Get ready to disclose more to the taxman

The new ITR forms call for a host of additional disclosures from individuals as well as other assessees

The beginning of a new financial year implies that the deadline for tax-returns filing is not too far away. The recently released new tax return forms (ITRs) for this year are a reminder to this annual exercise. And like in the past few years, a host of additional disclosures from individuals as well as other assessees are called for. Understanding the new requirements will help avoid last-minute surprises and hassles. Here’s what salaried taxpayers must watch out for this year.

ITR 1 applicability tweaked

ITR 1, the simplest of the return forms, has seen quite a few tweaks in the last three years. In 2017, ITR 1 was scaled down to a single page from seven earlier. In 2018, its applicability was restricted to only those assessees who qualify as a resident in India as per the Income Tax Act.

This year, individuals who are directors in a company or those who have invested in unlisted equity shares (say, senior management or key personnel in unlisted companies/ start-ups who have been allotted shares) are additionally excluded from filing ITR 1.

These individuals will now have to file the more complex ITR 2 now (provided they meet with the other conditions for ITR 2 applicability). Another point to note is that from this year onwards, only senior citizens aged over 80 and whose income does not exceed ₹5 lakh can file ITR 1 (and ITR 4) manually. Earlier, anyone whose income did not exceed ₹5 lakh and who did not claim refund in the return could file the form manually. The other eligibility criteria for filing ITR 1 — income from salaries, one house property, other sources, total income of up to ₹50 lakh and agricultural income of up to ₹5,000 — remain the same.

Additional info in ITR 2

The incremental exclusions in ITR 1 eligibility over the last few years has meant that ITR 2 has become the default option for those individuals who don’t qualify for ITR 1 and at the same time don’t have business income. With the net under ITR 2 getting wider by the year, additional disclosure requirements have been adding to the number of pages in this return form. While ITR 2 was 13 pages long in 2016, it jumped to 16 in 2017. Last year’s changes added one more page. This year’s changes takes the page count to 21. So, what are the new additions?

For one, more details relating to residential status, directorship in companies or holding of unlisted shares are called for. Secondly, while Schedule S — related to ‘Income from Salary’ — called for additional details on the salary income last year, the schedule this year has been revamped so as to seek the breakup of the gross salary, the exempt allowances, the net salary and the Section 16 deductions (such as standard deduction, which is applicable from this year onwards). This change is common to ITR 1 and ITR 2. Under the house property head, furnishing of PAN/TAN of tenant has been made mandatory if TDS is deducted.

This apart, ITR 2 asks for additional details in the schedules related to capital gains as well as income from other sources. Under capital gains, two changes are noteworthy. Long/short-term gains arising from the transfer of immovable property now require details such as the name and PAN of the buyer(s), their percentage share and the address of the property. With long-term capital gains on sale of equity shares and equity-oriented mutual funds no longer exempt from tax, information on this front is also sought in this year’s returns.

To put a check on the non-disclosure of interest incomes which are not subject to TDS or are below the TDS limit, disclosure of interest income under each head — savings bank, bank/co-operative/post-office deposits, interest on tax refund, etc, is sought separately. Emphasis has also been laid on detailed disclosure of incomes chargeable at special rates, including unexplained incomes, investments, expenses, etc. Amount of donation claimed as deduction under Section 80G now asks for a break-up between cash and other modes.

Exempt income and foreign income are under the scanner, too. Those whose agricultural income exceeds ₹5 lakh a year need to disclose location, land size, the nature of ownership, and whether it is irrigated or rain-fed.

Besides, unlike last year, those having foreign assets/income need to disclose details of foreign depository accounts, foreign equity and debt, foreign insurance contracts held, etc, separately.

ITR 4 changes

This is not all. Individuals filing returns under the presumptive taxation scheme also have to note two additional information requirements. One, those claiming taxability under Section 44AE (presumptive income under goods carriage) will now have to give details on registration, ownership, tonnage and income calculations for the same in the return form.

Besides, to prevent leakage of tax, information on the turnover/gross receipt reported for GST along with the GSTIN is also sought for cross-verification purposes.

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