Changes in Income Tax Return Forms (ITR Forms) for AY 2017-18

By | July 19, 2017

ITR Forms Changes

Deadline of Income Tax Return filing for AY 2017-18 (FY 2016-17) is just couple of weeks away and most of us have still not filed the return. If you have not filed the return and going to file in coming days then go through the following changes made in the ITR forms before filing.

One of the biggest changes made by the income tax department is the introduction of Single/One Page ITR form which shall cover almost 90 percent of the assesses. All the individual assessee having income from salary, pension, one house property and income from other sources (i.e. bank interest etc.) shall have to file ITR-1. However, this form shall be filled by assessee having total income less than Rs.50 lakhs.

This ITR-1 form will cover most of the salaried individual, pensioners, housewives etc. and can easily be understood and filed by the commoner without taking help of the professionals as it includes only the common deductions like 80C, 80D, 80G and 80TTA. In case assessee requires claiming deduction in other sections then he can claim the same under the column titled ‘Any Other”. Further, columns like exempted Long Term Capital Gains under section 10(38) and dividend income under section 10(34) have also been added.

Apart from introducing ITR-1, there are many changes made in the existing ITR forms. Some forms have been done away with or have got their name changed which reduces the total number of Income Tax Forms from existing 9 to 7  such as old ITR-2, ITR-2A and ITR-3 have been replaced with ITR-2 while the old ITR-4 is renumbered as ITR-3. Following is the list of the changes made in the ITR forms for AY 2017-18 together with the applicability.

ITR Forms Ay 2017-18

Key Changes in ITR Forms for AY 2017-18

ITR 1, 2, 3 and 4: Mandatory Disclosure of Aadhaar Number

Quoting of Aadhaar Number or Aadhaar Enrollment Number (in case of applied for) has been made compulsory in the ITR forms.

ITR Form 1 Sahaj

ITR 1, 2, 3, 4, 5, 6 and 7: Disclosure of Cash Deposited in Demonetization Period i.e. from 9th November, 2016 to 30th December, 2016.

Disclosing the amount of cash deposited in the bank account in between November 9th, 2016 to December 30th, 2016 is to be filed in the ITR form. However, the taxpayers required to mention the amount only if it exceeds Rs.2 lakhs, aggregating the new and old currency notes in any of his bank account such as savings account, loan account or current account during the demonetization period.

ITR 2, 3 and 4: Additional Deduction of Home Loan

As per section 80EE, first time home buyers can claim additional deduction of interest to the extent of Rs.50,000. This deduction is over and above the existing limit of Rs.2 lakhs under section 24(b).

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For availing the benefit under Section 80EE you need to satisfy few conditions namely the loan should have been sanctioned between 1st April, 2016 to 31st March, 2017, the loan amount should not in any case exceeds Rs.35 lakhs for a residential house cost and the total cost of the house in consideration does not exceed Rs.50 lakhs. Further, the taxpayers shall not be any having any other residential house property in his name at the time of sanction. However, he can own any number of commercial properties or even a residential house property after sanctioning of loan as the conditions specifically states that at the time of sanction of loan not after that. The benefit under section 80EE can be claimed during the construction of the house unlike deduction section 80C and section 24(b) which can be claimed only after the completion of the house.

ITR 2, 3, 5, 6 and 7: Unexplained income or credits chargeable at Special Rate of 60 percent

Taxpayers having unexplained incomes or investments as per section 115BB, have to report it under “Schedule OS” which will be charged at special rate of 60 percent. Taxpayer cannot file ITR-1 if he is having unexplained incomes or investments in the concerned year.

Dividend income exceeding Rs.10 lakhs from Indian Companies needs to be disclosed under Schedule OS and will be charged at flat rate of 10 percent. Similarly, income/royalty received for patent developed and registered in India needs to be disclosed under Schedule OS and shall be taxed at flat rate of 10%.

ITR 2, 3 and 4: Additional details of the assets and liabilities of the Individuals earning above Rs.50 lakhs

Last year Government had asked individuals/HUFs earning above Rs.50 lakhs to declare the value of assets and liabilities under new schedule including the cost of immoveable property, bullion, jewelery, vehicles, shares, cash and bank balance etc.

This year Government has asked to provide the description and the address of the immoveable as well as moveable assets in the new ITR forms. Further, new columns have been added to disclose the “Interest held in the assets of a firm or association of person (AOP)” as a partner or member.

ITR 4: Division of Cash receipt and digital receipt under presumptive taxation scheme

Section 44AD allows assesse to consider 8 percent of the gross receipt or turnover to be the deemed income for the year. However, Finance Act 2017 has reduces the rate to 6 percent for the digital receipt of the taxpayer for the year. New columns have been inserted to segregate the turnover or receipt in digital mode and any other mode.

Further, Finance Act 2017, had also included the professionals such as lawyers, doctors, chartered accountants etc. under the presumptive taxation scheme. Now the professionals can declare minimum 5o percent of gross receipt as deemed income for the year.

Tax Rebate under Section 87A

Tax Credit or Rebate for the taxpayers having gross taxable income (total income less deduction under section 80) up to Rs.5 lakhs has been increased from Rs.2,000 to Rs.5,000 under Section 87A for the AY 2017-18. However, if the total tax liability is less than Rs.5,000 then the tax credit or rebate shall be restricted to the tax liability.

Most of the changes made in ITR forms are in line with the simplification and digitalization of the tax compliance. Further, by making filing of tax return mandatory for the assess having total income including exempt income exceeds basic exemption limit shall bring-in more assessee in the tax ambit.

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