The Central Board of Direct Taxes (CBDT) released new income tax return (ITR) forms for the financial year 2017-18 for taxpayers. Find out what has changed in these forms here.
Filing income tax returns can be quite a laborious task especially if you don’t have your paperwork ready. Recently, the Central Board of Direct Taxes (CBDT) released new income tax return forms to file returns. We’ll take you through the changes that you should be aware of. Ready? Here we go.
The income tax return filing process is becoming more transparent if the new forms are anything to go by. The forms seek more disclosures from taxpayers than they did in the previous years. Overall, there are more than 25 key changes compared to last year across all the forms meant for individuals, businesses, and other assessees. Most of these changes require that taxpayers give the break-up of information provided or other details that help the income tax department verify the transactions that taxpayers report.
What are the new forms?
The new forms that have been released for the financial year 2017-18 are-Sahaj (ITR 1), Form ITR-2, Form ITR-3, Form Sugam (ITR-4), Form ITR-5, Form ITR-6, Form ITR-7, and Form ITR-V.
For the first time, there will be a penalty on income tax returns filed after the due date which is normally July 31 i.e. ITRs for FY 2017-18 are due to be filed by July 31, 2018, as per current rules.
Additional reading: 5 Common Mistakes People Make While Filing Income Tax Returns
What are the changes?
Those with income from salary, one house property and other sources (like interest) use the most basic one-page ITR-1 or Sahaj form. The form now seeks additional details of salary. The taxpayer first needs to fill up salary amount excluding allowances, perquisites, and so on. Then, he/she will need to provide details pertaining to perquisites, allowances, ‘profit in lieu of salary’ etc. Until last year, the forms only requested an assessee to mention only the taxable figure of salary. The same goes for income from house property. The form now wants the taxpayer to provide the breakup of gross rent received, tax paid to local authorities, etc.
Additional reading: How To File Income Tax Returns? What Is Form 16?
Who can fill the form?
Any individual who is a resident other than not ordinarily resident, having income up to Rs. 50 lakhs and who is receiving income from salary, one house property/other income (interest, etc.) can fill the ITR Form-1 (Sahaj). Further, this form has also rationalised parts relating to salary and house property. It has also mandated furnishing of basic details of salary (as available in Form 16) and income from house property.
In case of non-residents, the requirement of furnishing details of anyone foreign bank account has been provided for the purpose of refund credit. Further, furnishing details of cash deposits made during a specified period as provided in the ITR form for the assessment year 2017-18 has been done away with from the assessment year 2018-19.
Additional reading: A 10-Point Guide To Make Filing Income Tax Returns Simpler
Form ITR-4 seeks more disclosure:
There are changes also in the presumptive taxation scheme that is meant for small businesses such as freelancers and shop owners and for professionals such as doctors. Now, the taxpayer doesn’t need to maintain books of accounts or get their financials audited. The assessees can pay a percentage of their total turnover as the tax. The old ITR-4 sought only four details- total creditor and debtors, total stock-in-trade, and cash balance. But the new form asks for more financial details of the business such as the amount of secured and unsecured loans, advances, fixed assets, capital account and so on.
These details are essentially sought after the implementation of the Goods and Services Tax (GST). The business owner also needs to provide GST number of the assessee and the amount of turnover based on the GST return filed. Earlier, business owners reported a different turnover for income tax and other indirect taxes based on their convenience. It is now possible to cross-check the details disclosed in the ITR with the GST filing.
Reference for employee stock options:
The government had made changes to the taxation of employee stock option in an unlisted firm in the previous year’s Budget. The amendments are applicable from this assessment year. While filing the return, employees will need to obtain a valuation report in case of sale of unlisted shares. This will ensure that they correctly report the capital gains or loss. The ITR form also asks for the detailed break-up of such transactions.
Tax experts feel that the new ITR forms display the government’s intent to combat tax evasion. The new forms will also plug in the gaps in the existing income tax returning process.
Now, applying for a Credit Card or a Personal Loan is as easy as filing your Income Tax returns online. Care to give it a try?