INCOME TAX RETURN FORMS(ITR – 1, 3 & 6)

CA. JAINENDAR P

B. COM, ACA

ASSOCIATION OF CHARTERED ACCOUNTANTS,

CHENNAI

11th JULY 2020

• INTRODUCTION

• ITR FORMS

• DUE DATES FOR ITR

• IMPORTANCE FOR CORRECT FILING OF ITR

• APPLICABILITY & CHANGES IN ITR FORMS – AY

2020-21.

AGENDA:

INTRODUCTION

❑The ITR forms have been Notified on 29th May, 2020.

❑ Presently ITR 1 and ITR 4 is available in JAVA and Excel utility for E-filing.

❑ ITR 2 was available only in Excel Utility until yesterday, i.e 10th July.

❑ Relevance of Delhi HC Judgement in the case of Avinash GuptaVs. UOI.

The Delhi HC had instructed the Govt. to ensure availability of forms for

tax audit from the beginning of next assessment year. The Court has taken

the cognizance of delay by CBDT in release of ITR forms which has

become a habit of CBDT.

ITR FORMS

• Individuals

ITR 1

• Individuals & HUF

ITR 2 & 3

• Presumptive Incomes

ITR 4

ITR FORMS

• Other than Individual, HUF & Companies

ITR 5

• Companies other than companies claiming exemption under section 11

ITR 6

• Charitable Exempt Entities

ITR 7

DUE DATES FOR FILING ITRDue Dates for Filing Income Tax Returns

Sr. No. Type of assesses Existing Due Date Revised Due Date

1

Liable for Audit

- Income Tax Return 31st Oct 2020 30th Nov 2020

- Audit Report 30th Sept 2020 31st Oct 2020

2

Not Liable for Audit

(Eg: Salaried Employees) 31st July 2020 30th Nov 2020

3 Transfer Pricing 30th Nov 2020 30th Nov 2020

IMPORTANCE FOR CORRECT FILING OF ITR

On filing an incorrect income tax return, the assessee may receive any one of the

following notices :

➢ Notice u/s 139(9)- Defective Return – A response may be submitted within 15

days in the absence of which the return shall be treated as ‘Invalid’ leading to

penalties and litigations

➢ Intimation u/s 143(1) - May lead to wrong processing of return and infructuous

demands may arise, leading to filing of 154 application and litigations.

➢ Scrutiny u/s 143(2) or 148.

➢ Penalty u/s 270A Under reporting / mis-reporting of income may lead to

penalty amounting to 50% / 200% of the tax on under-reported income.

➢ Prosecution u/s 277 – Furnish of False information

a) Where tax sought to be evaded exceeds ₹ 25,00,000/- Imprisonment for a

term of 6 months to 7 years and fine.

b) In other case Imprisonment for a term of 3 months to 2 years and fine.

IMPORTANCE FOR CORRECT FILING OF ITR (CONTINUED)

APPLICABILITY &

KEY CHANGES IN

INCOME TAX RETURN FORMS FOR

AY 2020-21

WHO CAN USE ITR – 1 FORM ?

Ordinary Resident Individuals

❖having total Income < Rs.50 lakhs

❖Income from Salary / Pension and/or

❖Income from only ONE House Property and/or

❖Income from Other Sources excluding :-

i. Dividend income exceeding Rs.10 lakhs taxable u/s 115BBDA

ii. Income referred to in sec - 115BBE

iii. Winning from Lottery & Race Horses

WHO CANNOT USE ITR - 1 FORM

❖ Individuals having total Income exceeds Rs. 50 Lakhs

❖ Is a Director in any company.

❖ Has held any unlisted equity share at any time during the previous year.

❖ Income from more than one house property and where there is brought forward loss

or loss to be carried forward from previous year.

❖ Income from winnings from lottery or income from Race horses.

❖ Income taxable under section 115BBDA (Tax on certain dividends received from

domestic companies).

❖Income under the head “Capital Gains” e.g., short-term capital gains or long term capital

gains from sale of house, plot, shares etc.

❖Income to be apportioned in accordance with provisions of Section 5A.

❖Agricultural income in excess of Rs. 5,000.

❖Income from Business or Profession

❖Loss under the head ‘Income from other sources’.

❖Person claiming relief under section 90 and/or 91.

WHO CANNOT USE ITR - 1 FORM

❖ Income of the nature referred to in section 115BBE (Tax on income referred to in section

68 or section 69 or section 69A or section 69B or section 69C or section 69D).

