The Central Board of Direct Taxes (CBDT) had notified new income tax return (ITR) Forms (ITR-1 to ITR-7) for FY 2019-20 (01 April 2019 to 31 March 2020) on 29 May 2020. The due date for filing the return for FY 2019-20 has been extended from 31 July 2020 to 30 November 2020.
The choice of ITR Form for each taxpayer is dependent upon the quantum of income, residential status, nature of income earned, etc. by the taxpayer. For individuals and HUFs not earning income from profits and gains of business or profession, ITR-1 or ITR-2 can be used to file return of income.
The Income Tax Department has made several changes in the ITR Forms applicable for FY 2019-20, as compared to the previous year. Key changes made in ITR-1 and ITR-2 are highlighted below:
1. New criterion mandating filing of tax returns by individuals not covered in the past
From FY 2019-2020 onwards, an individual who satisfies one or more of the below conditions is required to file a return even though the individual was not required to do so in past years:
a. Deposited more than Rs 1 crore in one or more current accounts; or
b. Expenditure exceeding Rs 2 lakh incurred for self or any other person for travel to a foreign country; or
c. Expenditure incurred exceeding Rs 1 lakh towards consumption of electricity during the year.
2. Introduction of ‘Schedule DI’ to furnish details of investments made during the extended period
In view of the COVID 19 pandemic, the Income Tax Department has allowed taxpayers extended time to make certain tax saving investments eligible for deduction under section 80C, 80D, 80G, etc. (like LIC, PPF, donations, etc.) and payment for acquisition/ purchase/ construction of property for the purpose of claiming capital gains exemption – the last date has been extended from March 31 2020 to 31 July 2020 and 30 September 2020, respectively.
This Schedule gives the individual a designated space to report the investments made/expenditure incurred during this extended time limit post year end.
3. Furnishing of PAN / Aadhaar interchangeably
Various schedules of ITR-1 and ITR-2 require the taxpayer to furnish PAN of another person, such as tenant/ co-owners in house property schedule; buyer in case of immovable property in the capital gain schedule; specified person (spouse, minor child etc.) in Schedule SPI, etc. In light of permissible usage of PAN and Aadhaar interchangeably, Aadhaar can now be quoted in place of PAN in these schedules.
4. Changes to Schedule 80D
A separate schedule has been introduced for claiming deduction on account of expenses incurred towards health insurance, preventive health check-up and medical expenditure. The schedules have two sections – for self / family and for parents. Each section is further split into two categories – senior citizen and not a senior citizen.
Under each of these sections following details have been sought:
i. Health Insurance
ii. Preventive health check-up
iii. Medical expenditure (This deduction can be claimed on which health insurance is not claimed at (i) above)
This break-up and drop-down are now aligned with the provisions of section 80D as compared to the preceding year’s drop-down.
5. Income from Pass-Through Entities(PTI)
Capital gains and other income earned by a taxpayer from PTI requires following bifurcation under the respective income schedule as well as in Schedule PTI:
# Long-term capital gains into gains under section 112A and others
# Short term capital gains into gains under section 111A and others
# Income from other sources into dividend (referred to in section 115-O) and others
In the carry forward loss schedule, losses to be carried forward in the hands of taxpayers need to be bifurcated between normal and pass through income.
6. Other key changes
Itemized deductions under Part B of chapter VIA now specifically capture deductions for interest on housing loan under affordable housing scheme (under Section 80EEA) and deduction for interest on loan taken for buying electric vehicle (under Section 80EEB).
Taxpayers will have to provide the unique number / the documentation identification number if the income-tax return is filed in response to a notice / an order under the prescribed sections of the Act.
Over the years we have seen government making changes and adding more disclosure requirements with the objective of widening the tax net and the changes carried out are a step in this direction. Specific changes linked to relief granted due to the ongoing COIVD-19 pandemic have also been introduced.
