Tax Dept allows joint property owners to file returns using simple forms

Rolling back its week old order, the Income Tax Department on Thursday allowed joint owners of single house property to file income tax return using simple Form-1 (Sahaj) or Form-4 (Sugam).

On January 3, it had debarred individual taxpayers owning house property in joint ownership and those who paid Rs 100,000 in electricity bills in a year or incurred Rs 200,000 expense on foreign travel from filing their annual income return using the simple return forms.

"After the notification, concerns have been raised that the changes are likely to cause hardship in the case of individual taxpayers," the Central Board of Direct Taxes (CBDT) said in a statement.

According to the statement, the issue was examined and "it has been decided to allow a person, who jointly owns a single house property, to file his/her return of income in ITR-1 or ITR-4 Form, as may be applicable, if he/she meets the other conditions".

"It has also been decided to allow a person, who is required to file return due to fulfilment of one or more conditions specified in the seventh proviso to section 139 (1) of the Act, to file his/her return in ITR-1 Form," it added.

The government, which usually notifies forms for filing income tax returns by individuals in April every year, on January 3 notified tax return forms for assessment year 2020-21 (income earning year April 1, 2019 to March 31, 2020).

Returns in ITR-1 Sahaj can be filed by an ordinary resident individual whose total income does not exceed Rs 50 lakh, while Form ITR-4 Sugam is meant for resident individuals, HUFs and firms (other than LLP) having a total income of up to Rs 50 lakh and having presumptive income from business and profession.

The January 3 notification effected two major changes in the ITR forms -- first, an individual taxpayer cannot file return either in ITR-1 or ITR4 if he is a joint-owner in house property. Second, ITR-1 form is not valid for those individuals who have deposited more than Rs 1 crore in bank account or have incurred Rs 200,000 or Rs 100,000 on foreign travel or electricity respectively, it said.

Such taxpayers were to use different forms, which would have been notified in due course.

The CBDT said to ensure that the e-filing utility for filing of return for assessment year (AY) 2020-21 is available as on April 1, 2020, the Income-tax Return (ITR) Forms ITR-1 (Sahaj) and ITR-4 (Sugam) were notified on January 3.

"In the notified returns, the eligibility conditions for filing of ITR-1 and ITR-4 Forms were modified with an intent to keep these forms short and simple with bare minimum number of Schedules. Therefore, a person who owns a property in joint ownership was not made eligible to file the ITR-1 or ITR-4 Forms.

"For the same reason, a person who is otherwise not required to file return but is required to file return due to fulfilment of one or more conditions in the seventh proviso to section 139 (1) of the Income-tax Act, 1961 (the Act), was also not made eligible to file ITR-1 Form," it said.

After the notification, concerns were raised that the changes are likely to cause hardship in the case of individual taxpayers.

"The taxpayers with jointly owned property have expressed concern that they will now need to file a detailed ITR Form instead of a simple ITR-1 and ITR-4. Similarly, persons who are required to file return as per the seventh proviso to section 139(1) of the Act, and are otherwise eligible to file ITR-1, have also expressed concern that they will not be able to opt for a simpler ITR-1 Form," it said.

Usually, the Income Tax Department notifies the ITR forms in the first week of April of the relevant assessment year. However, in contrast to the old practice, it has notified two ITR forms ITR-1 and ITR-4 for the assessment year 2020-21 in the first week of January.