❖ Any resident having any asset (including financial interest in any entity) located outside

India or signing authority in any account located outside India.

❖ Any resident having income from any source outside India.

WHO CANNOT USE ITR - 1 FORM

KEY CHANGES IN ITR 1

1. CHECKPOINT IN GENERAL INFORMATION:

KEY CHANGES IN ITR – 1

AY 2019-20 AY 2020-21

2. NATURE OF EMPLOYMENT:

KEY CHANGES IN ITR 1

3. New Additions under Chapter VIA:

80EEA - Deduction for interest paid on home loan for affordable housing – Interest payment up to

Rs. 1.50 Lakhs.

80EEB - Deduction in respect of interest paid on loan taken for the purchase of electric vehicle.

- Interest payment up to Rs. 1.50 Lakhs.

- Loan for purchase of EV must be sanctioned during the period starting from 1st April 2019 till

31st March 2023.

KEY CHANGES IN ITR 1

4. SCHEDULE - DI: DETAILS OF INVESTMENTS

❖Individuals and HUFs having income from profits and gains of business or

profession excluding Presumptive income.

❖Those who can file ITR-2.

❖Partner in Partnership Firm.

WHO CAN USE ITR - 3 FORM

SPECIFIC CHANGES IN ITR 3

1. The Checkpoint with regard to seventh proviso to Sec 139(1) as discussed in

ITR – 1 is applicable for ITR – 3 as well.

- Deposit more than Rs. 1 Cr in Current accounts.

- Expenditure for Foreign Travel exceeding Rs. 2 Lakhs.

- Expenditure of Electricity Consumption exceeding Rs. 1 Lakh.

2. Chapter VI-A :

▪ Addition of deduction under Section 80EEA and 80EEB

2. GENERAL INFORMATION –TYPE OF COMPANY

Where assessee needs to disclose about the Directorship in companies or holding

of unlisted equity shares, one new disclosure column is added here which is “Type

of Company”

SPECIFIC CHANGES IN ITR-3

❖ Companies other than Companies Claiming Exemption u/s 11.

WHO CAN USE ITR - 6 FORM

SPECIFIC CHANGES IN ITR 6

The Turnover / Gross Receipts to be considered is that of FY 2017-18 and the limit is

Rs. 400 Crores.

1. Turnover of Domestic Companies

2. Whether Assessee has opted for taxation under section 115BA / 115BAA/

115BAB ? (Domestic Company)

TAX RATES FOR COMPANIES

Conditional

S. 115BA

(Mfg)

25%

Same as

turnover based

< 400 Crs

S. 115BAA

(Any)

22%

22 + 2.2 + .968

= 25.168

S. 115BAB

(Mfg)

15%

15 + 1.5 + .66

= 17.16

SCHEDULE – BP - Computation of Income from Life insurance business

SCHEDULE OS: REMOVAL OF Point No. 2C

❖ IND AS – BS : REMOVAL OF NO ACCOUNTS CASE

Balances of Debtors, Creditors, Stock-in trade and Cash as on 31st March.

SPECIFIC CHANGES IN ITR-6

❖ IND AS – PL : REMOVAL OF POINT No. 63 & 64

63. Computation of Presumptive Income from Goods Carriages under Section 44AE.

64. If regular books of account of business or profession are not maintained, furnish

the following information for previous year 2018-19 in respect of business or

profession – (OTHER THAN COVERED U/S 44AE)

1. Tax Audit Applicability

COMMON CHANGES IN ITR-3 & ITR-6

44AB

• Limit Increased from 1 Cr to 5 Cr

• Limit of 5 Cr only if:

i. Aggregate of all amounts received in cash do not exceed 5% of said

amount; AND

ii. Aggregate of all payments made in cash do not exceed 5% of said

payment.

44AB - EXAMPLE

• Receipts:-

➢ 4 Crs sales out of which 10 Lacs in cash

➢ Partner introduces – 15 Lacs in cash loans

➢ Loans – 10 Lacs by NEFT

➢ Is Tax Audit u/s 44AB required?

-Yes as total receipts - 425 L ; Cash – 25L

➢ Is it mandatory or optional??

- mandatory

2. Part A-OI : Additional disclosure

❖ Point 11 (da) – Disallowable u/s 43B

Interest on any loan or borrowing from a deposit taking NBFC or systemically

important non-deposit taking NBFC.

