I-T returns take new form

ITR 1 and 2 have been streamlined, grouping a few segments and adding a few others

The annual tax-return filing ritual will soon be upon us. The Tax Department has notified the new income tax return forms to be used by assessees this year. Here are the changes that salaried tax payers need to take cognisance of, before filing their returns this year.

Applicability tweaked

The year gone by saw rationalisation of ITR forms in quite a few ways. For instance, ITR 1 was brought down to a single page from seven earlier, and ITR 2A was done away with. The current year has seen further tweaks.

Until last year, ITR 1 could be used by residents — not ordinarily residents as well as non-residents. This year, this form can be used only by those who qualify as a resident in India as per the definition laid down in the Income Tax Act.

The other criteria for being eligible for ITR 1 — income from salaries, one house property, other sources and total income of up to ₹50 lakh — remain the same. This could be to move anyone who has a foreign bank account or transactions abroad, to ITR 2. Currently, the ITR 2 form is applicable, amongst other criteria, to those who have foreign income/assets.

In 2017, the ITR 2 form was modified in such a way that not only the salaried class but also partners of business firms could use it. This has been done away with this year. Thus, ITR 2 has effectively been made applicable exclusively to the salaried class who are otherwise not eligible for ITR 1. This year, partners of a firm have to use ITR 3, along with those who run proprietary businesses.

The new ITR 1 form continues to be a single-page document. But the department seeks more details under the salary and house property heads.

More information sought

Additional columns have been added to salary income for information such as allowances not exempt, value of perquisites and profit in lieu of salary.

Under house property, too, details such as rent received/receivable, local taxes paid and interest payable on borrowed capital are sought. These changes have been accommodated by reducing space available for entry of bank account, advance tax/self-assessment tax and TDS/TCS details.

The department has increased the disclosure requirements under the capital gains schedule in ITR 2. First, greater disclosures with regard to consideration received are demanded from assessees who make capital gains from sale of unlisted securities. This is in line with the new section, 50CA, applicable for such transactions from 2017-18 onwards. The section calls for valuing the consideration on such transfers at the actual receipt or the fair market value (to be calculated in the prescribed manner), whichever is higher.

Separate segments have been introduced to capture any investments made to save capital gains tax, under sections such as 54, 54B, 54EC, 54EE and 54F. Earlier, this was not available for each section, individually.

The schedule dealing with income from other sources has also been expanded — the new forms specifically ask for disclosure of taxable gifts such as any sum of money over ₹50,000 or gift of property received for inadequate or no consideration.

All these tweaks have added one more page to ITR 2, taking the total number of pages to 13.

Common changes

Changes common to both ITR 1 and 2 forms include the removal of gender disclosure from the personal information section, as also the section asking for details of cash deposited during the demonetisation period (which was brought in last year).

Provisions have been made to capture the TDS on rent over ₹50,000 as per Form 26QC, made mandatory from June 1, 2017, onwards.

A late fee under Section 234 F will be charged for returns not filed within the due date specified (probably July 31, 2018, for incomes earned during 2017-18). If the return is submitted after the due date, but before December 31, 2018, a flat late fee of ₹5,000 will be payable.

A delay beyond December 31 will double the late fee.

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