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CBDT Notifies New ITR Forms ITR-1 to ITR-7 for AY 2020-21 with a New Schedule DI

cbdt-notifies-new-itr-forms-itr-1-to-itr-7-for-ay-2020-21-with-a-new-schedule-di


CBDT Notifies New ITR Forms ITR-1 to ITR-7 for AY 2020-21 with a New Schedule DI: CBDT has vide Notification No. 31/2020 dated 29.05.2020 notified the ITR Forms in ITR-1 to ITR-7 for the Assessment Year 2020-21 (Financial Year 2019-20). The ITR-1 (Sahaj) and ITR-4 (Sugam) notified earlier vide Notification No. 01/2020 dated 03.01.2020 have been revised to incorporate the changes or amendments prescribed by the Taxation and other Laws (Relaxation of Certain Provisions) Ordinance, 2020 promulgated on 31.03.2020 in order to provide relief due to outbreak of COVID-19 and the consequent lockdown imposed in the whole country since 25th March 2020.


Every year the CBDT notifies ITR forms for various categories of taxpayers and the forms, as applicable to the category of taxpayers, are used by the respective taxpayers.

Changes made in the Income Tax Act, 1961 by the relevant Budget are incorporated in the notified ITR Forms.

Way back in 2015, the Punjab & Haryana High Court in the case of Vishal Garg Vs UOI (Appeal No.- CWP No. 19770/2015) by an order dated 29-09-2015 directed the Income-Tax department to ensure that the forms etc. which are to be prescribed for the audit report and for e-filing the returns should ordinarily be made available on the first day of April of the assessment year.

Thereafter, for the first time, the CBDT had notified the forms (ITR-1 and ITR-4) well in advance before the end of the financial year that ended on 31st March 2020.

So far by a first notification of the year (Notification No. 01/2020 dated 03-01-2020), the CBDT has notified the new ITR Forms ITR-1 (known as 'Sahaj', but not so sahaj or easy) and ITR-4 (known as 'Sugam', but not so sugam or easy) for Assessment Year 2020-21 relevant to Financial Year 2019-20.


Reasons for delay in notifying the ITR Forms for AY 2020-21

However, due to COVID-19 outbreak, there has been a delay in notifying the remaining ITR forms for the AY 2020-21. CBDT vide a press note informed that in order to enable income taxpayers to avail full benefits of various timeline extensions granted by the Government of India due to COVID-19 pandemic situations, the CBDT is revising the return forms for FY 2019-20 (Assessment Year 2020-21). CBDT had initiated necessary changes in the return forms so that taxpayers could take benefits of their transactions carried out during the period from 1st April 2020 to 30th June 2020 in the return forms for FY 2019-20.

CBDT explained that the necessary modifications in the ITR forms are being made to allow taxpayers to avail the benefits of their investments/transactions made for the Apr-to-Jun 2020 period. Once the revised forms are notified, it will further necessitate the consequential changes in the software and return filing utility. Hence, the return filing utility after incorporating necessary changes shall be made available by 31st May, 2020 to avail benefits for FY 2019-20.

Due to the outbreak of COVID-19, the Government has extended various timelines under the Income-tax Act,1961 vide Taxation and Other Laws (Relaxation of certain provisions) Ordinance, 2020. Accordingly, the time for making investment/ payments for claiming deduction under Chapter-VIA-B of IT Act which includes Section 80C (LIC, PPF, NSC etc.), 80D (Mediclaim),80G (Donations), etc. for FY 2019-20 has also been extended to 30thJune 2020. Also, the dates for making investment/construction/purchase for claiming rollover benefit in respect of capital gains under sections 54 to section 54GB has also been extended to 30th June 2020. Therefore return forms are being revised to facilitate reporting of the transactions of the relief period.

It may be noted that generally the income-tax return forms are notified in the first week of April. This year also the e-filing utility for filing of return for Assessment Year 2020-21 was made available as on 1st April, 2020, and the Income-tax Return (ITR) Forms ITR-1 (Sahaj) and ITR-4 (Sugam) for the FY 2019-20 (Assessment Year 2020-21), too, were already notified vide notification dated 3rd January, 2020. However, to ensure that the taxpayer is enabled to avail all benefits of the timeline extension due to COVID-19 pandemic, the Return/Forms Revision is being carried out.