❖ Point 17 – Whether assessee is exercising option under subsection 2A of section

92CE (Tick –Yes/ No)[If yes, please fill schedule TPSA]

3. SCHEDULE DEP & DCG: Under Depreciation on Plant and Machinery (Other

than assets on which full capital expenditure is allowable as deduction under any other

section) – New rate option of 45% is added.

COMMON CHANGES IN ITR-3 & ITR-6

4. Pass Through Income LTCG 112A

COMMON CHANGES IN ITR-3 & ITR-6

SCHEDULE PTI – ADDITIONAL DISCLOSURE

5. SCHEDULE CFL – BIFURCATION OF LOSS

6. PAN / AADHAR:

Along with PAN, Aadhar No. can also be used interchangeably.

7. SCHEDULE – FSI & TR:

Details of Income from outside India & tax relief is available only in case of resident.

COMMON CHANGES IN ITR-3 & ITR-6

8. NEW SCHEDULE TPSA – DETAILS OF TAX ON SECONDARY ADJUSTMENTS u/s

92CE(2A)

9. SCHEDULE DI - The dates for making investment, construction or purchase for claiming roll

over benefit in respect of capital gains u/ss 54 to 54GB extended to September 30

10. Removal of Exemption u/s 54EE

Exemption u/s 54EE – Long term specified assets, i.e units of funds, as notified by the

Government, issued before 1st April, 2019. Hence, for AY 2020-21, this exemption is

not applicable to be claimed against Long Term Capital Gain.

11. Verification of ITR

KEY CHANGES IN ITR-6

Part B –TI: Any other income chargeable at Special Rates – Following points

inserted.

SCHEDULE – SI

ITR V and ACKNOWLEDGEMENT

❑ CBDT has notified ITR V and Acknowledgement forms separately for AY 2020-21.

This means that ITR V is no longer the final Acknowledgement form of Return

filing.

❑ On submission of the Tax return, ITR V would be generated and only after

completing the E-verification procedure the Acknowledgement Form would be

generated which is downloaded from E-filing portal.

CA. JAINENDAR P B.COM, ACA

+91-80560 63340

pjainendar@gmail.com

PRESENTATION: PART IICOVERAGE: ITR 2 ITR4 ITR5 ITR 7

KEY CHANGES

• The IT Dept. vide Notification No. 31/2020 dt. 29/05/2020 notified the forms.

• However, as of date, only the following IT return preparation software have been uploaded in

portal - ITR1; ITR2 & ITR 4;

• Who has to file: 7th Provisio to 139 (1):

➢ Deposited amount exceeding Rs. 1 crore in one or more current accounts with banking company or a co-

operative bank;

➢ incurred expenditure exceeding Rs. 2 lakh rupees for himself / any other person for foreign travel;

➢ incurred expenditure exceeding Rs. 1 lakh towards consumption of electricity

➢ [1/6 Scheme [Budget 2002]]

VERIFICATION

• Notification No. 1 / 2020: Rule 12: Not to file in ITR 1 : (latest change) Omitted -

• Joint Ownership of HP & 139 (1) Seventh Proviso → Now can be done in ITR1

• Paper form: now applicable only for Super Senior Citizens / ITR 1 & 4

WHO CAN USE ITR 2 : (ITR 3 – PGBP)

• Basically Individuals & HUF who are precluded from filing ITR 1

• Income > Rs. 50 Lakhs

• Residents, Not Ordinarily Residents, Non Residents

• More than One House Property; Capital Gains

• Directors / Investments in Unlisted Equity Shares

• B/f losses or C/f Loss

• Dividend Income exceeding Rs. 10 Lakhs (u/s 115 BBDA)

• Income u/s115 BBE

• Winnings from Lottery & Race Horses

WHO CAN USE ITR 2

• Apportionment u/s 5A : Portuguese Civil Code

• Agriculture Income in excess of Rs. 5,000

• Person claiming relief under DTAA

• Person having Assets / Source of Income outside India

WHO CANNOT USE ITR 2 :

• Entities other than Individuals & HUF

• Individuals & HUF having income from Business / Profession (PGBP)

WHO CAN / CANNOT USE ITR 4 : (PRESUMPTIVE INCOME + ITR 1)

√ Individuals HUF who is a Resident (Other than Ordinary Resident) & Resident Firms (Other than LLP),

√ Total Income less than Rs. 50 lakhs

√ Income computed under Presumptive basis : Sec 44AD / 44 ADA / 44AE

√ and Income under Salary or Pension; One House Property computed; income from other Sources

