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New changes applicable to ITR Forms 2019-20 for individuals

The government of India has been taking several measures to control the circulation of black money in the Indian economy and identify shell companies which are not listed anywhere. One of the recent initiatives in this line is the introduction of new Income Tax Return (ITR) Forms for individuals for Assessment Year 2019-20, asking for more detailed information about the sources of income, TDS, residential status, properties, and investments in unlisted shares of the taxpayers. The new Income Tax Return (ITR) forms for the last fiscal year 2018-19 has already been notified by the Central Board of Direct Taxes (CBDT). The following are the vital changes that are applicable to the ITR Forms for the Assessment Year 2019-20:

Modification in the reporting of salary income of individuals

In the new ITR forms, the mechanism of reporting salary income has been changed. While previously in the ITR Form of AY 2018-19 a taxpayer had to report their salary amount except for the exempted and non-exempted allowances, profit in lieu of salary, perquisites, etc., now they will have to provide all these details as per their Form 16. The new reporting mechanism is now in accordance with the Form 16 or TDS Certificate of the taxpayer received from the employer. As per the new tax rule applicable for AY 2019-20, a taxpayer is mandated to mention his/her gross salary, the number of exempt allowances, profit in lieu of salary, and perquisites as mentioned in his/her TDS Certificate while filing the income tax return. Furthermore, there are separate columns in the new ITR Forms where all the exemptions permitted under Section 16 of the Income Tax Act, 1961 like standard deduction, entertainment allowance, professional tax, etc. need to be specified. 

Needs more information pertaining to residential status

In the new ITR-2, individuals and HUFs who don’t have income from profits and gains of a business/profession need to provide details of their residency status along with specifying the number of days or years they were in India during the previous year. While in the ITR Forms of the past year taxpayers were required to disclose the total amount of taxable income under one single head namely ‘Other Sources’, the new forms include sections where the taxpayers need to fill up more information about their residential status and residuary income. While filing income tax returns for AY 2019-20, a taxpayer is mandated to mention the nature of income that comes from other sources and the deductions should be claimed regarding family pension in accordance with Section 57. The IT department has asked for the disclosures of the extra income in the new forms to check whether ITR-1 and ITR-4 are being used by eligible persons or not.

Directors of unlisted firms restricted from using ITR-1 and ITR-2

In order to find the directors of the unlisted companies in the country, individuals who have been the director of a company in the past year are mandated to provide a number of details regarding the company in the new ITR forms. The directors of both listed and unlisted firms have also been restricted from using ITR-1 (Sahaj) and ITR-4 (Sugam) for filing their income tax return. Instead, they are required to use ITR-2 or ITR-3 for ITR filing, as per applicability. As per the new tax rule, the directors of unlisted as well as listed firms will have to file their ITR for Assessment Year 2019-20 in ITR-2 where they are required to provide information like name of the company, Permanent Account Number (PAN), Directors Identification Number (DIN), whether they have invested in listed or unlisted shares, their equity holdings, etc.

Detailed information required for investors in unlisted equity shares

The investors having unlisted equity shares holdings are also required to disclose information about their unlisted equity shareholdings. New sections have been included in the new ITR Forms which ask for detailed information regarding unlisted equity shares which are held by an individual anytime during the past year. They will have to provide details pertaining to such unlisted shares such as number of shares held at the beginning of the year, the cost of acquisition, their face value, date of purchase or sale of shares acquired during the year, sale consideration of the shares transferred during the year, etc. This move has been taken by the IT department to keep a check on the issue of shares by a closely-held company and the investments made in such companies by the investors or shareholders. They are also barred from using ITR-1 and ITR-2 while filing their income tax returns for AY 2019-20. Instead, they are required to file their returns in ITR-3.

Need buyer’s information for filing capital gain on property sale

If an individual is filing the capital gain attained due to the transfer or sale of immovable property in the new ITR Form for AY 2019-20 he/she will have to provide more information than what was asked for before. Information such as the name of the buyer, address of the property, Pin Code, percentage share, amount, and PAN are required to be disclosed while filing his/her income tax return in ITR-2. Moreover, if the tax has been deducted under Section 194-IA of the Income Tax Act, 1961, the individual will be required to provide the PAN of the buyer in the ITR Form. The PAN should also be mentioned by the buyer in the documents of registration of the property.

The above-mentioned details about ITR Forms 2019-20 suggest that being an individual taxpayer this year you will have to fill up several new information while filing your income tax return. Though the process is likely to become a bit tedious and time-consuming from now onwards, the government of India has taken this move for the overall benefit of the Indian economy. Hence, before filing your returns this year make sure to keep all your vital information and supporting documents handy.  There are numerous websites, Bankbazaar is one of them which provide information on ITR form. To know more on updated information click here.

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