Arjuna (Fictional Character): Krishna, September Month has begun and so is the Income Tax Season, what are the new reporting requirements for Taxpayers in Income Tax Returns?

Krishna(Fictional Character): Arjuna, Each year CBDT notifies new ITR’s and brings changes in the Income Tax Return and the and requires new information from the taxpayers. Like each year, this year also CBDT has brought about new reporting requirements in the Income Tax Returns.

Arjuna (Fictional Character): Krishna, what are the new reporting requirements in ITR for Company assesee?

Krishna (Fictional Character): Arjuna, new reporting requirements in ITR for company assesee are as follows-

  • Detailed information of shareholders is to be provided by Unlisted Companies and Startups. The details required in the Income Tax Return are-

1. Name

2. PAN Card

3. Residential Status

4. Type of Share i.e Bonus Share or Equity Share or Preference Share or Rights Share or Sweat Equity Share

5. Quantity

6. Date of Allotment

7. Face Value of the Share

8. Issue price of the share

9. Amount Received

10. Cessation Details if the shares are Sold or Relinquished by the shareholder

  • Information regarding Turnover/Gross receipts as per GST return filed such as GSTIN and annual value of outward supplies, which was limited to ITR-4 only now made applicable to ITR-3, ITR-5 and ITR-6.
  • Details of all the assets and the liabilities to be provided by the Companies in the Income Tax Return. The following details are required to be provided-

1. Land and Building

2. Details of Listed Equity Shares and Unlisted Equity Shares

3. Details of Other Securities held by the Company

4. Capital Contribution in Other Entities i.e Details of the business in which the company has provided capital contribution as a partner.

5. Loans and Advances provided by the companies-

6. Details of Vehicles, Boats, etc-

7. Details of Jewellery, Bullion, artwork etc

8. Details of Liabilities( Other than Financial Institutions)-

Arjuna (Fictional Character): Krishna, what are the new reporting requirements in ITR for other than Company assesee?

Krishna (Fictional Character): Arjuna, new reporting requirements in ITR for other than company assesee are as follows-

  • Where regular books of accounts are maintained, Profit and Loss A/c is bifurcated into Manufacturing, Trading and Profit and Loss A/c in ITR-3, ITR-5, ITR-6. In Manufacturing A/c details of opening inventory of raw material and work in progress, purchases, direct wages, direct expenses, factory overheads and closing stock are to be given and cost of goods produced to be transferred to Trading A/c. In Trading A/c details of Sales, purchases, direct expenses, Opening and Closing stock of finished goods, etc is to be given and gross profit to be transferred to P&L A/c. Indirect incomes and expenses to be reported in P&L A/c. This will disclose gross profit and net profit calculations. The gross profit and net profit as per books of accounts will have to be reconciled with ITR.
  • In case the net agriculture income exceeds Rs.5 Lacs, following details to be provided for each agriculture land separately in ITR-2,ITR-3,ITR-5,ITR-6:

1. Name of district along with pin code in which agricultural land is located

2. Measurement of agricultural land in Acre

3. Whether the agricultural land is owned or held on lease

4. Whether the agricultural land is irrigated or rain-fed

From the above information, crop pattern and yield of each agriculture land can be determined.

  • Detailed information regarding holding of unlisted equity shares at any time during the year is to be given company wise in ITR-2, ITR-3, ITR-5, ITR-7. The above information will be cross-checked with data provided by companies. Applicability of taxability u/s 56 can be ascertained.
  • Details of directorship in company at any time during the financial year such as Name and PAN of the company, whether its shares are listed or unlisted and Director Identification No. (DIN) are to be furnished in ITR-2 and ITR-3. This will be cross verified with ROC.
  • Detailed disclosure for residential status in India is to be provided by individuals in ITR-2 and ITR-3 i.e. stay in India is more than 182 days or more during the year, stay in India is 365 days or more in 4 preceding years, etc. It will be helpful in determining correct residential status and hence taxability of residents and non-residents.
  • Information regarding Turnover/Gross receipts as per GST return filed such as GSTIN and annual value of outward supplies, which was limited to ITR-4 only now made applicable to ITR-3, ITR-5 and ITR-6.
  • The manner of reporting of Salary income has been changed. Earlier only taxable allowances were to be reported. Now gross salary is to be reported and then exempt allowances are to be deducted and taxable salary is to be calculated. Further separate reporting of all deductions u/s 16 is to be done instead of total deduction u/s 16. The disclosure will provide information in line with Form-16.
  • An individual, who either is a Director in a company or has invested in unlisted equity shares or claiming deduction from income from other sources except standard deduction for family pension, cannot file ITR-1 (Sahaj) or ITR-4 (Sugam).
  • Now ITR-4 can be filed only by resident individuals, HUF and Firms having income upto Rs.50 Lacs. Those having income above Rs.50 Lacs will have to file ITR-3 and provide more information.
  • From A.Y. 2019-20, only persons above 80 years of age i.e. super senior citizen using ITR-1 or ITR-4 can file paper returns. Rest all are required to file return electronically. Earlier those with income up to Rs. 5 Lacs and not seeking a refund could also file in paper form.

Arjuna: Krishna, what should the people learn from these new ITR forms?

Krishna: Arjuna, New computerized scrutiny and verification requires more and more information from taxpayers to check evasion and increase cross verification of economic transactions. Hence new changes in ITR are brought every year. CBDT has brought many reporting requirements in case of company assesee which means that the government wants to keep close watch on Company assesee.

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