Income tax assessees are set to come across certain impediments while selecting the income tax return (ITR) forms to be used for assessment year (AY) 2019-20. However, some sections in the forms have been rationalized and reporting requirements has been increased. Individuals and businesses both are liable to file their ITRs for the income earned in financial year 2018-19 using these forms: ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6 and ITR-7. These seven forms were notified by the Income Tax Department in the last month.
Various changes in the ITR forms for AY 2019-20 are as below:
- If the taxpayer is a director of a company at any time during the tax year, following details need to be furnishing (ITR 2, 3):
- Name and Permanent Account Number (PAN) of the company
- Company shares are listed or unlisted
- Director identification number
- Being a partner in a firm, taxpayer need to furnish name of the firm and PAN needs to be disclosed separately (ITR 5, 7).
- Interest income earned needs to be bifurcated into interest earned from savings bank, deposits, income tax refund, and interest in the nature of pass-through income or others (ITR 2, 3, 5, 6, 7).
- Break-up for certain specified incomes such as dividend income, winning from lotteries, puzzle, races etc. which are taxed under Income from other sources. The break-up period is aligned to the due dates of payment of advance tax (ITR 2, 3, 5, 6, 7).
- Break-up for monetary donations made in cash and other mode – monetary donations by taxpayer eligible for deduction under section 80G of the Income Tax laws needs to be bifurcated between donation made in cash or in any other mode (like cheque or electronic mode) (ITR 2, 3, 4, 5, 6).
- Enhanced reporting in case of transfer of immovable property- such as name and PAN of the buyer, address of property and in case of more than one buyer, percentage share and amount of each buyer need to be reported (ITR 2, 3, 5, 6).
- Enhanced reporting in relation to foreign assets located outside India- instead of information about foreign bank accounts held, the new ITR forms require details of following assets held by resident taxpayers at any time during the tax year in Schedule FA dealing with foreign assets and income from any source outside India (ITR 2, 3, 5, 6, 7):
- Details of foreign depository accounts
- Details of foreign custodial accounts
- Details of foreign equity and debt interest
- Details of foreign cash value insurance contract or annuity contract
- Under each asset category, there is further reporting requirement such as details of country name and code, name and address of institution, account number, date of opening the account, peak balance during the tax year, closing balance, amount of interest / amount paid / credit. In case of insurance contract, cash / surrender value of contract needs to be reported.
- While computing house property income, taxpayer needs to mandatorily furnish PAN / TAN of the tenant if credit for TDS on rent income is claimed by the taxpayer (ITR 2, 3, 5, 6, 7).
- Inserting manufacturing account and trading account in addition to profit and loss account- statement of profit and loss has been bifurcated into manufacturing account, trading account and profit and loss account. Certain additional details need to be furnished in the manufacturing account such as details of direct wages, direct expenses and factory overheads (ITR 3, 5, 6).
- In case of company ITR land or building or both (whether residential or not), other assets such as motor vehicle, aircraft, jewelry, archaeological collections, drawings, painting, sculptures or any work of art or bullion-date and cost of acquisition, purpose of use.
- In case where regular books of accounts are not maintained- details of gross receipts as bifurcated between receipts through specified banking modes and any other mode to be reported.
- In case of company ITR loans and advances given and received- party wise details along with opening and closing balance, amount received and repaid during the year, rate and amount of interest.
- Enhanced reporting in exempt income schedule includes if net agricultural income exceeds
INR 0.5 mn, income is not chargeable as per Double Taxation Avoidance Agreement (DTAA) or it is pass-through exempt income.
- In the schedule of exempt income, where the net agricultural income exceeds INR 0.5M, following details need to be reported separately for each agricultural land (ITR 2, 3, 5, 6)
- Name of district along with pin code where agricultural land is situated
- Measurement in acres
- Whether the land is owned or leased and whether it is irrigated or rain fed
Further, pass-through income not chargeable to tax and income not chargeable to tax as per DTAA also needs to be specifically reported in the schedule of Exempt Income (ITR 2, 3, 5).
Also, this year income taxpayers will also have to furnish details of the investments held, acquired or transferred in unlisted equity shares in a financial year. While there are various reporting requirements, the department is also seeking e-assessment. If you need any assistance in filing your income tax returns, tax computations, tax assessments or other tax compliances, you may reach us.
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