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The Central Board of Direct Taxes (CBDT) has unveiled new Income Tax Return forms for Assessment Year 2019-20. These forms are meant for individuals, firms and companies to file returns for the income earned for the period 1 April 2018 to 31 March 2019.
The new income tax return forms seek more disclosures as compared to the previous financial year. Here are the major changes in the new ITR- forms:
1) Applicability of ITR forms:
Until last year, Form ITR-1 cannot be used by individuals who have assets located outside India or have income from sources outside India or income under provisions of Section 5A.
As per the new notification, in addition to the above, now the form cannot be used even by an individual who has claimed deduction under Section 57, who is either a director of a company, has investment in unlisted equity shares or has income on which TDS (Tax Deducted at Source) has been deducted in another person's hands.
2) Details required in Form ITR-1(Sahaj) :
While it was said that Form ITR-1 was made simple in the preceding 2 years, there have been few changes in the form seeking more details.
a) A detailed breakdown of salary income received by the individuals (i.e. allowances, perquisites, standard deduction, etc.) needs to be reported which is similar to Form ITR-2. b) If an individual has a house property, he is required to specify if it is self-occupied, let-out or deemed to let-out and breakdown of actual rent received, taxes paid to local authorities, interest on borrowed capital etc., similar to Form ITR-2. 3) Stay details to be provided to determine Residential status:
As one is aware, there are various conditions specified under the Income tax Act to determine the residential status of an individual depending on the stay days in India. There are 3 categories of residential status in India (i.e. Resident (ROR), Resident but not ordinarily resident (RNOR) or non-resident (NR)).
Until last year, individuals were required to mention only their residential status in India based on their stay pattern in India.
Now, as per the new return form, stay of an individual is required to be provided for various categories of residential status, i.e., under ROR, RBNOR and NR (Individuals)
* You were in India for 182 days or more during the previous year * You were in India for 60 days or more during the previous year, and have been in India for 365 days or more within the 4 preceding years * You have been a non-resident in India in 9 out of 10 preceding years * You have been in India for 729 days or less during the 7 preceding years
Additionally, in case of individuals who qualify as non-resident, it is required to mention the jurisdiction of residence and Tax Identification Number (TIN).
4) Added mandatory fields/Additional information:
a) In the salary schedule, the form mandates TAN of employer if tax is deducted.
b) Under house property schedule, furnishing of PAN of the tenant is mandatory if tax is deducted on rental income. c) Under Capital Gains schedule, where a person has sold immovable property, the details of name of the buyer, PAN, amount, address of the property, etc. needs to be mentioned. d) If an individual is holding shares of an unlisted company, then they are required to provide information like name of the company, PAN, number of shares held or acquired, shares sold, etc. e) If an individual is a director of a company any time during the FY 2018-19, the details of name of the company, PAN, whether shares listed or not, Director Identification number, etc. needs to be mentioned. 5) Agricultural income claimed exempt exceeding INR 5 lakhs
Taxpayers having agricultural income exceeding INR 5 lakhs would be required to report the following:
a) Name of the district along with PIN code where the land is held,
b) Measurement of agricultural and, c) details of the ownership of the land, d) Whether it is irrigated or dependent on rainwater. 6) Exemption claimed under the double taxation avoidance agreement (DTAA) to be reported separately:
Individuals who claim tax relief in India under DTAA will now have to provide extensive disclosures such as nature of income, relevant Article under which exemption is claimed and whether overseas tax residency certificate is obtained.
7) Foreign asset reporting (FAR) schedule revamped
Residents and Ordinarily Residents are required to report foreign assets in the tax return forms. The new India tax return forms have widened the scope of providing bank account details. In place of foreign bank accounts, details are separately required for foreign depository accounts, custodial accounts, equity and debt interest and insurance.
The additional disclosure requirement sought in the new Income tax return forms is a move to check tax evasion.
Homi Mistry is Partner, Deloitte India; Niji Arora is Senior Manager with Deloitte Haskins and Sells LLP; Tarika Goel is Deputy Manager with Deloitte Haskins and Sells LLP; and Priya Padmanabhan is Assistant Manager with Deloitte Haskins and Sells LLP