Major Changes in Income Tax Returns - AY 2020-21

Recently, the Government has notified the new Income Tax Returns (ITR) forms for the Assessment Year 2020-21. The Central Board of Direct Taxes (CBDT) vide Notification No. 31/2020 dated 29th May 2020 has amended the Income Tax Rules, 1962. 

This article outlines the latest ITR forms along with the changes in ITR-1 to ITR-7 for the AY 2020-21 (FY 2019-20).



ITR Forms for AY 2020-21

1) Applicability of ITR-1 to ITR-7 - Below is a brief about applicability of ITR forms

ITR Forms

Applicability

ITR – 1

(SAHAJ)

Individuals being a resident (other than not ordinary resident) having total income up to Rs. 50 Lakhs, having income from:

  1. Salaries
  2. One House Property
  3. Other Sources (Interest etc.)
  4. Agricultural Income up to Rs. 5,000

ITR – 2

Individuals and HUF not having income from profits and gain of business or profession.

ITR – 3

Individuals and HUF having income from profits and gain of business or profession.

ITR – 4

(SUGAM)

Individuals, HUF and Firms (Other than LLP) being a resident having total income up to Rs.50 Lakhs and having income from business and profession which is computed u/s 44AD, 44ADA or 44AE of Income Tax Act, 1961.

ITR – 5

Other than for an Individual, HUF, Company and person filing the form ITR – 7.

ITR – 6

This form is for the companies other than companies claiming exemption u/s 11 (Income derived from property held under Trust) of the Income Tax Act, 1961.

ITR – 7

Persons including Companies required to furnish return under section:

  1. 139(4A) - ITR of Charitable and Religious Trust
  2. 139(4B) – ITR of Political Party
  3. 139(4C) & (4D) – ITR of entities claiming exemption u/s 10  

2) Non Applicability of ITR-1 and ITR-4 - Below is a brief about non applicability of ITR-1 and 4 on Individuals who:
  • has assets ( including financial interest in an entity) located outside India; or
  • has signing authority in any account located outside India; or
  • has income from any source outside India; or
  • is Director in any company; or
  • has held any unlisted equity shares at any time during the previous year; or
  • owns more than one house property, the income of which is chargeable under the head "Income from House Property"; or
  • has income under the head "Income from Other Sources" in the nature of-
    • winning from lottery;
    • activity of owning and maintaining race horses;
    • income is taxable at special rates under section 115BBDA or section 115BBE; 
  • has any brought forward loss or loss to be carried forward under any head of income; or
  • is assessable for the whole or any part of the income on which tax has been deducted at source in the hands of a person other than the assessee.
Key Changes in Form ITR for the AY 2020-21

1) Mandatory filing of return in case of expenditure or high value transactions [Seventh proviso to section 139(1)]

This provision was introduced by the Finance (No. 2) Act, 2019 and is applicable from the assessment year 2020-21. The government has now widened the scope for mandatory filing of returns.

Normally the filing of return of income is linked to the total income of a person. However, now the government has made filing of return mandatory based on certain high value transactions even though they are not required to file the return based on their total income. These transactions are:

(a) who have deposited more than Rs. 1 crore in one or more current accounts maintained with a bank in a financial year, or (deposit in cash or cheque or otherwise);
(b) who have expended more than Rs. 2 lakh on foreign travel for himself or any other person in a financial year, or 
(c) who have incurred more than Rs. 1 lakh on electricity consumption in a financial year, or
(d) who fulfills the prescribed conditions (not yet prescribed),

Note: The seventh proviso to section 139(1) applies only to person covered in section 139(1)(b) which includes an individual or a HUF or a association of person or a body of individuals, whether incorporated or not, or an artificial juridical person. This proviso is not applicable to a company or firm.

2) Schedule DI - Details of Investment

This new schedule has been incorporated in all the ITR forms. This is with regards to the time extension granted by the government for the purpose of claiming deduction under Chapter VI-A for any deposit/investment/payment made between 01st April 2020 to 30th June 2020 for AY 2020-21.



3) Use of Aadhar Card Number instead of Pan Card for Filing ITR

An Individual assessee having Aadhar card number but not having PAN can file his/her ITR-1/2/3/4 by mentioning their Aadhar card number. Similarly, Aadhar card number can be used interchangeably for below mentioned purpose:
  • In case of property let out to an individual tenant Aadhar card number can be used instead of PAN and TAN details of the tenant.
  • In case return is filed by a representative assessee, here also there is a option to quote PAN or Aadhar of such individual.
  • In case of furnishing auditor information in ITR-3/5/6 there is a option to quote PAN or Aadhar.
  • In ITR - 6 while providing information of Key person PAN and Aadhar can be used interchangeably.

4) Additional Information under Audit Information

In ITR - 3/5/6 certain new clauses has been inserted under Audit Information namely:

(a2)  Whether assessee is declaring income only under section 44AE/44B/44BB/44BBA/44BBB?

(a2i)  If No, whether during the year total sales/turnover/gross receipt/ of business exceeds 1 crore but does not exceed 5 crore rupees?

(a2ii)  If (a2i) is Yes, whether aggregate of all amounts received, including amount received for sales, turnover or gross receipt or on capital account such as capital contribution, loans etc. during the previous year, in Cash, does not exceed 5% of the said amount.

(a2iii) If (a2i) is Yes, whether aggregate of all payments made including amount incurred for expenditure or on capital account such as assest acquistion, repayment of loans etc, in Cash, during the previous year does not exceed 5% of the said amount.

5) Selection of Multiple Bank Account for Refund

From AY 2020-21, multiple bank accounts are allowed to be selected for getting the tax refund. In case multiple account are selected for tax refunds, then refund will be credited to one of the account decided by CPC after processing the return.                  

6) Nature of Employment

While filing ITR - 1/2/3/4 under the tab nature of employment, government employment has been bifurcated as "Central Govt.", "State Govt.", "Public Sector Undertaking", "Pensioners". Employees Other than government employees can file using the option of "Others" and  "Not Applicable" can be used by Individuals claiming family pension.


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