“ITR form” asking for information equivalent to “Scrutiny Notice Questionnaire”

The Income Tax Return (ITR) forms for FY 2018-19 notified by the government are different from those used to file the previous year’s returns. Some of the changes in the forms have been done keeping in mind the changes in income tax laws made in Budget 2018 for FY 2018-19 and onwards. Apart from that, there are other changes as well in the ITR forms which you should be careful about while filing your return for FY 2018-19.

The additional disclosures have been sought by the CBDT in respect of all those income which are often subject to tax disputes or which are prone to tax avoidance. It appears that the CBDT has envisaged turning the ITR forms into Scrutiny forms. By making the changes in current year ITR forms, the Dept. has increased the scope of disclosure and the scope to uncover the under-reporting or wrong-reporting of income. Key Changes have been discussed as follows:

1. No Paper Return : No scope for Information column left Blank

For the Assessment Year 2019-20, every taxpayer shall file the income-tax return electronically except a super senior citizen (whose age is 80 years or above during the previous year 2018-19) who furnishes the return either in ITR-1 or ITR-4.

The option available to a taxpayer, whose income was below Rs. 5 lakhs during the previous year, to file the physical return has been withdrawn. Thus, it is now mandatory for every taxpayer (except super senior citizen) to file the return only electronically.

Return of income can be filed through electronic mode using any of the following three options:

i. E-filing using a Digital Signature (DSC)

ii. E-filing without a Digital Signature

iii. E-filing under Electronic Verification Code (EVC)

2. To disclose additional Information for “Residential Status”

The new ITR-2 form asks individuals not only to specify the residential status as resident, resident but not ordinarily resident or non-resident, but also to provide additional information with respect to residential status, such as :-

a) Number of days of stay in India,

b) Jurisdiction of his residence

c) Tax identification number in case he is a non-resident.

3. “Directors” of the Companies to disclose more Information

If you are Director of a company, then you will be required to specify your DIN (Director Identification Number) in ITR-2 or 3 whichever is applicable. Along with this you will also be required to provide information –

a) Name of company,

b) PAN

c) Whether shares are listed or unlisted.

4. Full Disclosure of “Interest Income”

Taxpayers will be required to specify the full bifurcation details of the interest income. Income from other sources head in ITR-1 has been updated to provide details of the source from where interest. Interest income to be bifurcated into –

a. Saving Bank

b. Deposits (all kinds of)

c. Income tax refund

d. In the nature of Pass Through Income u/s 115UA & 115UB

e. Others

5. “Salary Income” to Sync with Form 16

In ITR-1, this year providing details of your salary income will be easier as the details required are in sync with the information available in Form-16. In the last year, though taxpayers were required to provide the break-up of salary details, the information required was not in sync with information available in Form-16.

Now, from Assessment Year 2019-20, an individual has to mention his gross salary and then the amount 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.

The new ITR forms seek TAN (Tax Deduction and Collection Account Number) of the employer instead of PAN. Further, furnishing of TAN is mandatory in case tax is deducted at source by employer on the salary income.

6. Disclosure of Investment in “Shares held in unlisted companies”

If you are holding shares in an unlisted company then, you are required to disclose the details of your holdings in ITR-2. The details required are extensive –

a) Name of the company,

b) PAN of the company,

c) Number and cost of acquisition at the beginning of the year,

d) Number of shares, face value, issue price (or purchase price) and date of purchase of shares acquired during the year,

e) Number and sale consideration of shares transferred during the year,

f) Number and cost of acquisition of shares held at the end of Previous Year.

7. Disclosure regarding “Buyer of Property”

If you have sold a property in FY 2018-19, then while filing ITR-2, you will be required to provide complete details of the buyer to whom you have sold the property need to be reported such as:

a) Name of buyer

b) PAN of the buyer

c) Address of property

d) In case of more than one buyer, percentage share and amount of each buyer

8. Additional Disclosures regarding Income from “Business & Profession”

a) Insertion of Manufacturing Account and Trading Account in addition to Profit and Loss Account. Statement of Profit and Loss has been bifurcated into Manufacturing account, Trading Account and Profit and Loss Account. Certain additional details need to be furnished in the Manufacturing Account such as details of direct wages, direct expenses and factory overheads.