Extension of ITR filing due date for AY 2020-21

The due date to file the income tax returns for individuals, etc is July 31, 2020 for the AY 2020-21 having no tax audit. Finance Minister Smt. Nirmala Sitaraman at a press conference on 13.05.2020 announced the first Tranche Special Economic Package and Measures for Relief to support Indian Economy amid COVID-19 after PM declared Rs. 20 Lakh Crore Package to spur the growth and make India self-reliant on 12.05.2020 at his address to the nation in the wake of COVID-19 pandemic.

At the same time, the Finance Minister announced certain Tax-related measures. One of the measures is the extension of the due date of all Income Tax Returns for Assessment Year 2020-21 to 30 November 2020.  Similarly, the tax audit due date will be extended to 31 October 2020. However, legislative changes are pending.

Rule 12 of the Income Tax Rules, 1962 prescribes the return filing procedure.  The notification has amended Rule 12 for the AY 2020-21. 

No changes in ITR 1 and ITR 4

The ITR-1 and ITR-4 initially notified on 03.01.2020 restricted the use of these ITR forms in the following cases-

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 were made in Rule 12 of the Income Tax Rules, 1962.

Thereafter, 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 the 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.

In the notified new ITR-1 and ITR-4, the necessary changes has been made to allow joint owners as well as filing of return under the seventh proviso to section 139(1) .

No Change in Rule 12 notified

No changes in Rule 12 are notified by this notification. Thus the Rule 12 as existing shall remain in force.

New Schedule ‘Schedule DI - Details of Investment’ notified in ITR-1 to ITR-7

The new notified ITR forms in ITR-1 to ITR-7 contains a new schedule to report the ‘Deduction attributable to investment/expenditure made between 01.04.2020 to 30.06.2020’ as per the time extension granted by the Taxation and other Laws (Relaxation of Certain Provisions) Ordinance, 2020.

This schedule is divided into two parts-
A) Investment/ Deposit/ Payments for the purpose of claiming deduction under Chapter VI-A

B) Payment/Acquisition/Purchase/Construction for the purpose of claiming deduction u/s 54 to 54GB

ITR-1 and ITR-4 forms have only Part-A.

Who are compulsorily required to file a return of income in AY 2020-21

Filing of ITR or Income Tax Return or simply return of Income is governed by the provisions of Section 139 of the Income Tax Act, 1961.

(a) When the gross total income exceeds the basic exemption limit:

As per section 139(1)(b), every person being a person other than a company or a firm, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax (commonly known as ‘basic exemption limit ‘), shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed.

From the above provision, it is crystal clear that filing of return of income or ITR does not depend on nature or heads on income but is dependant on the quantum of income.

Under the income tax law, there are 5 (five) heads of income-
1. Income from Salary
2. Income from House Property
3. Income from Business or Profession
4. Capital Gains
5. Income from Other Sources.

The aggregate of all the income under each of the head is the Gross Total Income, from which deduction under chapter VI-A is allowed. Deduction u/s 80C, 80D, 80TTA, etc falls under chapter VI-A. After reducing the deduction u/c VI-A from the Gross Total Income, the derived figure or amount of income is termed as ‘Total Income’. Section 139(1) refers to this ‘Total Income’.

The above provision was amended vide by the Finance Act, 2005, w.e.f. 1-4-2006 and a proviso [6th proviso of section 139(1)] was inserted according to which Total Income so computed above shall be required to be increased by the followings:

1. Exempt long term capital gains u/s 10(38)
[This exemption is withdrawn from AY 2019-20]

2. Exemption claimed u/s 10A, u/s 10B and u/s 10BA.

3. Exemption claimed under-
(a) section 54 or 
(b) section 54B or 
(c) section 54D or 
(d) section 54EC or 
(e) section 54F or 
(f) section 54G or 
(g) section 54GA or 
(h) section 54GB. 
[Amendment introduced from AY 2020-21]
All these exemptions are claimed from capital gains.

4. Deduction claimed under chapter VI-A 
[Chapter VI-A includes section 80C, section 80D, section 80G, etc.]

If the resultant income exceeded the maximum amount which is not chargeable to income-tax, shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed.

In the nutshell, the law is amended to measure the basic exemption limit with reference to Gross Total Income instead of Total Income only. Therefore now if the Gross Total Income exceeds the basic exemption limit then one has to mandatorily file the return of income or ITR.

Presently for the financial year 2019-20 or assessment year 2020-21, the maximum amount which is not chargeable to income tax is Rs. 2,50,000. Therefore, if the Gross Total Income exceeds Rs. 2,50,000 during the financial year 2018–19, the person has to mandatorily file the return of income.

