Key Changes in the ITR Form for the financial year 2019-20
Owing to the COVID-19 situation, the Government has extended the deadline to submit your ITR to November 30, 2020. However, it is advised you complete the necessary formalities earlier to avoid the last-minute rush and to keep in mind the new changes to the ITR form.
For the year 2020-21, the Government has introduced many additional details that need to be taken care of to submit the form successfully. As a taxpayer, knowing about these changes can allow you to make the necessary adjustments and tweaks to your papers before submitting them.
Here are the primary changes the Government has made for ITR this year –
1. Changes in Form-16 –
The format for Form 16 has also changed and comes with its own set of exemptions and deductions. The other form 24Q can still be submitted as per the old format. Here’s what’s changed for the form-16 in lieu with the exemptions and deductions –
The IT department has asked every employer to give a proper, detailed breakdown of the tax-exempt allowances and tax breaks in form 16. All deductions, including the ones under 80 CCD, 80C, 80E, and 80G, will now need to be disclosed separately.
In the earlier format, the consolidated amount could be presented for all deductions. The form includes details for gratuity, leave travel allowance, leave encashments, house rent allowance, and commuted pensions.
There is also a specific column that provides the total salary amount you receive from other employers.
2. ITR -1 changes –
Earlier, there were restrictions and a cap on individuals who could file for tax returns for the FY 2019-20.
However, the CBDT has changed that in a notification issued on January 3, wherein it stated that an ITR-1 couldn’t be used by individuals who own a single house property that’s jointly owned or even fulfilled one of the conditions under the seventh proviso of 139(1).
This seventh provision refers to individuals who have incurred any form of expenses that limit to Rs. 2 lakh or more when it comes to traveling to foreign countries.
Or any person who has deposited an amount more than Rs.1 Crore in one or even more current accounts and paid electricity bills exceeding Rs. 1 lakh in 2019-20.
The ITR-1 can be filed by any resident individual whose income does not exceed more than Rs. 50 lakh, and they shouldn’t be a director in a company or invested in unlisted shares of equity.
The sources of income must be from single house properties, salary, family pension, interest income, etc.
3. Any information related to unlisted equity shares or foreign assets –
Earlier, you wouldn’t have to declare unlisted shares, but now under the new rules, you’ll need to disclose details of any unlisted shares of equity you have held in the previous year.
These include details such as PAN of the company, name, opening balance for the number of shares, date of purchase and costs, shares purchased/sold, and other details.
If you’ve held foreign assets, you’ll need to declare them in the ITR. The information provided in the assets includes custodian accounts and foreign depository that needs to be given.
If you hold debt investments or equity during the previous year, you need to disclose details such as the name of the country where the asset is held, the company’s name, business nature, and the date when the asset was acquired.
4. Cashback –
The cashback received on taxes is subject to tax only if it exceeds an amount of Rs. 50,000.
This includes cashback in the form of credit in e-wallets, bank accounts, or credit cards or gifts received as cash are only taxed if they exceed Rs. 50,000.
5. Pre-filled ITRs –
The IT Department provides pre-filled ITR-1 forms when you file for the returns online. Almost all details you provide are pre-filled under form-16. These include the FD interest income, salary, and the TDS details.
The TDS your employer files in 24Q and 26AS are the ones that will be used to pre-fill these details.
The deductions you claim under 80C to 80U are also pre-filled in the ITR-1, and details about house property will be pre-filled for you too.
6. The interest income –
Previously, all interest income was filed under the “income from other sources.” Now you will need to specify the interest income earned.
You can place them under different categories, such as the interest a government instrument gives or interest from foreign deposits.
7. Modification around Section 80GGA –
The IT department requires detailed disclosures on exemptions and the ITR has formed a separate tab under the section 80GGA.
This section works for those who want to claim deductions for donations to any particular institution.
Details such as the organization’s name and address you’ve donated to PAN, donation, and the deduction will also have to be provided to help the department check for genuineness.
8. Properties owned details are needed –
If you own a property which has been sub-let, you will have to provide the name, Aadhar and the PAN details of the tenant.
You’ll also need to provide the complete address of the property under the ITR-1. If you’ve not received the rent that was due by you, you can provide these details as well.
9. NRIs –
For NRIs, the ITR-2 and ITR-3 are available, depending on whether the income is from a business or not.
You’ll need to prove your residential status by providing the number of days you were physically present in India as the taxability for any individual depends on the residential status.
The country of residence and ID number will also have to be furnished, and you must mention the total time you spent in the country during the previous financial year.
10. What happens if you’re a company director?
As a company director, you’ll need to file the ITR-2 or 3, and this has disclosures in the company you’re a director of.
You also need to provide details such as the company’s name, company PAN, and the Director Identification Number and disclose the company’s listed/unlisted shares.
Now that you know the changes in the ITR, make sure you consult your financial advisor to receive returns in tandem to your expenditure in the last fiscal year.
If you want to learn more and get a consultation, reach out to us and know how we can help you make better financial decisions for your business.