New ITR forms: How the changes will affect you when you file your returns

The income tax department has released the ITR forms for income tax return filing for the Financial Year 2017-18

The income tax department has released the ITR forms for income tax return filing for the Financial Year (FY) 2017-18. Even though only the PDF version has been issued, very soon we can expect the excel utility/ schema/ instructions for respective forms so that e-filing can begin. 
 

Here are some of the significant changes that have been introduced in the ITR forms this year for the Assessment Year (AY) 2018-19

ITR 1:

• Similar to AY 2017-18, a one-page simplified ITR Form-1 (Sahaj) has been notified for AY 2018-19 however with certain modifications.
• ITR-1, for AY 2018-19 can be filed only by a resident Indian with an income of up to Rs. 50 lakhs (salary and other sources like property or interest). Therefore non-residents cannot file this form for reporting income of FY 2017-18.
• Details of a break up of salary has been called for in the return which one is easily available in Form 16. Further, parts relating to house property have also been rationalized calling for a little more details pertaining to house property income. 
• The Finance Act 2017 introduced a mandatory levy of a fee under Section 234F for a delay in filing of return of income. Therefore, to accommodate this, an additional field for entering the fee under 234F has been added to the return
• The Finance Act 2017 also introduced TDS on rent paid in excess of Rs 50,000. Therefore, to claim credit of such TDS, a field has been introduced to disclose this in the return.

ITR 2:

• Since a non-resident cannot file his return in ITR-1 for AY 2018-19, he will have to file ITR-2 or other forms as the case may be.
• Further, this form, for AY 2018-19, would be applicable for individuals or HUF for reporting their income other than income from “Profits and Gains from Business or Profession” Therefore this form does not have Schedule ‘Business or Profession’ Further, field for interest held in the assets of a firm or association of person in Schedule AL has been removed as well. Accordingly, partners of firms who could file ITR 2 earlier can no longer file ITR-2.

ITR 3:

• This form can be used by individuals and HUF receiving income under the head “Profits and Gains from Business or profession” in FY 2017-18
• In the general information tab, an option to select section 115H (who is a non-resident Indian in any previous year, becomes assessable as resident in India in respect of the total income of any subsequent year) has been added.
• The depreciation rate has been limited to 40% in all depreciation related Schedules. This has been done to give effect to Notification 103/2016 dated 7 November 2016 where the CBDT has restricted the rate of depreciation on plant and machinery to 40% only.

ITR 4 (Sugam):

• This return is meant for the presumptive tax payers i.e. those who can declare income as a specific percentage of their gross receipts or turnover and pay taxes accordingly.;
• For the presumptive taxpayers, furnishing of GST related details is now mandatory viz GST Registration No., GST Turnover etc
• In the tab for financial particulars the assessee has to declare the following additional information. 

1. Partners/ Members Capital

2. Secured Loan 

3. Unsecured Loan 

4. Advances 

5. Fixed Assets

The mode of filing returns remains the same i.e. electronic filing. However exceptions to this are, the following taxpayers filing ITR - 1 or ITR -4, can still go ahead filing a paper return:

(i) A taxpayer who is of age 80 and above at any time during the previous year; or 

(ii) A person or HUF whose annual income is not more than Rs. 5 lakhs, and who has not claimed any refund in the Return of Income so far. 

Impact of these changes

Most of the changes in the ITR forms this time, have been made more in line with and to accommodate the various amendments brought about in Finance Budget 2017.

However, the introduction of additional fields calling for additional disclosure appear complex, and some concerns have been raised for the first time taxpayers and also the existing taxpayers. Eg the break-up of salary details in ITR 1 which was earlier not required. However, these details are available easily in the Form 16 made available to taxpayers by their employers. 

There would be a little of a challenge for non-residents who can no more file the simple ITR-1 and have to necessarily report their income in ITR-2 or other forms as applicable. However, now NRIs can receive refund directly into their foreign bank accounts by providing their IBAN number and relevant account details.

Presumptive tax payers who report a percentage of their turnover as their income and are not burdened with the mandate of maintaining books of account, will see significant changes. They have an additional compliance of reporting their GST number, turnover etc.  This has probably been done with an objective to link the direct and indirect tax numbers i.e to cross verify the turnover reported in the ITR 4 with that in the GST returns. With the introduction of GST related fields the tax department now may link turnover and other related information.

Overall, the revised forms require some additional reporting; the requirement of GST details was anticipated as government is now making the shift to using more technology to capture leakages. 

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Income Tax Forms	Applicability for FY 2016-17	Applicability for FY 2017-18	Other changes introduced for FY 2017-18
ITR 1 (Sahaj)	Individuals having income from salary, one house property, other sources etc and total income upto Rs 50 lakhs	For resident individuals having Income from Salaries, one house property, other sources and having total income upto Rs.50 lakh	Break up of salary income Break up of house property income New field for section 234F TDS details as per Form 26QC
ITR 2	For Individuals and HUFs not carrying out business or profession under any proprietorship (Earlier partners of firms could filed ITR 2)	For Individuals and HUFs not having income from profits and gains of business or profession (Partners of firms can no more file ITR 2)	Schedule BP is removed The field for “interest held in the assets of a firm or association of person” in Schedule AL has been removed
ITR 3	For individuals and HUFs having income from a proprietary business or profession	For individuals and HUFs having income from profits and gains of business or profession This form is therefore exclusively meant for income from business or profession	In the general information tab, an option to select section 115H added. The depreciation rate has been limited to 40% in all depreciation related Schedules.
ITR 4 (Sugam)	For Presumptive Income from Business & Profession	For Presumptive Income from Business & Profession (No change as regards applicability here)	GST No. and turnover details to be provided

Under “financial particulars” the following additional information to be provided

a. Partners/ Members Capital

b. Secured Loan 

c. Unsecured Loan 

d. Advances 

e. Fixed Assets

The author is Founder & CEO at ClearTax