Know the income tax return form you need to fill this year

Balwant Jain

The government has finally notified new and simplified income tax return (ITR) forms after the earlier version (notified in April) was opposed by assessees for its cumbersome disclosure norms about bank accounts and foreign travels.

Let us discuss the features you need to know about the new ITR forms.

The government has notified four ITR forms which are applicable to individual or Hindu Undivided Family (HUF). Let us discuss as to which form you need to file.

Form ITR 1: This is also known as Sahaj (meaning easy). This form can only be filed by an individual, whose source of income is salary and not business. Even a pensioner can use this form.

You can also use this form in case you have any income under the head “income from other sources” which generally includes interest from various investment products such as savings bank account, recurring bank account, fixed deposits with bank and post offices. This form can be used by you even if you have any exempt income in addition to the taxable income from two of the sources discussed above.

You cannot use this form in case your agricultural income exceeds Rs5,000 in the previous year as the same need to be added to your regular income for the purpose of determining the average rate of tax on which your other income shall be taxed. So you can use this form even if your other exempt income exceeds the threshold of Rs5,000. Earlier, there was a cap of Rs5,000 of exempt income for using this form.

Note that if you have won any lottery or have any income from a horse race in the last year, you cannot use this form. Moreover you can use this form only if you own one house property, so in case you own more than a house, you cannot fill this form. This can also not be used in case you have any asset outside India or any income from a source outside India.

In my opinion, this form would be applicable to the majority of the tax payers as most of them are salaried and do not own more than a house property and have only income taxable under the head “income from other sources” in addition to receiving either salaries or pension.

Form ITR 2A: The form is introduced this year. Unlike the ITR 1, this form can be used by individual as well as an HUF. But in case you have any foreign asset outside India or have income from any foreign source, you cannot fill this form for filing tax return. It may be noted that you can use this form in case you have more than one house property or have agricultural income exceeding Rs5,000. This form is an extended version of ITR 1 and can be used only if you do not have business income or capital gains and any foreign asset or have foreign income.

Form ITR 2: This form can be used by individual as well as an HUF. It can be used in case you have income taxable under the head “capital gains” in addition to the income taxable under the head “salaries” and “income from other sources”. This form can be used by you even in case you have income from lotteries or horse races. This form can also be used by you in case you have agricultural income exceeding Rs5,000 or you own more than one house property. However this form cannot be used by you if you have any income taxable under the head “profits and gains of business or profession” howsoever small the amount taxable under this head.

This form can even be used by the resident tax payers who have any foreign asset or any income from foreign source.

Form ITR 4S: This is commonly called Sugam. This form can be filed by any individual or an HUF who has business income which is taxable at certain predefined basis either as certain percentage of your gross receipt/sales or your income is presumed at fixed amount per income yielding asset owned by you such as truck etc. The form can be used only and only if your business income is taxable on some presumptive basis. Broadly speaking, it can be filed by a person who is otherwise entitled to file his return of income in the ITR 1, but cannot file as he has certain business income taxable at predetermined way.

So in case you have capital gains income or agricultural income exceeding Rs5,000 or own any foreign asset or have income from any foreign source, you cannot use this return to file your return of income. You cannot use this form even if you have income from lottery or horse race.

Changes in disclosure norms

The forms notified earlier had provisions for disclosure of foreign travels undertaken with details of expenses incurred by you. However, the revised forms have done away with this requirement and you are only required to give details of your passport.

The earlier notified forms had sought details of all bank accounts held during the previous year, including the particulars of joint holders and closing balances of the accounts. The revised forms are seeking the details of only “active” bank accounts. The Finance Ministry has has done away with disclosure of details of dormant accounts which are not operational during the last three years. Moreover, you are not required to furnish the details of balances at the year-end and the details of the joint holder of the accounts.

However, you are still required to submit the details of the bank name, IFSC code and number of all your bank accounts whether savings or current. It seems you are not required to furnish details of your recurring account or fixed deposits with banks held by you during the year.

The forms to be used by the person who has taxable income under the head “profits and gains of business or profession” other than on presumptive basis are not yet notified.

The author is Company Secretary, Bombay Oxygen Corporation Limited. The views expressed in this article are his own.