The Central Board of Direct Taxes (CBDT) has been very prompt in notifying the income tax return (ITR) forms for assessment year (AY) 2020-21. Usually, CBDT issues new ITR forms once the financial year (FY) gets over. In the last several years, because of various amendments in ITR forms, there was a delay in notifying ITR forms even after the FY started.

The new forms incorporate the changes made in the last Finance Act. We give you the details.

Early notification

In the current AY20, there are around seven ITR forms in total. CBDT has notified two forms—ITR 1 and ITR 4—for AY21; the remaining ITR forms are expected to get notified soon.

“The government wants to avoid backlash that we usually witness year-on-year because of delay in notifying the ITR forms or amendments thereafter," said Amit Maheshwari, partner, Ashok Maheshwary and Associates Llp, a chartered accountancy firm.

It is expected that this year the government will notify all the forms before the end of the FY and update utilities (e-filing tax return forms) accordingly so that a tax payer will be able to file ITR as soon as the AY starts, added Maheshwari. It may be noted that in AY20, though the forms were notified early, the utilities were revised multiple times, the last being in July.

The changes

Like every year, the tax department has made some changes to the notified ITRs.

To start with, apart from basic information like permanent account number (PAN) and Aadhaar number that you have to mention in the ITR forms , you also need to mention your passport number, if you have a valid Indian passport, in ITR-1 and ITR-4, whether you went abroad or not during the assessment year.

Apart from that, there are two other major changes in the ITR forms. “First, an individual taxpayer cannot file returns either in ITR-1 or ITR-4 if he is a joint-owner in a house property. Second, ITR-1 is not valid for those individuals who have deposited more than 1 crore in a bank account or have incurred 2 lakh or 1 lakh on foreign travel or electricity, respectively," said Wadhwa.

ITR-1, which is also known as “Sahaj", can be used by an individual whose income primarily include salary income and whose total income does not exceed 50 lakh during the FY. It can also include income from interest (bank deposits, savings accounts and so on), family pension and agriculture income (not more than 5,000).

On the other hand, ITR-4 can be used to file returns by resident individuals, Hindu Undivided Families (HUFs) and firms (other than Llp) having a total income of up to 50 lakh from business and profession and those filing ITR under the Presumptive Taxation Scheme (PTS). Read more about PTS here.

Also, in accordance with the Finance Act, 2019, if you have made an aggregate deposit of more than 1 crore in one or more current accounts, then the aggregate of the amount deposited in all such accounts need to be mentioned in the ITR forms. There was no such provision earlier.

Another change is that those who file ITR under PTS will have to divulge additional information this time. They will have to mention the opening balance of cash in hand, the opening balance of bank accounts and the total amount received in cash during the year, besides the total amount deposited in the banks during the year. Apart from that, the total amount of cash outflow, withdrawal from a bank account and closing balance of cash in hand and with the banks also need to be disclosed in the ITR form.

Can you file early?

Just because the ITR forms have been notified early, can you file your returns already? No, this is because e-filing utilities are yet to be updated.

“Till now only the forms have been notified but not the return filing utility. A taxpayer who is required to file returns before the previous year ends (FY20) cannot do so until the return filing facility is activated on the e-filing portal," said Naveen Wadhwa, deputy general manager, Taxmann, an e-filing intermediary.

Ideally, you should file ITR from 1 April onwards and before the due date of 31 July. Remember that filing returns after the due date but before 31 December attracts a penalty of 5,000; if the return is filed after 31 December but before 31 March of the next year, the penalty is 10,000. However, if the total income of the person does not exceed 5 lakh, the late filing fee is restricted to 1,000.

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