CBDT has rolled back the changes made in the notified ITR forms ITR-1 and ITR-4 for AY 2020-21 within a week of its notification. Such rollback restores the ITR forms of the last year for the current year without any changes in the ITR forms.
On January 3, 2020, the CBDT by its first Notification of the year numbered 01/2020 notified the ITR Forms in ITR-1 (Sahaj) and ITR-4 (Sugam) well before the end of the financial year for the Assessment Year 2020-21 relevant to Financial Year 2019-20.
It appears that the changes in ITR forms were notified in haste. This is because within 6 days of the notification, the changes made in the current ITR forms compared to last year were reversed and rolled back.
ITR-1 and ITR-4 are considered to be the simplest forms among all the ITR forms. While ITR-1 is used by non-business taxpayers, ITR-4 is used by business assessees. These forms require less reporting of information compared to other forms.
ITR-1 form is used by a salaried individual who has salary income, income from one house property and interest income. Pensioners also used the ITR-1 form. Only a resident individual whose total income does not exceed Rs. 50 lakh can use ITR-1.
ITR-4 is used by taxpayers opting to pay tax under the presumptive income scheme under which there is no requirement to keep the detailed books of accounts for the business or profession. A resident Individual, HUF and a firm (except LLPs) whose total income does not exceed Rs. 50 lakh can use ITR-4.
Rule 12 of the Income Tax Rules, 1962 prescribes the return filing procedure. The notification has amended Rule 12 for the AY 2020-21.
The forms have been changed to report additional information like passport number, employer TAN and address, address of house property, tenant's address with PAN or Aadhaar. These are form level changes.
Apart from form level changes, changes were also made in Rule 12 to restrict the use of the ITR-1 and ITR-4 forms.
These significant changes are outlined below-
1. Joint Owners of house property cannot use ITR-1 and ITR-4: Joint Owners of house property cannot use ITR-1 and ITR-4 even though he is otherwise eligible to file ITR-1 or ITR-4. The joint ownership may be with two or more than two persons.
It implies that a person who is a joint owner of house property cannot use the simple version of ITR forms in ITR-1 or ITR-4. Merely because of joint ownership, he has to file a detailed return in other ITR forms.
2. ITR-1 cannot be used for filing of return under the seventh proviso to section 139(1): A person who is required to file the return for non-financial or non-income basis, as per the seventh proviso to section 139(1), is also restricted from the use of ITR-1.
There are certain non-income criteria on the basis of which a person, who is otherwise not required to file a return of income under the law, is required to compulsory file a return of income as introduced by the Finance (No. 2) Act, 2019 which are outlined below-
1. A person who has deposited amount of more than Rs. 1 crore in aggregate in one or more current accounts maintained with a bank in a financial year.
2. A person who has incurred more than Rs. 2 lakh in aggregate in a financial year for foreign travel for himself or any other person.
3. A person who has incurred more than Rs. 1 lakh in aggregate in a financial year for payment of electricity bills.
4. Any other prescribed conditions. No such condition is yet prescribed.
The above two amendments are made in Rule 12 of the Income Tax Rules, 1962.
Now by a Press Release dated January 9, 2020, the CBDT has granted relaxation in eligibility conditions for filing of Income-tax Return Form-1 (Sahaj) and Form-4 (Sugam) for Assessment Year 2020-21.
The press release states that a person who owns a property in joint ownership was not made eligible to file the ITR-1 or ITR-4 Forms. For the same reason, a person who is otherwise not required to file a return but is required to file a return due to fulfillment of one or more conditions in the seventh proviso to section 139(1) of the Income-tax Act, 1961 (the Act), was also not made eligible to file ITR-1 Form.
The difficulty of filing a detailed ITR for those taxpayers who are otherwise eligible to file simple forms of ITR has been acknowledged.
After examining the representations, the Board has allowed a person, who jointly owns a single house property, to file ITR-1 or ITR-4 if he or she is otherwise eligible to file ITR-1 or ITR-4.
Similarly, if a person satisfies one or more conditions specified in the seventh proviso to section 139(1) is also allowed to file his or her return of income in ITR-1.
With this decision, the changes introduced in the ITR forms for AY 2020-21 have been removed and this restores the ITR forms in ITR-1 and ITR-4 same as those notified for the last assessment year.
This is one of the benefits of early notifying the ITR forms so that suitable changes can be made or suggestions of various groups can be incorporated before releasing the final e-filing utility. The government can also save itself from extending the due date of filing of the returns due to last-minute changes in the e-filing utilities as experienced by us till last year.
Please note that this clarification is issued by way of a press release. Since the forms were already notified and Rule 12 is amended, a formal notification is required to undo the changes in the ITR forms for AY 2020-21.
Read the full text of the Press Release:
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
New Delhi, 09th January, 2020
PRESS RELEASE
CBDT grants relaxation in eligibility conditions for filing of Income-tax Return Form-1 (Sahaj) and Form-4 (Sugam) for Assessment Year 2020-21
In order to ensure that the e-filing utility for filing of return for assessment year (A.Y) 2020-21 is available as on 1st April, 2020, the Income-tax Return (ITR) Forms ITR-1 (Sahaj) and ITR-4 (Sugam) for the A.Y 2020-21 were notified vide notification dated 3rd January, 2020. In the notified returns, the eligibility conditions for filing of ITR-1 & ITR-4 Forms were modified with an intent to keep these forms short and simple with bare minimum number of Schedules. Therefore, a person who owns a property in joint ownership was not made eligible to file the ITR-1 or ITR-4 Forms. For the same reason, a person who is otherwise not required to file return but is required to file return due to fulfilment of one or more conditions in the seventh proviso to section 139(1) of the Income-tax Act, 1961 (the Act), was also not made eligible to file ITR-1 Form.
After the aforesaid notification, concerns have been raised that the changes are likely to cause hardship in the case of individual taxpayers. The taxpayers with jointly owned property have expressed concern that they will now need to file a detailed ITR Form instead of a simple ITR-1 and ITR-4. Similarly, persons who are required to file return as per the seventh proviso to section 139(1) of the Act, and are otherwise eligible to file ITR-1, have also expressed concern that they will not be able to opt for a simpler ITR-1 Form.
The matter has been examined and it has been decided to allow a person, who jointly owns a single house property, to file his/her return of income in ITR-1 or ITR-4 Form, as may be applicable, if he/she meets the other conditions. It has also been decided to allow a person, who is required to file return due to fulfilment of one or more conditions specified in the seventh proviso to section 139(1) of the Act, to file his/her return in ITR-1 Form.
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