New ITR forms call for filing return even if your income isn't taxable

Joint property holders can file simplified forms. But even if your income is low, file returns if you meet one of three newly-introduced conditions

The Central Bureau of Direct Taxes (CBDT) recently notified the income tax return (ITR) forms I-VII for the assessment year 2020-21. This year’s forms contain several features that were necessitated by changes introduced in the Finance Act, 2019. The forms have also been modified to accommodate the leeway the government has granted taxpayers in the wake of the lockdown.

ITR I and IV were released in January also. At that point, a restriction was imposed. People who own a single-house property, but in joint name, were not allowed to use these two simplified forms. Now that restriction has been removed. If a taxpayer has one house property, he can use these forms even if the property is held in joint name.

Many individuals, in the normal course, do not have to file a tax return because their incomes are lower than the taxable limit. According to a proviso added to Section 139 of the Finance Act, 2019, if such a person has incurred an expenditure of more than Rs 1 lakh on electricity bill, more than Rs 2 lakh on himself or any other person for travel to a foreign country, or deposited cash more than Rs 1 crore in one or more current accounts, he will be required to file a tax return. “The purpose is to make individuals entering into high-value transactions file tax returns,” says Naveen Wadhwa, deputy general manager, Taxmann.com. These conditions have now been incorporated in the ITR return forms. “Many people who earlier did not file tax returns should check to see if they meet any of these criteria and hence need to file a return this year,” says Rupali Singhania, partner, Areete Consultants LLP.

 

 

If a taxpayer’s deposit or expenditure exceeds the threshold limit, he will also have to state the aggregate amount deposited or spent during 2019-20 while filing the return. “The burden of disclosure and compliance on the taxpayer will increase. Apart from maintaining details of their incomes and investments, taxpayers should maintain the details of their foreign travel expenses, both personal and business. They should also maintain data on cash deposits made in banks in the course of their business transactions,” says Archit Gupta, founder and chief executive officer, ClearTax.

Taxpayers were permitted to invest in the first quarter of the current financial year to avail of deductions for the previous financial year. A new Schedule DI has been inserted in the ITR forms where taxpayers can enter details of these investments. Wadhwa emphasises that though the time limit for making investments has been extended by three months, the threshold limit available under the respective sections has not changed. “If a taxpayer is, for instance, claiming deduction under Section 80C, the aggregate amount of deduction for investment or payment made during the period April 1, 2019, to March 31, 2020, and for the additional period of April 1, 2020, to June 30, 2020, shall not exceed Rs 1.5 lakh,” he says. Taxpayers should also avoid claiming a deduction on the same investment twice. “If a taxpayer has made an investment in the first quarter of 2020-21 and claimed deduction on it for 2019-20, he should not claim deduction on it for 2020-21 as well,” says Singhania.

Though the last date for filing return has been extended to November 30, do not wait until the last moment to do so in view of the more extensive disclosures required. Start compiling the details right away and do so as soon as the utilities become available (utilities are java and excel versions of ITR forms that allow returns to be submitted electronically). At present, utilities for only ITR I and IV are available.