What Are the Changes in the New ITR Forms?



Income Tax Return (ITR) is a form in which an individual (taxpayer) is supposed to submit the information about his/her income earned in the particular financial year (1st April to 31st March of next year) and tax applicable to the Income Tax Department of India. It is mandatory that every taxpayer must file his/her ITR on or before the mentioned due date given by the income tax department.

A taxpayer is eligible to fil ITR forms depending upon the sources, type of income earned, and the category he/she belongs to such as individual, company, Hindu Undivided Families (HUFs), Association of Persons (AOP), Body of Individuals (BOI), etc. The Income Tax Department has specified seven types of ITR forms from ITR-1 to ITR-7 and that taxpayers should choose the relevant form to file their return of income.

Income of the taxpayer can be of various forms such as income from salary, capital gains, house property, business/profession, and other sources like interest earned from bank deposits, dividends, securities, royalty income, lottery winnings, etc. Taxpayers are required to file ITR if they have an annual income of Rs. 2.5 lakhs or exceeds it, if they are senior citizens (age between 60 - 80 years), the limit is Rs. 3 lakhs, and if they are above 80 years of age, the limit is Rs. 5 lakhs.

Taxpayers can fill the income tax form (16, 16A, 16B, 16C, 26AS) and submit ITR electronically, called e-filing software. The Income Tax Department provides the benefits of getting a refund based on their own identity and income proof to all taxpayers. Through e-filing, the taxpayers can easily access their past returns. Also, e-filing promises the taxpayers that their income details remain fully secure and confidential.

 

What are the changes in the new ITR forms?

 In April 2021, the Central Board of Direct Taxes (CBDT) notified the new ITR forms for the financial year 2020-2021 (the assessment year 2021-2022). Due to the COVID-19 crises, the CBDT has not changed the ITR forms importantly and the new ITR forms are aligned with the changes made by the Finance Act, 2020. So, this year, the taxpayers can feel relaxed because of the limited changes in the income tax forms.

 Further, the corresponding changes in the new ITR forms are:


1)    Form ITR-1 (Sahaj) cannot be filed by an individual in case of deferment of paying the tax on Employees’ Stock Option (ESOPs).

2)    Form ITR-1 cannot be filed if the tax has been deducted under Section 194N. This section provides that every banking company, cooperative bank, or post office will deduct Tax Deducted at Source (TDS) at 2% on the amount withdrawn over Rs 20 lakhs and TDS of 5% on the amount is withdrawn up to Rs 1 crore.

3)    Individuals with an annual income up to ₹50 lakhs need to file a form ITR-1 online. This annual income will include salary, one house property, agriculture (up to Rs.5,000), and other sources (like interest from deposits, etc.) But an individual co-owns a house property forms ITR-1 or ITR-4 cannot be filed.

4)    Form ITR-4 (also known as Sugam) can be filed by individuals, Hindu Undivided Families (HUFs), and firms that are other than limited liability partnerships (LLPs) with an annual income up to Rs 50 lakhs from the business and profession heads. This is computed under the presumptive taxation provisions of sections 44AD, 44ADA, or 44AE under the Income Tax Act.

5)    Form ITR-4 can be filed by individuals with bank deposits of Rs.1 crore, foreign travel expenditure of Rs.2 lakhs, electricity bills of Rs.1 lakh, or any income under the taxation provisions.

The above-resulting changes in the forms ITR-1 and ITR-4 allow better understanding and less error occurring in ITR filing. To make your tax filing process very simple and user-friendly, we, as a tax firm in Pune, assure less time consumption for filing your income tax refund and more possibilities of getting payback soon. Along with the accounting and tax services in Aundh, we also provide bookkeeping and consulting services to individual taxpayers and business owners.

To get a one-stop solution for all your business requirements, do visit the best tax consultant near me!!

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