X Others may not use this : please see ITR 1 ineligibility)

X Director in a Company; investments in Unlisted Equity Share;

X Non-Residents; Assessees having Foreign Assets; Foreign Sourced Income; DTAA Relief; Income > Rs. 50

Lakhs; LLP

X More than one HP; Income from Capital Gains; IFOS (Lottery; Race Horses; 115BBDA / 115 BBE

X Income not offered under Presumptive basis

X B/f or C/f of losses; Deductions under IFOS; Apportionment of TDS credit;

WHO CAN USE ITR 5 & ITR 7:

√ ITR 5 to be used by persons other than Individual, HUF, Companies and entities required to file ITR 7

√ Firms / LLP;

√ AoP / BoI; - Cooperative Banks; Cooperative Banks; Societies Registration Act regd. Entities; Business

Trust (S 139 (4E) / Investment Trust (S 139 (4fF) ; Any other Trusts not covered under ITR 7

√ Local Authorities;

√ Representative Assessees u/s 160 (iii) / (iv)

√ AJP - Estate of Deceased / Insolvent Person; Other AJP

ITR 7 to be filed by

139 (4A) – Trusts (u/s 11A / 12) ; 139 (4B) Political Party 139 (4C) Section 10 Exemption

139 (4D) – Certain Educational Institutions Section 8 Company

KEY CHANGES : ITR2

• Aadhar Number column introduced in multiple places : juxtaposed to the PAN field: in

Block Representative Assessee; House Property (Co-owners & Tenant); Income of

Specified Persons (SPI)

• Pass through Income u/s 115 UA / 115 UB – Section wise distinction; table provided for

indicating Share of Current Year loss if any

• Losses C/f of PTI provided in CFL (even for past years)

• Sheet DI

KEY CHANGES : ITR5

• For entities with business turnover between Rs. 1 and Rs. 5 Crores, with cash

transactions (less than 5% of Gross Receipts / Expenses): Relief from Tax Audit]

Note: Cash: covers not only P&L but also B/S items such as Capital / Loans / Fixed Assets

• Amount disallowable u/s 43B: Interest on Loans from NBFC (Deposit taking or

Systematically Important)

• TPSA Option : Please refer declaration in Verification Column (Return furnished u/s

92CD)

KEY CHANGES : ITR7

• Details of registration or approval under the Income-tax Act

• Apart from details of earlier / existing Registration, Details of Application for

Registration made under new provisions (Sec 12AB) is to be given

• New Provisions operative from 01st June 2020 (now shifted to 01st October 2020)

[by way of a Tweet]

• Date of application; Section of Exemption etc.,

ITR 7 : REGISTRATION / APPROVAL UNDER IT ACT

OTHER POINTS

• ITR xml importing : Java works better ! Excel issues do persist !!

• Option to select multiple accounts for Refund : and if so done, Refund Credit Account will be

decided by CPC after processing.

• Due date changed / extended even for Partners (& not necessarily Working Partner) to due

date where accounts are audited under any law. [Explanation 2 (a) (iii) – Working ]

• LTCG u/s 112A: Grandfathering Clause (Exemption of Gains upto Jan 31, 2018) – Now

Schedule 112A is mandatory; (for FIIs 115AD(1) (iii) (Tool is now Schedule)

• Income from Pass through Entities u/s 115 UA (Business Trusts) & 115 UB (Investment Trusts)

: to include column for losses Income (through Investment Trusts & Business Trusts)

OTHER POINTS: DEDUCTIONS

• Notification No. 69/2019 dt. 20/09/2019: Additional depreciation of 15% for (a) Motors Cars

(other than those used in the business of running them on hire) & (b) Motor Buses, Lorries &

Taxis (used in business on hire) – on and from AY 2020-21 onwards.

• Deductions u/s Ch VI-A (investment / expenditure made upto 31/07/2020): Now Notified.

• Changes in Chapter VI – A : Deduction u/s 80D; Separate Schedule

• 80EEE : Interest towards Affordable Housing Rs. 1.5 Lakhs

• 80EEB : Interest on Electric Vehicle Rs. 1.5 Lakhs

• Schedule TPSA (Tax on Secondary Adjustment) 92 CE (2A): 18% Addl. Tax + 12% SC + 4% EC

QUESTIONS?

THANK YOU !!!

M Navarathan

mnavarathan@gmail.com