ALERT: Latest Important Changes in Income Tax Return Forms and It's Impact on Citizens

There are certain changes which income tax assesses have to come across in the income tax return (ITR) forms. These changes are brought by the Income Tax Department in select ITR forms which is meant to be used for assessment year 2019-20.  

As per tax experts, there are few sections in the forms which have been rationalized and reporting requirements is increased. However, individuals and businesses are required to file their income tax returns for the income earned in financial year 2018-19 using the forms: ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6 and ITR-7.  

These seven forms are also known as ITR forms which were notified by the Income Tax Department earlier this month. It is to be noted that July 31 is the due date for filing income tax returns (ITR) for assessees not required to get their accounts audited. 

Certain important changes in the income tax forms applicable to individual assessees: 

• Changes in Section 80G 

Though, there are no changes with reporting of income eligible for benefit under Section 80C of the Income Tax Act, cash and non-cash donations eligible for deduction under Section 80G/80GGA need to be reported, as per tax experts. 

According to Amit Maheshwari, partner, Ashok Maheshwary & Associates LLP, "The forms seek bifurcation between donation in cash and other mode for Section 80G deduction purposes." 

• Income Tax Forms - Changes Applicable to Company Directors

Individuals who are director in a company can no longer file the income tax return using Form ITR-1 or Form ITR-2. These individuals will have to furnish details such as the company's PAN and Director Identification Number (DIN). They should also mention whether the shares are listed or unlisted. Adding to it, details on investments and transactions undertaken in relation to such shares will also be needed. 

"These changes are supposed to be introduced to crack down on shell companies and checking on routing of black money," said Rishi Kapadia, partner, Dhruva Advisors. 

• Changes with Respect to Agricultural Income 

"For taxpayers earning agricultural income more than Rs. 5 lakh, extra details of the agricultural land need to be provided like name of district, land area, whether land is owned or leased, whether the land is irrigated or rain-fed." 

• Changes with respect to unlisted company shares

Income tax assesses will be required to furnish details of the investments held, acquired or transferred in unlisted equity shares in the financial year. 

According to Gopal Bohra, partner, NA Shah Associates LLP, "An individual/HUF (Hindu Undivided Family) holding unlisted shares needs to tell the name of the company, opening number of shares, cost, details of shares acquired & sold during the year and closing number of shares and cost."  

• Restrictions on ITR-1 and ITR-4

Form ITR-1 - also called as "Sahaj" - cannot be used by an individual serving as director of a company, having investments in unlisted equity shares, or having income on which TDS (tax deducted at source) has been deducted in another person's hands. 

Form ITR-4 – also known as "Sugam" - cannot be used by individuals or HUFs non-resident, ordinarily resident, non-resident partnership firms, directors of companies or persons having investment in unlisted equity shares or having more than one house property. 

• Changes Applicable to NRIs

As per experts, “Individual taxpayers have to select the applicable residential status rule now which is based on the actual physical stay of the individual tax payer.” 

Overseas Citizens of India (OCI) and Persons of Indian Origin (PIO) qualifying as non-resident have to report the actual numbers of days of stay in the country in the relevant financial year as well as preceding four years, Mr Kapadia said. 

Adding to it, individuals qualifying as NRI need to report the jurisdiction of residence and Taxpayer Identification Number. 

• Changes in Sale of Capital Assets (Immovable Property)

In regard to sale of immovable property during financial year 2018-19, details of name, PAN, percentage share, the value of sale and address of the buyer is required to be furnished.