The government has notified forms for filing income-tax returns (ITR) for assessment year 2020-21 for individual, professional and corporate assesses that allow taxpayers to benefits of investments in tax-saving instruments for an extended period up to June 30 granted by the government following the Covid-19 pandemic.
The new ITR forms also require assesses to furnish details if their cash deposits exceed Rs 1 crore or if they have spent over Rs 2 lakh on foreign travel or their electricity bill is Rs 1 lakh or more in the fiscal, in case they are not otherwise required to file income tax returns.
The income-tax (I-T) department on Sunday said in a tweet that CBDT notified ITR forms 1 to 7 for AY 2020-21, which captures income and investment details for financial year 2019-20 through an order dated May 29.
CBDT notifies Income Tax Return forms 1 to 7 for AY 2020-21(FY 2019-20), vide G.S.R. 338(E) dated 29th May, 2020. pic.twitter.com/xp8m20dbp5
— Income Tax India (@IncomeTaxIndia) May 31, 2020
The government has given four months additional time to the taxpayers to file returns for the financial year 2019-20 because of the Covid-19 pandemic. Finance minister Nirmala Sitharaman had extended the due date for all income-tax returns from July 31 to November 30, 2020 while announcing the first tranche of Rs 21 lakh crore Aatmanirbhar Bharat Abhiyan stimulus package on May 13.
Accordingly, the time for making investment or payments for claiming deduction under Chapter-VIA-B of the I-T Act that include Section 80C (LIC, PPF, NSC etc.), 80D (Mediclaim) and 80G (Donations) for the financial year 2019-20 had also been extended to June 30, 2020.
According to Saraswathi Kasturirangan, partner at consultancy firm Deloitte India, the ITR 1 form, which is also known as ‘Sahaj’ (easy), has been reissued with some changes. The form, earlier issued on January 3, 2020, had sought detailed information with respect to salary income as well as house property income such as tenant details. These details are no longer being sought in the new form, she said.
“The ITR 1 also now captures information on whether the taxpayer has cash deposits exceeding Rs 1 crore, expenditure on foreign travel exceeding Rs 2 lakh or electricity expenses exceeding Rs 1 lakh since these trigger tax filing requirements even where the taxpayer does not have taxable income,” she added. ITR 1 is meant for individuals having salary, pension, family pension and interest income.
Amarpal Chadha, tax partner and India mobility leader at consultancy firm EY India, said the government has taken necessary steps to “timely” notify the forms pursuant to the extension of return filing deadline to November 30.
“To give relaxations due to Covid, CBDT had allowed claiming of deductions on investments made during the period April 2020 to June 2020 against income of tax year 2019-20. There were certain doubts about the modality to claim deduction for such investments. The notified forms provide for required mechanism to claim such deductions,” he said.
Experts, however, await necessary changes in the online return filing portal.
Naveen Wadhwa, DGM at tax consultant Taxmann said the income-tax department has notified the forms without the return filing utility. “Thus, a taxpayer, who is required to file the return, cannot do so until the return filing facility is made available on the e-filing portal,” he said.
The new ITR form for corporate taxpayer provides the option for the company to opt for a low tax rate without any exemption.
Ashok Shah, partner at NA Shah Associates LLP said in case of domestic companies, the new form — ITR 6 — asks the taxpayer whether the company would opted for concessional taxation. “Tax payers who opt for new concessional tax rate are required to pay tax at effective tax rate of 25.17% and in case of new manufacturing companies incorporated on or after 1.10.2019 and commenced the manufacture or production of an article or thing on or before 31st March, 2023 are required to pay tax at effective rate of 17.16%,” he said.
Union finance minister Nirmala Sitharaman on September 20, 2019 had slashed corporate tax rates for domestic manufacturing firms from 30% to 22% and for newly incorporated companies from 25% to 15% provided they forgo all exemptions and incentives. Effectively, tax incidence on existing companies was reduced to 25.17%, inclusive of surcharge and cess and for new companies it turned out to be around 17.1%.
Chartered accountant Kapil Rana said the new ITR forms show that the government is making all efforts to curb the tax leakages and also allowing law-abiding taxpayers to take benefit of the investments made during the difficult time even if they are done after the completion of the assessment year.