The income tax return forms have been notified for the tax filings due for AY 2019-20. The due date for filing the income tax returns for FY 2018-19 is 31 July 2019. The returns require some additional and detailed disclosures in comparison to the income tax returns of earlier years.
Taxpayers need to be aware of the key changes that would impact their tax filings.
A taxpayer who is an individual and is resident in India and earning income up to Rs 50 Lakh can use ITR-1 to file the return. The form ITR-1 can be filed for reporting income from salary, one house property, income from other sources and agricultural income up to Rs 5,000.
Taxpayers have to report the gross salary under income from salary i.e., salary, perquisites and profits in lieu of salary. The exempt allowances have to be disclosed allowance-wise and deducted from gross salary e.g., if a portion of the HRA has been claimed as exempt, it’s amount should be separately reported. For income earned from other sources, a taxpayer has to also provide detailed break-up of incomes e.g, Interest income from savings or fixed deposits etc.
ITR-2 can be used by taxpayers who are individuals and Hindu Undivided Families (HUFs) to report all types of income other than income from business or profession.
Resident individuals who have total income above Rs 50 Lakh have to use ITR-2. Also, a taxpayer who is a non-resident or a Director in any company or has invested in unlisted equities at any time during the financial year has to file the returns in ITR-2 even if their income is less than Rs 50 Lakh. Such taxpayers have to disclose information on their Directorships in various companies and details of their investment in unlisted equity shares.
In ITR-2, in reporting the income from salary, taxpayers need to provide a complete break-up of the details of various components of salary. The specifications of the amounts falling under salary, perquisites and profits in lieu of salary have to be mentioned therein. Taxpayers would be able to draw this information from the annexure to Form 16 provided by the employer.
Also, an employee earning income from more than one employer during a financial year has to provide the complete salary details (as above) for each employer.
In making the disclosure under ‘residential status’, taxpayer has to furnish the details of days of stay in India in the previous year, during the preceding four years etc. In the case of non-residents, additional details need to be furnished with respect to details of the jurisdiction of residence outside India and taxpayer identification numbers of such a country.
The form ITR-2 also requires detailed disclosures for various transactions. In the case of donations, segregation into cash and other modes have to be provided; for the immovable property sold, the address of the immovable property sold with buyer’s details such as PAN; in case of agricultural income exceeding Rs. 5 Lakhs, the location and ownership details of agricultural land must be provided.
ITR-3 can be used by Individuals and HUFs to report all types of income. Specifically, these taxpayers who earn income from profits and gains of business or profession have to file their return in ITR-3.
A taxpayer who is a Director in a company or who has had investments in unlisted equity shares at any time during the financial year and earns income from business or profession will have to file their return in ITR-3. All the disclosures and details required in ITR-2 also apply to a taxpayer who has to file in ITR-3. Additionally, a taxpayer will have to furnish the information on turnover/gross receipts reported under their GST registration (under Goods and Service Tax Act) for the financial year 2018-19.
The author is ClearTax CEO. Views expressed are his own