Don't confuse this with the tax relief given up to an income of Rs. 5,00,000 announced in the Interim Budget, 2019. If the Total Income is Rs. 5,00,000 then it is mandatory to file the return of income since it exceeds the basic exemption limit of Rs. 2,50,000 though no tax is payable.


For example, In the case of a salaried individual who has only Income from Salary and if his Income from Salary (before giving any effect of section 80C, 80D, etc.) but after Standard deduction and deduction for tax on employment i.e. Professional Tax, exceeds Rs. 2,50,000 during FY 2019-20 then he or she is compulsorily required to file the ITR.

The following information is for academic knowledge only and contemporary has lost its importance.

There is a provision in section 139(1A) of the Income Tax Act, 1961 as per which an employee may file the return of income to his employer. The provision was inserted in 2002 when returns were filed manually. Though the provision is still kept in the statute but it has lost its relevance after the introduction of online filing of ITRs.

(b) When the taxpayer has incurred loss in any year:

If any person has a loss in any previous year under the head "Profits and gains of business or profession" or under the head "Capital gains" and wishes to carry forward the loss to subsequent year, then it is mandatory to file the return of income and such a return of income must be filed within the due date of filing of return of income. [section 139(3)].

(c) In the case of foreign assets, etc:

Where a resident who is otherwise not required to furnish a return, but-

(a) is a beneficial owner or beneficiary of any foreign asset,

(b) holds any financial interest in any foreign entity,

shall be required to compulsorily file a return of income.

(d) Filing of return in case of expenditure  or high-value transactions: [Seventh proviso to section 139(1)]

This provision is introduced by the Finance (No. 2) Act, 2019 and is applicable from the assessment year 2020-21.

The Union Budget, 2019 has widened the scope of compulsory filing of return. Normally, the filing return of income is linked to the total income of a person. 

However, for the following persons return filing is made compulsory (from the assessment year 2020-21) based on certain high-value transactions even though they are not otherwise required to file a return of income on the basis of total income- 

(a) who have deposited more than Rs. 1 crore in one or more current accounts maintained with a bank in a financial year, or (deposit in cash or cheque or otherwise)

(b) who have expended more than Rs. 2 lakh on foreign travel for himself or any other person in a financial year, or

(c) who have incurred more than Rs. 1 lakh on electricity consumption in a financial year, or

(d) who fulfill the prescribed conditions (not yet prescribed), 

The above provisions are contained in the seventh proviso to section 139(1) of the Income Tax Act, 1961.

Note: The seventh proviso to section 139(1) is not applicable to a company and a firm. It applies only to a person covered in section 139(1)(b) which includes an individual or a Hindu undivided family or an association of persons or a body of individuals, whether incorporated or not, or an artificial juridical person.

Who can file ITR-1

As per Rule 12, the rules for the filing of ITR-1 are given below-
  1. ITR-1 can be filed only by an individual.
  2. The individual must be a resident. Thus a non-resident cannot file ITR-1.
  3. The Total Income of the individual includes the following incomes only-
a) Income chargeable under the ‘Salaries’

b) Family Pension Income u/s 57(iia)

c) Income from ONE House Property (single ownership) without any carry forward or brought forward of loss. This means the house property must be a self-occupied house property. If the house property is let-out, the interest paid on home loan shall not exceed Rs. 2,00,000 during FY 2018-19.

d) Income from Other Sources like bank interest, interest on income tax refund, etc. The income from other sources shall not include income from winning from lottery or race horses.

Who cannot file ITR-1


An Individual cannot file ITR-1 if the following conditions are satisfied-

1. If he has any foreign assets including shares and bonds

2. If he has any foreign bank accounts

3. If he has any income from foreign sources

4. If he has any income to be apportioned in accordance with provisions of section 5A i.e. Portuguese Civil Code applies

5. If he has claimed deduction u/s 57, other than deduction claimed u/s 57(iia).

6. If he is a director in any company

7. If he has held any unlisted equity share at any time during the previous year

8. If he is assessable for the whole or any part of the income on which tax has been deducted at source in the hands of a person other than the assessee

9. If he has claimed any relief of tax under section 90 or 90A or deduction of tax under section 91

10. If he has agricultural income, exceeding Rs. 5,000

11. If his total income, exceeding Rs. 50 Lakh during FY 2019-20

12. If he has income taxable under section 115BBDA (dividend income from a domestic company above Rs. 10 lakh)

13. If he has an income of nature referred to in section 115BBE (tax on undisclosed income referred to in section 68 or section 69 or section 69A or section 69B or section 69C or section 69.