Thus, if assessee is engaged in manufacturing activities then he shall be required to arrive at cost of goods sold through manufacturing account, gross profit through trading account and net profit through profit and loss account. Manufacturing account is not meant for service providers and traders. Hence, they can start directly from trading account

b) In case where regular books of accounts are not maintained – Details of gross receipts as bifurcated between receipts through specified banking modes and any other mode to be reported.

c) Any person claiming bad debts of the amount of more than Rs. 1 lakh, in respect of a debtor, is required to report PAN of such debtor (if available) in ITR forms. However, no information about these debtors were required to be furnished in old ITR forms if PAN is not available. In new ITR forms, name and address of the debtor shall be required to be furnished in case PAN of such debtors isn’t available.

d) ITR forms released last year had incorporated new Schedule requiring GSTIN of the assessee and turnover as per GST return filed by him. However, this information was required only in case of taxpayers who have opted for presumptive taxation scheme and filing return in form ITR-4. The same schedule has now been incorporated in ITR Forms 3, 5 and 6.

e) New ITR-3 inserted a new clause asking for the details regarding the liability of assessee for audit under any Act other than the Income-tax Act, wherein assessee is required to mention the relevant Act and section under which audit is required and date of furnishing of audit report for the same.

9. Income from “Other Sources” needs to be explained

It is mandatory for an assessee to specify the “nature of income taxable” under the head income from other sources.

10. Enhanced Reporting of “Agriculture Income”

Enhanced reporting in exempt income schedule, if net agricultural income exceeds Rs.5 Lakhs, following details need to be reported separately for each agricultural land :

a) Name of district along with pin code where agricultural land is situated

b) Measurement in acres

c) Whether the land is owned or leased and whether it is irrigated or rain fed

11. To Disclose “Mode of Donation” for deduction u/s. 80G

Break-up of monetary donations made in cash and other mode- Monetary donations made by taxpayer and eligible for deduction under section 80G of the Income Tax Laws (ITL) need to be bifurcated between donation made in cash or in any other mode (like cheque or electronic mode). Cash donation made in excess of Rs. 2,000 shall not be allowed as deduction from gross total income.

12. To Disclose little more for Foreign Assets

Enhanced reporting in relation to foreign assets located outside India- Instead of information about foreign bank accounts held, the new ITR forms require details of following assets held by resident taxpayers at any time during the previous year in Schedule FA dealing with foreign assets and income from any source outside India

a) Details of Foreign Depository accounts

b) Details of Foreign Custodial accounts

c) Details of Foreign Equity and Debt interest

d) Details of Foreign Cash Value Insurance Contract or Annuity Contract

Under each asset category, there is further reporting requirement such as details of

a) Country name and code,

b) Name and address of institution,

c) Account number,

d) Date of opening the account,

e) Peak balance during the tax year,

f) Closing balance,

g) Amount of interest/ amount paid/ credit.

In case of insurance contract, cash/ surrender value of contract needs to be reported.

Thus, Taxpayers and Tax Professionals should get themselves ready for Additional Disclosures and documentation for this Tax-Filing season.

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5 Comments

  1. CA Sagar Gambhir says:

    All Companies to think twice even before filing ITR -6 for AY 2019-20, will company able to file ITR-6 in time is a BIG question due to a new requirement which is as under:-

    1. Schedule SH-1 – As per this new table now all Unlisted Companies are required to give details of all shareholder. Following are the details which new ITR requires from companies:-

    Details of shareholding at the end of the previous year

    Name of each Shareholder
    Residential Status in India
    Type of Share
    PAN of all shareholder
    Date of allotment of each share
    Number of Shares held
    Face Value per share
    Issue price per share
    Amount Received

    Details of equity Share application money pending allotment at the end of the previous year

    Name of the applicant
    Residential Status in India
    Type of Share
    PAN
    Date of application
    Number of shares applied for
    Application money received
    Face value per share
    Proposed issue price

    Details of shareholders who are not a shareholder at the end of the previous year but was a shareholder at any time during the previous year

    Name of Shareholder
    Residential Status in India
    Type of Share
    PAN
    Number of Shares held
    Face Value per share
    Issue price per share
    Amount Received
    Date of allotment
    Date on which cease to be a shareholder
    Mode of cessation
    In case of transfer, the PAN of the new shareholder

    As per Instruction of ITR form details to be provided in able table Schedule SH-1 states that Shareholding of Unlisted Company (other than a start-up for which Schedule SH-2 is to be filled up) If you are an unlisted company, please furnish the following details in respective columns of this Schedule: (i) The details of shareholding as on 31st March, 2019; (ii) The details of share application money pending allotment as on 31st March, 2019; and (iii) The details of shareholder who did not have a shareholding as on 31st March, 2019 but had a shareholding during the financial year 2018-19. Please note that if you are a start-up which has filed a declaration in Form-2 with DPIIT, aforesaid details should be filled up as per Schedule SH-2 and not in this Schedule, otherwise fill this Schedule.

