Income Tax Return filing: Pick right ITR form based on your performance; here’s how

Income Tax Return filing: Pick right ITR form based on your performance; here’s how

The Central Board of Direct Taxes (CBDT) had recently announced the new Income Tax Return (ITR) forms in which the taxpayers are required to furnish the details of income earned, source of the same and taxes paid in respect of the financial period beginning April 1, 2017 to March 31, 2018. By notifying the new ITR forms much before the commencement of the tax filing season, CBDT has depicted its commitment to improve service to taxpayers and to provide them sufficient time for filing tax returns.

Seven types of ITR forms

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Identifying the different categories of taxpayers, the CBDT has notified seven types of ITR forms. Hence, it is important to understand the changes in ITR and their impact, so as to prepare better for the tax filing season. For individuals and HUFs, ITR 1 to 4 are applicable, depending upon the source / nature of income:

In a bid to get tough on tax evaders, the new ITR forms seek additional information from the taxpayers. In view of the same, some of the existing schedules have been modified and some new schedules have been introduced. These changes shall also ease out the transition to e-assessment and hence greater clarification is being sought from taxpayers in the return itself so as to save time and costs at the assessment stage.

ITR 1 (SAHAJ)

The simplest ITR form, now requires detailed calculation of income from salary and house property, which was not required until last year. Further, taxpayers will have to provide details of allowances that are not exempt, value of perquisites, profit in lieu of salary and other deductions. Additional rows have been inserted to report tax paid to local authorities, interest payable on borrowed capital for income from house property.

ITR 2 or ITR 3

Taxpayers furnishing these ITRs will now be required to furnish a detailed computation of the capital gains, providing details of the actual sales consideration, Fair Market Value (FMV) as determined in a prescribed manner and thereafter the deemed value of consideration, which shall be higher of the two. Additionally, for those claiming investment based exemption, new columns have been inserted for furnishing details like date of sale of original capital asset and amount of exemption claimed for each capital gain separately.

Finance Act 2017 brought about an amendment relating to the transfer of unlisted shares, which deems the value calculated by a chartered accountant or a merchant banker to be the full value of consideration, if the transfer price is less than the FMV. The new ITR forms accordingly require the taxpayer to provide figures of actual sales consideration and FMV as determined by a merchant banker or chartered accountant. An individual or an HUF, who is a partner in a firm, shall now be required to file his return in Form ITR 3 only. Last year the partners were required to file return in ITR 2.

ITR 4

This form also seeks more information than the erstwhile form which sought only four particulars of the business, i.e., total creditors, total debtors, total stock-in-trade and cash balance. The new ITR 4 form seeks details of additional financial particulars such as amount of secured/unsecured loans, advances, fixed assets, capital account, etc. Further, ITR 4 also requires the taxpayers to provide the aggregate turnover as reported by him in the GST return. With GST returns tied to the ITRs submitted to the Income Tax Department, manipulation of turnover would be impossible, thereby dissuading tax evaders.

Individual taxpayers filing income-tax return in ITR 2/ ITR 3/ ITR 4 are no longer required to mention their gender as that column has been removed. Also, ITR 2 now allows non-residents to provide foreign bank account for the purposes of crediting refund.

Late filing of ITR

Until the last financial year, if a taxpayer failed to file the ITR before end of assessment year, penalty under Section 271F could be imposed by the assessing officer only after initiating the penalty proceedings. Ensuing the exclusion of this penalty provision by the Finance Act, 2017, late fee is levied under Section 234F on account of delay in furnishing of ITR. Accordingly, the taxpayer shall now be required to pay late filing fees under Section 234F along with interest under Sections 234A, 234B and 234C before filing the ITR and furnish the details therein.

Source:- financialexpress

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