Changes in the New ITR Forms AY 2020-21: Reporting Requirements and Compliance

Introduction to New ITR Forms

Recently, the Hon'ble Central Board of Direct Taxes (CBDT) has notified new ITR (Income Tax Return) forms for AY (Assessment Year) 2020-21 through Notification dated 29.05.2020. These new forms have introduced new schedules and reporting requirements, which are a significant departure from previous years.

As of now, only ITR-1, ITR-2, and ITR-4 can be e-filed. However, apart from the changes stated above, additional reporting and compliance requirements have been introduced for these forms. These changes aim to enhance tax transparency and compliance.

Detailed Analysis of New ITR Forms

Form ITR-1 Sahaj

ITR-1, also known as Sahaj, is intended for individuals with an income up to Rs. 50 lakhs per annum. Taxpayers with such income can now use this form based on the source of their income, which includes:

Income from Salary or Pension Earnings from one House Property, excluding cases where loss is carried forward or brought forward to the next year Income from other sources, except winnings from lottery or Race of Horses

Form ITR-4 Sugam

ITR-4 Sugam is suitable for individuals or Hindu Undivided Families (HUF) or partnership firms who have opted for a presumptive income scheme based on their earnings. Specifically, these taxpayers include:

Earnings under Section 44AD or 44AEE (gross turnover up to Rs. 2 crore or gross receipt up to Rs. 50 lakh, respectively) Earnings from salary or pension Total income from one House Property, again excluding carry-forwards of losses Income from other sources, excluding winnings from lottery or Race of Horses

Major Changes on ITR-1 Sahaj

Several significant modifications to ITR-1 Sahaj have been introduced to enhance reporting and comply with the new regulations. The key changes are detailed below:

Bifurcation of Amounts Reporting: A new Schedule 80D has been added, requiring taxpayers to report bifurcated amounts under each sub-head. Inclusion of Foreign Travel Expenses: In case of travel expenditure exceeding Rs. 2 lakh, taxpayers are required to disclose this information. Consumption of Electricity: For electricity consumption expenditure exceeding Rs. 1 lakh, taxpayers must report this. Tenant Information: In case of rental income, the tenant's PAN or Aadhar number must be provided. New Deduction Column: A separate column has been introduced to claim deductions under Section 57(4)(vii) for interest received on compensation or enhanced compensation as per Section 56(2)(vii).

Eligibility Criteria and Restrictions for ITR-1 and ITR-4

There are several restrictions for filing returns through ITR-1 and ITR-4. Taxpayers who have brought forward or carried forward losses under the House Property head are not eligible to file either return. These returns should not be used by individuals who meet any of the following criteria:

Holding unlisted equity shares during the previous year Having assets or financial interests in entities outside India Holding signing authority in accounts outside India Earning income from sources outside India Being a Director of a company Earning profits and gains from businesses and professions that do not require computation under Sections 44AD, 44ADA, or 44AE (such as speculative business, agency business, commission, or brokerage income) Capital gains Income from more than one house property Other sources of income, such as winnings from lotteries or owning and maintaining racehorses

Conclusion

With these new ITR forms, the tax compliance landscape for AY 2020-21 has become more stringent. Taxpayers are advised to carefully review the requirements and ensure compliance with these new regulations to avoid any penalties or complications.