July 31, 2017 is the last date for filing income tax returns for FY 2016-17. It’s important to know what has changed in ITR compared to last year. The biggest change is the number of ITR forms have reduced from 9 to 7. Other than that all the tax returns have to filed electronically except for people who are more than 80 years of age and have income less than Rs 5 lakhs and have no claim for refund.
We give you the 9 key changes that happened in ITR Forms for individuals/HUFs/Professionals.
- 1 1. Less number of ITR Forms
- 2 2. One pager form for Salaried Tax payer [ITR 1 Sahaj]
- 3 3. Disclose Cash Deposited during Demonetization [ITR 1, 2, 3, 4, 5, 6, 7]
- 4 4. New Field for quoting Aadhar Number [ITR 1, 2, 3, 4]
- 5 5. Fields for Income Taxable at special rates [ITR 2, 3, 4, 5, 6, 7]
- 6 6. Deduction under section 80EE [ITR 2, 3, 4]
- 7 7. More detailed declaration of assets/liabilities by Individuals earning above Rs 50 lakhs [ITR 2, 3, 4]
- 8 8. Digital Receipts Vs Cash payments for presumptive taxation scheme [ITR 4]
- 9 9. Presumptive taxation scheme for Professionals [ITR 4]
1. Less number of ITR Forms
The numbers of ITR Forms have been reduced from 9 to 7.
- The previous ITR 2A, ITR 2 and ITR 3 forms have been rationalized to single ITR 2 Form.
- The previous ITR 4 Form has been re-numbered as ITR 3.
- ITR 4S (Sugam) is now ITR 4 (Sugam).
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Here are some posts which can help you with e-filing of ITR 2017:
2. One pager form for Salaried Tax payer [ITR 1 Sahaj]
As promised the government has come out with simple, one pager ITR 1 Sahaj form which can be filled by tax payers who have income from salary/pension, one house property and income from other sources like interest income. However to fill this form the total income should be less than Rs 50 Lakhs.
The form has done away with the long list of deductions and only included the most common deductions under section 80C, 80D, 80G and 80TTA. If the tax payer wants to claim tax benefit under other sections he can do so by mentioning relevant section in column titled “Any Other”.
Some new columns have been introduced to report dividend income (u/s Section 10(34)) and exempted long term capital gains (u/s Section 10(38)).
3. Disclose Cash Deposited during Demonetization [ITR 1, 2, 3, 4, 5, 6, 7]
A new field has been inserted in all ITR Forms to report the amount of cash deposited during the demonetization period of November 9 to December 30, 2016. However you need to report this if the cash deposit during the period exceeds Rs 2 Lakhs.
4. New Field for quoting Aadhar Number [ITR 1, 2, 3, 4]
The finance bill was amended to make it compulsory for tax payers to quote their aadhar number while filing income tax return. The ITR Forms have introduced column for either entering aadhar number or the Enrolment ID in case the aadhar is not received but has been applied for.
Also Read: 25 Tax Free Incomes & Investments in India
5. Fields for Income Taxable at special rates [ITR 2, 3, 4, 5, 6, 7]
Some incomes are taxed at special rates. The ITR forms have introduced columns to declare these.
As per Section 115BB, any unexplained income or investment attracts special tax of 60% (plus surcharge and cess, as applicable) irrespective of the tax slab. This can now be shown in the newly inserted column under ‘Schedule OS’ .
If tax payer has unexplained income he/she cannot fill ITR 1.
Dividend Income above Rs 10 lakhs
As per Section 115BBDA dividend income of more than Rs 10 lakh from domestic companies are taxable at the rate of 10%. The same can be reported in newly inserted column under ‘Schedule OS’ . If tax payer has dividend income above Rs 10 Lakhs (as explained above) he/she cannot fill ITR 1.
Income from patent
As per Section 115BBF, royalty received for patent developed and registered in India is taxed at 10%. The same can be reported in newly inserted column under ‘Schedule OS’ .
6. Deduction under section 80EE [ITR 2, 3, 4]
Section 80EE gives additional tax exemption of Rs 50,000 for payment of interest on housing loan to first time home buyers. This is over and above the tax exemption of Rs 2 lakhs u/s 24(b). A new field has been introduced in Schedule VI-A to claim this deduction.
In case you are filling ITR 1 you can mention Section 80EE in “Any Other” deductions to avail this tax benefit.
7. More detailed declaration of assets/liabilities by Individuals earning above Rs 50 lakhs [ITR 2, 3, 4]
Last year the income tax department had introduced new section to declare the values of assets and liabilities of individuals with income of more than Rs 50 lakhs. This year the ITR form asks for more detailed information like address of immovable property.
8. Digital Receipts Vs Cash payments for presumptive taxation scheme [ITR 4]
As per the presumptive taxation scheme u/s 44AD, 8% of gross turnover is considered as income. Budget 2017 made further classification in the same. Now 6% of gross turnover is considered as income if the payment is accepted in digital form including cheque, wallets, etc. The ITR 4 has made separate columns to list digital Vs Cash receipts.
9. Presumptive taxation scheme for Professionals [ITR 4]
Budget 2016 had introduced presumptive taxation scheme for professionals such as doctors, Charted accountants, lawyers, etc who can declare minimum 50% of gross receipts as income. ITR 4 has introduced new fields accordingly.
This was brief summary of key changes for ITR Forms for AY 2017-18. We would come out with more details of Income Tax Return in subsequent posts.