 Form for FY 2019-20. These include:

1. 1. If the taxpayer has deposited amounts totalling more than ₹1 crore in one or more current bank accounts in the previous financial year, then this amount needs to be notified in ITR 4 Form.
   2. If the taxpayer has spent ₹2 lakhs or more on foreign travel on self or for another person, then the amount needs to be notified in the ITR 4 Form.
   3. If the taxpayer incurs an expense of more than ₹1 lakh on electricity bills in the previous year, then this amount needs to be notified in ITR 4 Form.

• If a representative of the taxpayer files the ITR 4 Form, then the representative’s Aadhaar number should be mentioned in the ITR 4 Form from FY 2019-20 onwards.
• The taxpayer has to disclose the additional details as mentioned below in Part A- General information section of ITR 4 Form:

1. • If the individual is a partner in the firm, then they must furnish the firm’s name and PAN details.
   • The individual also needs to provide details of all the partners in the firm, like name, address, share percentage in the firm, rate of interest on capital, remuneration paid/payable, Aadhaar and PAN details.

• The “Nature of Employment” part has been shifted from Part A- General Information to Part B- B1: Salary Schedule of ITR-4 Form.
• A new section named “Particulars of cash and bank transactions relating to presumptive business” has replaced the “Financial particulars of the business” section. Under this new section, the taxpayer has to provide the total opening cash and balance of all the bank accounts, total receipts in the previous year, and withdrawals or payments made during the previous year.
• For interest received on compensation or enhanced compensation under Section 56(2)(viii), a different column altogether has been added under the heading “Income from other sources”.

3) Changes in all the ITR forms

• It is compulsory for all registered Indian taxpayers to file their income tax returns online. Only those individuals who are 80 years or above and do not gain any income earnings from profession or business can file their income tax returns form offline.
• With effect from 1 April 2017, if an individual does not file their income tax form before the stipulated due date, then a penalty of ₹10,000 will be levied on late filing of ITR under Section 234F. The ITR forms, in fact, contain a specific section, wherein the individual has to provide details of the fees or penalty payable under section 234F.

This time, the government seeks more specific information from Indian taxpayers. It can be determined by the kind of additional details asked in the ITR forms for the FY 2019-20. However, these are mainly general details, which can be collated easily and mentioned in the ITR forms. So, don’t waste any more time and file your ITR before it is too late.