Revised ITR Forms for AY 2019–20
Like every year, the Income Tax Department issues new ITR Forms. Here are the changes for each ITR Form!
ITR 1 (Sahaj)
ITR 1 is the simplest Form for filing ITR i.e. Income Tax Return. ITR 1 can be filed only if the taxpayer is:
- Salaried individual
- Indian Resident
- Income less than INR 50 Lakh in a financial year
Changes in ITR 1 for AY 2019–20
- Salary schedule is similar to Form 16 part B
The images below display comparison between both the ITR 1 salary schedule and Form 16 part B
Our take: The employer usually provides salary breakdown in Form 16 part B. In the ITR 1 for AY 2019–20, the salary schedule asks for the same information provided in Form 16 part B. Since ITR 1 is to be filed by Resident Salaried individuals. This is a positive change since it becomes easier to transfer information from Form 16 to ITR 1.
Also Read: Form 16 Changes & How does it affect you?
2. Standard Deduction of INR 40,000 allowed
Our take: It is a welcomed move by the salaried individuals u/s 16(ia) since it allows a deduction of INR 40,000 from their taxable income. However, for salaried individuals having income less than INR 40,000 in a financial year, they cannot claim the full standard deduction.
3. Bifurcation of Income from Other Sources(IFOS)
In ITR 1 for AY 2019–20, the dropdown for IFOS is provided, it allows the taxpayer to bifurcate their incomes based on the nature of income. Eg: the taxpayer can add interest from saving income, interest from Fixed Deposit and dividend income separately.
Our Take: Under the head of Income from Other Sources, a drop-down option is provided. Earlier, you only had to disclose the total income under the head of IFOS. This AY it would be easier for the taxpayers because they will not have to undertake the hassle to aggregate their incomes from all the sources.
4. Directors in any company cannot file ITR 1
Earlier, the directors that were earning a salary income less than INR 50 lakh, were allowed to file ITR 1.
Our take: It is a hassle for the director since they will have to file ITR 2. It would require the directors to provide information about their company. This information includes Name, DIN(Director’s Identification Number), PAN and if the shares of the company are listed or not. It becomes a hassle since the directors have to share similar information to the MCA(Ministry of Corporate Affairs) and for ACTIVE Compliance. However, the motive for the Income Tax Department is to gather the information of the taxpayer and their income sources.
5. Individuals holding shares in an unlisted company cannot file ITR 1
Our take: An unlisted company is the one which does not have its shares listed on any stock exchange. Some companies provide their employees with shares of the company as a part of their compensation structure. It is usually the case with employees of Startups and Small businesses, where are a shortage of funds. It would prove to be a hassle for such employees holding shares in the unlisted company. Here, the salaried individuals working with such firms will not be allowed to file ITR 1 and will have to file ITR 2.
6. House Property owners with one deemed let-out house property, will be allowed to file ITR 1
Earlier, house property owners with self-occupied and Let-out property were only allowed to file ITR 1. For AY 2019–20, house property owners with deemed let-out house property will be allowed to file ITR 1.
Our Take: When the house property owner, owns more than one house, he/she is allowed to declare one house as ‘self-occupied’. The other house property that is left vacant is considered to be ‘deemed let-out’, i.e. a notional rent is assumed on this property.
ITR 2
ITR 2 can be filed by any individuals or HUFs who do not have any sort of business and professional income source.
Changes in ITR 2 for AY 2019–20
- More information required if the taxpayer is a Non-Resident
Taxpayers with the residential status as a non-resident, are required to file more information while filing their ITR 2. The additional information includes the Jurisdiction of Residence and TIN(Tax Identification Number) in their country of residence. If the taxpayer is an Indian citizen or a person of Indian Origin (POI) they will also have to disclose the number of days of stay in preceding years.
Our take: The I-T department here seems to be asking this information on a precautionary basis. Earlier, the ITR 2 only asked for the residential status and no details of its computation and the taxpayer’s details outside India. However, the non-resident taxpayers may feel hesitant to provide such details.
2. PAN of the tenant is required if TDS is deducted in House Property Income
PAN / TAN of the tenant is mandatory when TDS is deducted under section 194-IB.
Our Take: The income tax department wants to gather information about both the parties in the rental agreement. Earlier, only the name and amount paid by the tenant was required for House Property Income.
3. Details Required if Agricultural Income is more than INR 5 Lakh
If the agricultural income is more than INR 5 Lakh, additional information is required such as Name of district & PIN code, Measurement of Agriculture Land in Acre, if the land is owned or leased and if the land is irrigated or rain-fed.
Our Take: Since the agricultural income is tax-free in India, there are chances of misusing this field to disclose the income and have it free from taxes. To avoid this misuse and check the genuineness of the income, the I-T Department seems to have made this change.
4. Details of Unlisted Equity Shares held during the financial year
Taxpayers holding shares of an unlisted company are required to disclose information of their holding. The information that is to be shared is- Name & PAN of the company, opening and closing the balance of the shares, shares acquired & transferred during the year.
5. Additional information required in case of a director in a company
If the director in a company is being compensated with the salary, then he/she can file ITR 2. Additional information on Name & PAN of the company, DIN and if the shares of the company are listed or not.
ITR 3
ITR 3 is to be filed by Individuals and HUFs having income from the business & profession and require tax audit.
Changes in ITR 3 for AY 2019–20
- Additional information of Trading account is required
While filing ITR 3 more details of the trading account are required to be disclosed. This is in the case when books of accounts are maintained for business and profession.
2. Information for Presumptive business and profession are asked
In the P&L account schedule details for presumptive business and profession are specifically asked in ITR 3 for AY 2019–20. Earlier, this information was part of no account case section.
ITR 4 (Sugam)
ITR 4 is primarily for the taxpayers who have opted for the presumptive taxation scheme. Taxpayers that can file ITR 4
- Indian Residents- Individuals, HUFs and firms (other than LLPs)
- Income less than INR 50 lakh in a financial year
- Businesses and professionals under the presumptive taxation scheme
Changes in ITR 4 for AY 2019–20
- Directors in a company cannot file ITR 4
Earlier, directors in a company that earned only a salary from the company, were allowed to file ITR 3. Directors in any company cannot file ITR 4 and have to either file ITR 3 or ITR 2 this Assessment Year, depending on their income situation.
2. Taxpayers holding shares in an unlisted company cannot file ITR 4
The last assessment year allowed taxpayers holding shares of an unlisted company were allowed to file ITR 4. This AY 2019–20, these taxpayers holding shares of the unlisted company will not be able to file Form ITR 4 and are required to file ITR 2 or ITR 3, based on their income situation.
3. Bifurcation of Income from Other Sources
4. Deemed Let Out is included under House Property Type.
For AY 2019–20 house property owners with deemed let out house property can file ITR 4. Previously, only self-occupied and let out were included under house property, so taxpayers with deemed let-out had to file ITR 2.
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