For Financial year 2016-17, the income tax department has released income tax return forms with many changes. This is done to simplify the tax filing process and free taxpayers from the burden of compliance. The Income Tax Return forms that have been released will be applicable on income earned from 1St April 2016 to 31st March 2017 and the deadline for submitting these forms will be 31st July 2017.
However, the Central Board of Direct Taxes (CBDT) has notified new income tax return forms for the Assessment Year 2017-18. Recent changes in ITR forms have made it compulsory for all taxpayers who have an income of more than 5 lacs to file tax returns electronically. At the same time, they cannot claim for a refund. Also, ITR forms have been reduced from 9 to 7. The recent changes in ITR forms that every individual/professional/HUF must know are as follows:
1. Single page ITR form
The government has come out with a single page ITR – 1 form in the name of ITR 1 Sahaj. This form can only be filed by taxpayers who have one house property, income derived from salary or pension or income from other sources such as interest income. Only those taxpayers can fill this form whose income is less than 50 lakh rupees. Those taxpayers with an income of more than 50 lakh rupees or those who have more than one house property should file ITR 2 form. People above the age of 80 can file paper returns as well as those who has not claimed any refund in income tax return. Also, the form has discarded many deductions and included those mentioned under section 80C, 80G, 80D and 80TTA. A new column called ‘Any Other’ has been added for tax payers who want to claim other tax benefits.
2. Asset/Liability column removed
Sahaj form does not have any mention of asset and liability. It has been removed from ITR 1 form. Before changes were introduced, while filing income tax return, a person with an income of more than 50 lakh a year had to declare asset and liability. But now, a person with an income over 50 lakh does not have to file ITR 1 form, hence it has been done away with. For all other forms, the asset and liability column has become more detailed and includes information like address of immovable property.
3. Number of ITR forms reduced
As mentioned before, the number of ITR forms have come down from 9 to 7. ITR 2A that was filed by taxpayers with more than one house property, ITR 3 that was filed by those deriving income from profession and business and ITR 2 that was filed by taxpayers who had more than one house property as well as taxable capital gains have been done away with. These (ITR 2, ITR 2A and ITR 3) have been merged into a single ITR 2. Hence, a person with more than one house property, income from business or profession and taxable capital gains will have to file the new ITR 2 form. Additionally, ITR 4 has been rationalized as ITR 3 and ITR 4S (also called Sugam) has been renumbered as ITR 4.
4. Income taxable at special rate
Some new columns have been introduced for incomes that are taxed at special rates. These include income from patent in which royalty received for patent registered and developed in India will be taxed at 10% (as per section 115BBF). A new column called ‘Schedule OS’ can be used to report the same. A taxpayer who has dividend income of more than 10 lakhs from domestic companies can also be reported in column ‘Schedule OS.’ It will be taxable at 10%. (As per section 115BBDA). Taxpayers having an income of more than 10 lakhs can not file ITR 1 form. An unexplained income or investment will be charged with 60% tax, plus surcharge and cess (As per Section 115BB).
5. Disclosure of money deposited during demonetisation
For those who have deposited Rs. 2 lakhs or more during demonetisation period from November 9 to December 30, 2016, a new section has been included in every ITR form to report this amount. This new field has been added by the tax department to hold accountable those who have deposited more than 2 lakh into bank accounts. The taxpayer will have to mention name of the bank, account number IFSC code and the amount of money deposited in income tax return. During the period of demonetisation, it was declared that individuals with cash deposits of more than 2.5 lakh rupees will be sent notice to disclose the source of money. But with the limit brought down to 2 lakh, the chances of notice being sent by the income tax department to individuals has increased.
6. Tax exemption on housing loan
Additional tax exemption of Rs. 50,000 for payment of interest on house loans can be availed by first time buyers under section 80EE. This is above tax exemption of Rs. 2 lakh that is mentioned under section 24(b). This deduction can be claimed in a new field that has been introduced in Schedule VI-A. For those filing ITR 1, this deduction can be claimed by mentioning Section 80EE in the section ‘Any Other’ of ITR 1.
7. Quoting Aadhar number
Taxpayers will now have to compulsorily quote their Aadhar number while filing tax returns. Aadhar must be quoted in ITR 1, 2, 3 and 4. This column has been added to either enter Aadhar number or enrolment ID in case if Aadhar is not received by has been applied for by the taxpayer.
8. Unclaimed credit
Unclaimed TDS/TCS of present year can now be carried forward to the next year. Taxpayers are required to disclose tax deducted at source or tax collected at source in specific schedules in tax returns. Previously, there was no mechanism to do this but recent changes in ITR has included this mechanism.