New Income Tax Returns forms & its Applicability

New Income Tax Returns forms & its Applicability

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New Income Tax Returns forms & its Applicability

This [i.e., preparing my tax return] is too difficult for a mathematician. It takes a philosopher. — Albert Einstein

Changes in the Income tax return filing forms have become an annual feature & every year new sets of income tax returns forms are notified. For the current assessment year, CBDT has notified 7 types of Income-tax return forms. Each return form is applicable according to the status of taxpayer & type of income earned. It’s time to know the correct return forms and the changes as for majority of the taxpayer, tax compliances begin and end with filing income tax return.

The returns forms notified and its applicability is tabulated in the following chart:

ITR Forms Applicable to
1 This is the simplest form of Income Tax return which was used by 3 Cr of taxpayer in the last FY 2017-18. Resident Individual/HUF having income only from salary, One House Property, income under the head “Income from other source” can file the return in ITR-1 provided that

1.      Total income doesn’t exceed Rs. 50 Lakh

2.      Dividend income does not exceed Rs. 10 Lakh

3.      No income is taxable u/s 115BBE

4.      No relief u/s 90 or 90A.

2 Individual/HUF having no business/professional income.
3 Individual/HUF having business & professional income.
4 Individual/HUF having business & professional income and opting for presumptive scheme of taxation.
5 Firm, LLP, AOP, BOI, artificial juridical person, cooperative society or local authority. (A person who is required to file return in ITR 7 shall not use this form).
6 Company, other than a company claiming exemption u/s 11
7 Persons (including companies) who are required to furnish return u/s 139(4A), 139(4B), 139(4C) or 139(4D) (i.e., trusts, political parties, institutions, colleges, etc.)

The new forms incorporate the changes made by the Finance Act, 2017 in the Income tax Act, 1961. More importantly, there is a column for late return filing fees. Late filing fees of Rs. 1,000/-, Rs. 5,000/- or Rs. 10,000/-  shall be required to be paid before filing the income tax return if taxpayers do not file return of income within due date.

Here is a compilation of few of the changes in current ITR forms vis-a-vis last year’s ITR forms:

  1. Earlier ITR-1 was applicable for all, Residents, Non-residents and Residents but not ordinarily resident (RNOR). Now, this form has been made applicable only for resident individuals.
  2. The new ITR form requires additional reporting of salary components as per Form No. 16. It also requires little more details of income form house property.
  3. Earlier, partners having income from partnership firm were allowed to file return in ITR Form-2 provided there is no income to partner separately from the proprietary business. Now, anyone having income from a partnership firm will now be required to file return in ITR-3 or ITR-4 only.
  4. CBDT had restricted the highest rate of depreciation for any block of asset to 40%. The new ITR Forms have replaced the depreciation column of 50/60/80/100% with 40%.
  5. In ITR-4, column has been provided to declare the following additional information like Members Capital, Secured Loan, Unsecured Loan, Advances, fixed Assets etc. However, this detail is optional and not mandatory. Lot many taxpayers are wrongly treating it as a mandatory filed.
  6. More reporting requirement is introduced for Capital gains in case of transfer of unquoted shares in ITR 2, 3, 5, 6 & 7. The Finance Act- 2017 has introduced new Section 50CA from AY 2018-19 which provides that if unlisted shares are transferred at a price which is less than its FMV, the sales consideration shall be deemed to be the price as calculated by a Merchant Banker or a CA on the valuation date.
  7. In ITR-3, 5 & 6, new column have been introduced to incorporate GSTR No. and turnover/gross receipts as per GST return filedalong with the details of CGST, SGST, IGST and UGST paid or refunded by taxpayers during the Financial Year.
  8. The Finance Act, 2017 had extended the scope of taxing gift by introducing a new clause, i.e. Section 56(2)(x) which covers all taxpayers within its ambit. Consequently, new columns have been inserted in all ITR forms except ITR 1 & ITR 4 under ‘Schedule OS’ to report any income as specified in Section 56(2)(x).
  9. Individual taxpayers who are filing income tax return in Form ITR 2, 3 or 4 aren’t required to mention the gender (i.e. male, female or transgender) as the column of gender has been removed.
  10. Corporate social responsibility (CSR) expenditures are to be incurred mandatorily under the Companies Act, 2013 & these expenditures are not deductible u/s 37(1) of the Income Tax Act, 1961. A new column has been inserted in ITR Form 6 to provide details of such expenditure.
  11. In case of non-residents, the requirement of furnishing details of any one foreign Bank Account has been provided for the purpose of credit of refund.

There is no change in the manner of filing of ITR Forms as compared to last year. All these ITR Forms are to be filed electronically. However, where return is furnished in ITR Form-1 (Sahaj) or ITR-4 (Sugam), the following persons have an option to file return in paper form:

(i) An Individual of the age of 80 years or more at any time during the previous year; or

(ii) An Individual or HUF whose income does not exceed five lakh rupees and who has not claimed any refund in the Return of Income.


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