Usually, the Income-tax Department notifies the ITR forms at the start of April of the relevant assessment year. However, this year, due to the exceptional circumstances & to incorporate the relaxations/ extensions due to COVID the Department has notified all ITR forms in the last week of May. The Timeline for ITR filings for All Assessees has already been extended till 30th Nov 2020.
The new ITR forms for AY 2020-21 (FY 2019-20) have introduced new additional columns & schedules. These changes have been introduced to capture new, yet essential information. Some changes are consequential to the amendments made to the Income-tax Act by the recent Finance Acts. Key highlights of some of the important changes are as follows:
1. Concessional tax regime option – Revised Form ‘ITR-6’ for Companies provides a new drop-down to opt for concessional tax regime u/s 115BAA / 115BAB as introduced by Taxation Laws (Amendment) Ordinance, 2019.
2. Secondary TP adjustment related – Regarding amended section 92CE, the new ITR Forms 3, 5 and 6 require details on Assessee’s choice of paying additional income tax @ 18% (plus a surcharge of 12%) in case of non-repatriation of Primary Transfer pricing (TP) adjustment amount within the prescribed time.
3. The new depreciation rate of 45% added – For motor-cars / vehicles acquired on or after 23rd Aug 2019 but before 1st Apr 2020, and put to use before 1st Apr 2020, new rates of depreciation notified by CBDT @ 45% has been included.
4. Joint house-property owners & high spenders – can continue to file their returns using the simple Sahaj & Sugam forms, i.e. New ITR 1 & 4, for AY 2020-21 if they fulfill other conditions of these forms. However, for ‘high spenders’, new ITR forms seek details on foreign travel spend of more than Rs. 2 Lacs, electricity consumption more than Rs. 1 Lac & current account(s) deposit of more than Rs. 1 Crore in the Form itself in line with Finance (No. 2) Act 2020 Amendment.
5. New ‘Schedule DI’ for investments – All the new ITR Forms require separate disclosure of tax-saving investments/donations made during extended period Apr to Jun 2020, and the amount which is attributable towards deduction for AY 2020-21 (FY 2019-20); in line with the extension option till 30th Jun 2020 granted by Covid-19 Relaxations Ordinance. Please note that though the time limit for investing has been extended by 3 months, there is no increase in the threshold limit under respective sections. E.g. if a taxpayer is claiming deduction u/s 80C, the aggregate amount of deduction for investment/payment made from 1st Apr 2019 to 31st Mar 2020 and 1st Apr to 30th Jun 2020 shall not exceed Rs. 150,000.
6. Reporting of dividend received from ‘specified foreign company’ – Dividend received by a domestic company from a foreign company, in which such domestic co. has 26% or more equity, is taxable at 15% plus Surcharge & Cess on a gross basis without deduction for expenses. In new ITR-6, such a domestic co. is required to separately report such Dividend income in Schedule OS (Income from other sources) and Schedule SI (Special Income) to reflect such dividend income.
7. Option to quote PAN or Aadhaar in various schedules – In all the Forms, various schedules of the ITR requiring the assessee to furnish PAN of the second party, being tenant, co-owners, director, auditor, Share-holders of unlisted cos. including start-ups, etc. have been changed to allow quoting of Aadhaar/ PAN in place of PAN only.
8. Trusts to furnish details of re-registration made under new provisions & various other additional/ amended disclosures for Trusts – Under New ‘ITR – 7’, Trust are required to furnish various details in respect of an application for re-registration made under new Section 12AB. As part of COVID Relaxations, timelines for such applications have been extended to 31st Dec 2020 i.e. within 3 months from 1st Oct 2020. The Timeline for all ITRs has been extended to 30th Nov 2020. So, details of the re-registration application can only be provided if such an application is made before the filing of ITR. Various other amended disclosure requirements such as for ‘Donation forming part of Corpus Fund’, etc. have been introduced.
9. Reporting of share in co-owned land and building – In New ITR-6, a company is now required to report its share in land or building in case of co-ownership
10. Details of authorized person verifying ITR – Schedule of ‘Key Persons’ in ITR-6 has been changed to allow reporting the details of ‘eligible person’ (authorized by the Board) to verify the return in absence of an MD/ Director. This is line with an Amendment by Finance Act 2020.
11. New Schedule 112A & 115AD(1)(b)(iii) proviso introduced – These seek information w.r.t sale of listed equity share in a company or unit of equity-oriented fund or unit of a business trust on which STT is paid u/s. 112A and proviso to Sec 115AD(1)(b)(iii) for all assesses and Non-residents (FIIs) respectively
12. Shareholders’ details Schedule SH-1 not to apply for Non-profit Cos. – In new ITR-6, it has been clarified that Schedule SH-1 is not applicable to Not-for-profit companies formed under Companies Act or a company limited by guarantee. This Schedule was introduced for anti-avoidance & anti-abuse to keep a check on closely held companies issuing shares at higher than FMV.