Note: The followings are important to note while filing ITR-1:

1.
ITR-1 can be filed only by a Resident Individual.
Thus-
(i)   A Non-resident Individual cannot file ITR-1.
(ii)  A HUF cannot file ITR-1.

The above rule is kept same as per last year and no changes in ITR-1 are made for the AY 2020-21.
2.
Though the Interim Budget, 2019 allowed an Individual two self-occupied house properties without any notional tax liability on the second house, but if he owns two house property, he cannot use ITR-1.

No corresponding changes in the ITR-1 for AY 2020-21 have been made to incorporate the changes.

Who can file ITR-4


As per Rule 12, the rules for the filing of ITR-1 are given below-

1. ITR-4 can be filed by the following persons-

(i) A resident Individual
(ii) A resident HUF
(iii) A resident firm (but not LLP)

2. The above persons are deriving income from business or profession.

3. The income from business or profession is computed as per section 44AD, section 44ADA or section 44AE of the Income Tax Act, 1961.

These sections are known as the presumptive income scheme where no regular books of accounts are maintained.

Who cannot file ITR-4


The persons mentioned above cannot file ITR-4 even though they are otherwise eligible to file ITR-4 in the following cases, if such a person-

1. has any foreign assets including shares and bonds

2. has any foreign bank accounts

3. has any income from foreign sources

4. has any income to be apportioned in accordance with provisions of section 5A i.e. Portuguese Civil Code applies

5. is a director in any company

6. has held any unlisted equity share at any time during the previous year

7. is an owner of more than one house property, the income of which is chargeable under the head 'Income from house property'

Note: Though the Interim Budget, 2019 allowed an Individual two self-occupied house properties without any notional tax liability on the second house, but if he owns two house property, he cannot use ITR-4.

No corresponding changes in the ITR-4 for AY 2020-21 have been made to incorporate the changes.

8. is assessable for the whole or any part of the income on which tax has been deducted at source in the hands of a person other than the assessee

9. has claimed any relief of tax under section 90 or 90A or deduction of tax under section 91

10. has agricultural income, exceeding Rs. 5,000

11. has total income of more than Rs. 50 Lakh during FY 2019-20

12. If he has income taxable under section 115BBDA (dividend income from a domestic company above Rs. 10 lakh)

13. If he has an income of nature referred to in section 115BBE (tax on undisclosed income referred to in section 68 or section 69 or section 69A or section 69B or section 69C or section 69).

Manner of filing of return


No changes in the manner of furnishing return of income are notified for the AY 2020-21. Therefore, the rules for furnishing the return of income as applicable in the last year are applicable for the current assessment year.

The Rules of filing return of income are as follows-

Person
Condition
Manner of furnishing ITR

Individual or HUF
(a) Tax Audit is applicable u/s 44AB

Online filing of ITR with a digital signature.
(b)  Very Senior Citizen (age is 80 years or more) and filing ITR-1 or ITR-4
(i) Online filing of ITR with or without digital signature, or
(ii) Paper Form filing of ITR
At the option of the assessee.
(c) Other cases,-viz
(i) Tax Audit Not Applicable
(ii) Senior citizens
(iii) Very senior citizens not filing ITR-1 or ITR-4

Normal salaried individuals are covered here.

(i) Online filing of ITR with or without digital signature.

Firms
(a) Tax Audit is applicable u/s 44AB

Online filing of ITR with a digital signature.
(b) Other cases (Non-audit cases)
(i) Online filing of ITR with or without digital signature.
Note: In case a return of income (ITR) is filed without digital signature, the ITR shall be verified by EVC or by submitting the ITR-V at CPC, Bangalore within 120 days of the filing of online return by ordinary or speed post after manually signing the ITR-V.

From the above, it is clear that ITR should be filed online, except in case of a very senior citizen individual filing ITR-1 or ITR-4 where paper filing is allowed.


In tax audit cases, it is mandatory to verify the return with a digital signature only.

In other cases (non-audit cases) digital signature is not mandatory to verify the ITR. It is optional.

Where a return of income is not verified with a digital signature, then the same may be verified with EVC through net banking or Aadhar OTP or prevalidated bank accounts or Demat accounts.

Instead of EVC verification, a return may be verified manually. In this case, a return shall be verified by submitting the ITR-V at CPC, Bangalore within 120 days of the filing of online return by ordinary or speed post after manually signing the ITR-V.

Read the full text of the Notification No. 31/2020 dated 29.05.2020.


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