    Schedule AL-1 – Assets and liabilities as at the end of the year (for the unlisted company other than start-up for which Schedule AL-2 is required to be filled up) If you are an unlisted company, please furnish the details of assets and liabilities of the company in the respective items of this Schedule. Please note that if you are a start-up which has filed a declaration in Form-2 with DPIIT, aforesaid details should be filled up as per Schedule AL-2 and not in this Schedule, otherwise, fill this Schedule

    2. Schedule AL-1:- As per this new table now all Companies is required to give details of Assets and liabilities despite filling details of Balance sheet in ITR -6. Following are the details required for filing ITR-6.

    A.Details of the building or land appurtenant thereto, or both, being a residential house

    Address
    Pin Code
    Date of Acquisition
    Cost of Acquisition
    Purpose for which used

    B.Details of land or building or both not being in the nature of the residential house

    Address
    Pin Code
    Date of Acquisition
    Cost of Acquisition
    Purpose for which used

    C.Details of listed equity shares

    Opening balance

    Number of Shares
    Type of Share
    Cost of Acquisition

    Shares acquired during the year

    Number of Shares
    Type of Share
    Cost of Acquisition

    Shares transferred during the year

    Number of Shares
    Type of Share
    Sale Consideration

    Closing Balance

    Number of Shares
    Type of Share
    Cost of Acquisition

    D.Details of unlisted equity shares

    Name of Company
    PAN
    Opening Balance

    Number of Shares
    Cost of acquisition

    Shares acquired during the year

    No. of shares
    Date of subscription/purchase
    Face value per share
    Issue price per share (in case of fresh issue)
    Purchase price per share (in case of purchase from existing shareholder)

    Shares transferred during the year

    No. of shares
    Sale consideration

    Closing Balance

    No. of Shares
    Cost of acquisition

    E.Details of other securities

    Type of securities
    Whether listed or unlisted
    Opening Balance

    No. of securities
    Cost of acquisition

    Shares acquired during the year

    No. of securities
    Date of subscription/purchase
    Face Value per share
    Issue price per securities (in case of fresh issue)
    Purchase price per securities (in case of purchase from existing shareholder)

    Securities transferred during the year

    No. of Securities
    Sale consideration

    Closing Balance

    No. of securities
    Cost of acquisition

    F.Details of capital contribution to other entity

    Name of entity
    PAN
    Opening Balance
    Amount contributed during the year
    Amount withdrawn during the year
    Amount of profit/loss/dividend/interest debited or credited during the year
    Closing Balance

    G.Details of Loans & Advances to any other concern (If money lending is not assessee’s substantial business

    Name of the person
    PAN
    Opening person
    Amount received
    Amount paid
    Interest debited if any
    Closing balance

    H.Details of the motor vehicle, aircraft, yacht or other modes of transport

    Particulars of assets
    Registration number of vehicle
    Cost of acquisition
    Date of acquisition
    Purpose for which used

    I. Details of Jewellery, archaeological collections, drawings, paintings, sculptures, any work of art or bullion

    Particulars of asset
    Quantity
    Cost of acquisition
    Date of acquisition
    Purpose of use

    J.Details of liabilities
    Details of loans, deposits, and advances taken from a person other than a financial institution:

    Name of the person
    PAN
    Opening Balance
    amount Received
    Amount paid
    Interest Credited if any
    Closing Balance
    Rate of Interest%

    Companies have to prepare the above data before start filing ITR -6 for AY 2019-20. By going through the above requirement it will be very time consuming for all company to prepare and filing ITR in time. Specifically, the way details required for each shareholder like Name of Shareholder, PAN No. of each shareholder, share allotment date, Issue price etc. Even ITR form required details of all shareholder which are not shareholder as on 31.03.2019 but was a shareholder as on 01.04.2018.

  2. CA Sagar Gambhir says:

    *CBDT mandates Scripwise calculation of Long Term Capital Gains in ITR, revises the forms*

    The Income Tax Dept today have updated on e filing portal that In case of long term capital gains (LTCG) arising on sale of equity shares or unit of equity oriented fund or unit of business trust on which STT is paid, separate computation of capital gains should be made for each scrip or units of mutual fund sold during the year and aggregated amount should be provided in item No. B4 (ITR 2)/B5( ITR 3) (in case of residents) or item No. B7 (ITR 2)/B8(ITR3)(in case of non-residents). The Utility has been updated and relevant validation rules are relaxed .Please download the latest utility available under Downloads. Updated utility of ITR-5 for the same change will be available shortly.

  3. Avinash d v No says:

    2. To disclose additional Information for “Residential Status” in this case , additional information is required for everybody or only for Non Residence – Please clarify

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