Changes in the ITR form for FY 2018-19 (AY 2019-20)

There are many changes which are notified by the CBDT in this year's income tax returns. There are changes for all those who have Income from salary, House property, Capital Gains or company owners. Government is trying to collect more data to increase transparency on how information is disclosed in the income-tax returns.

We have highlighted some major changes here for reference.

Reporting of salary income on a gross basis:

The new ITR forms have changed the mechanism of reporting of salary income. Up to Assessment Year 2018-19, an individual was required to report salary amount excluding all exempt and non-exempt allowances, perquisites and profit in lieu of salary. These items were reported separately in the same schedule and had no impact on the calculation of net salary income.

The new ITR forms have changed this reporting mechanism, which is now in sync with the columns of Form 16 (TDS Certificate issued by the employer). Now, from Assessment Year 2019-20, an individual has to mention his gross salary and the number of exempt allowances, perquisites and profit in lieu of salary shall be deducted or added to arrive at the taxable figure of salary income. Further, the new ITR forms seek separate reporting of all deductions allowable under Section 16, namely:

a) Standard Deduction

b) Entertainment allowance 

c) Professional tax

Investment in unlisted companies:

Where a company issues shares at a price which is less than its FMV and the difference between the FMV and issue price exceeds Rs. 50,000 then the difference is charged to tax in the hands of the shareholders under the head income from other sources.

In order to keep a check on the issue of shares by a closely held companies and investment made therein by shareholders, a new table has been inserted in new ITR forms to seek the following details in respect of unlisted equity shares held at any time during the previous year by an assessee:

a) Name of the company

b) PAN of the company

c) No. and cost of acquisition of shares held at the beginning of the year

d) No. of shares, face value, issue price (or purchase price) and date of purchase of shares acquired during the year

e) No. and sale consideration of shares transferred during the year

f) No. and cost of acquisition of shares held at the end of the previous year.

Buyer’s information is required in case of transfer of immovable property:

If assessee reports a capital gain, from the transfer of immovable property, in income-tax return, it would be mandatory for him to furnish the following information about the buyer:

a) Name of buyer

b) PAN of buyer

c) Percentage share

d) Amount

e) Address of property

f) Pin code

It is mandatory for the assessee to furnish the PAN of the buyer in ITR form if tax has been deduced under section 194-IA or PAN is quoted by the buyer in the registration documents.

PAN is otherwise a mandatory document to buy or sell an immovable property if the stamp duty value or the sales consideration exceeds Rs. 10 lakhs.

Classification of house property :

While providing details of your house property in ITR-1, you are required to specify whether the house is – ‘Self Occupied’, ‘Let-out’ or ‘Deemed Let-out.’ In the previous year’s ITR-1, there was no such option of ‘Deemed Let-out‘ in ITR-1. Also, while filing ITR, if there are any rent arrears that are received by you in FY 2018-19 then you have to report them property wise as received.ITR-1 & ITR-2 has introduced an additional row ‘Arrears/Unrealized Rent’ received during the year less 30%

ITR 1 and ITR 4 ask for nature of residuary income:

Up to Assessment Year 2018-19, taxpayers were required to disclose the aggregate amount of income taxable under the head of other sources. However, from Assessment Year 2019-20, it is mandatory for an assessee to specify the nature of income taxable under the head income from other sources and the deductions claimed in respect of family pension in accordance with Section 57. Such extra disclosures have been asked by the Dept. to check that the ineligible persons are not using the ITR 1 and ITR 4 for filing of return.

There is a notification by the Income-tax authorities based on which taxpayers will be required to disclose a break-up of capital gains earned from shares each script-wise. However, the form has not been notified until today and hence, we have not discussed the same here. We will write a separate post on the same.

Wealth Cafe Actionable - These changes have surely increased the back end work and data that will be required to file Income-tax Returns going forward. Do not take these changes lightly and keep yourself updated irrespective of whether you are filing the return by yourself or from a consultant.


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