Key Changes in the ITR

Key Changes in the ITR Forms for the AY 2017-18 that impacts Individual

At the onset of the new financial year, the Central Board of Direct tax has notified the income tax forms applicable for Financial Year 2016-2017 (i.e. Assessment Year 2017-2018). These ITR forms will be applicable for income earned for the period 1 April 2016 to 31 March 2017.

Income tax return forms (ITR-1/ ITR-4) can be filed in paper mode in case of individuals aged 80 years or more (at any time during the year) as well as individuals/Hindu Undivided Families (HUF) whose income does not exceed INR 500,000 with no refund claim in the return.

Major Changes in the ITR- Forms

Less number of ITR Forms

1. The number of ITR Forms have been reduced from 9 to 7.

♦    Erstwhile Form ITR-2A, Form ITR-2 and Form ITR-3 have been changed to single Form ITR-2.

♦    The earlier FormITR-4 has been re-numbered as Form ITR-3.

♦    Form ITR – 4S (Sugam) is now Form ITR 4 (Sugam).

Applicability of Form ITR-1 Sahaj

2. With the aim of making it easier for taxpayers to file annual income tax returns, a crisp one pager form, ‘ITR-1 Sahaj’ has been notified. ITR 1 Sahaj can be filed by tax payers having income under the following heads, totalling upto INR 50,00,000:

(a)    Income from salary/pension,

(b)    Income from one house property,

(c)    Income from other sources like interest income, etc.

Inter alia, the form will not be eligible in case the tax payer has the following income:

(a)    Dividend income exceeding INR 10 lakhs covered under Section 115BBDA of the Income tax Act, 1961 (“the Act”),

(b)    Unexplained cash credit or investment taxable at 60% under Section 115BBE of the Act,

(c)    Agriculture income exceeding INR 5,000.

Related:- simplified ITR 1 with fewer columns

Simplified one pager ITR Form. [ITR 1 Sahaj]

3. The following changes are made in the ITR form:

(a)    The erstwhile 18 different sub headings under “Deduction under Chapter VIA” has been reduced to 5 sub headings, which are frequently used i.e. section 80C, section 80D, section 80G, section 80TTA and “any other”. If taxpayer wants to claim deduction under any other provisions of Chapter VI-A, one can specify the relevant section in column titled as ‘Any other’.

(b)    Donations under section 80G do not have to be supported with details like Name, PAN and Address of Donee.

(c)    Schedules of TDS and TCS have been merged.

(d)    Given that the requirement to report specified assets and liabilities is applicable only for persons with total income exceeding INR 50 lakhs, these details are not relevant now in Form ITR 1 and have been removed.

(e)    Further, under “exempt income” schedule, specific disclosure is required for the following income:

1. Dividend income earned under section 10(34) of the Act;
2. Long term capital gain earned under section 10(38) of the Act;

iii.    Agricultural income not exceeding INR 5,000; and

1. Others (specify).

Disclosure of cash deposited during demonetization. [ITR 1, 2, 3, 4, 5, 6, 7]

4. In order to track the amount deposited of INR 200,000 or moreduring the demonetization period (i.e. from 9 November, 2016 to 30 December, 2016), details of such amount deposited in bank account would need to be reported in the Income tax return form. The tax payer would be required to mention the IFSC Code, Name of the Bank, account number and the cash amount deposited.

Quoting Aadhaar Number. [ITR 1, 2, 3, 4]

5. A new section (section 139AAof the Act) requires every person who are eligible to obtain Aadhaar number, to mandatorily quote the same in the return of income w.e.f. July 01, 2017. If any person does not have the Aadhaar Number but has applied for the Aadhaar card then he can quote Enrolment ID of Aadhaar application Form in the ITR.

Taxpayers are required to get their PAN linked with Aadhaarnumbesr. However, if a taxpayer fails to link the Aadhaar number, the PAN allotted to them shall be deemed to be invalid.

A person who has resided in India for a period amounting to 182 days or more in the twelve months immediately preceding the date of application for enrolment of Aadhaar, is eligible to obtain Aadhaar number as per the Aadhaar Act, 2016.

Deduction under section 80EE of the Act. [ITR 2, 3, 4]

6. Section 80EEof the Act gives additional tax exemption of INR 50,000 for payment of interest on housing loan to first time home buyers. This deduction is over and above the INR 2 lakhs limit covered under Section 24(b) of the Act.

A new field has been provided in ITR forms under Chapter VI-A deductions to claim home loan interest under Section 80EE of the Act.

Detailed declaration of value of assets/liabilities by Individuals/HUF earning income above INR 5,000,000. [ITR 2, 3, 4]

7. Last year the Income-tax department had introduced a new Schedule requiring individuals/HUFs to declare the cost of specified assets and liabilities if their total income exceeds INR 5,000,000.

Now, the tax payers are also required to disclose the following additional details:

(a)    Immovable asset: Address of each immovable property held by the tax payer.

(b)    Movable asset:

1. Financial assets (at cost)

♦    Bank ( including all deposits)

♦    Shares and securities

♦    Insurance policies

♦    Loans and advances given

1. Details of “Archaeological collections, drawings, painting, sculpture or any work of art.
2. ‘Interest held in the assets of a firm or AOP as a partner or member’: Members/partners are required to disclose name, address, PAN of the firm or AOP and the assessee’s investment in the Firm/ AOP on cost basis.

For taxpayer having income upto INR 5,000,000, the ITR forms have been simplified. However, there are some additional disclosure requirement brought in for tax payer shaving income more than INR 5,000,000.