Key Changes in ITR for AY 2021-22

Vide Notification No. 21/2021 dated 31st March 2021, the Central Board of Direct Taxes (CBDT) notifies Income Tax (7th Amendment) Rules 2021. In this notification, Rule 12 of the Income Tax Rule, 1962 is being amended and Income Tax Return forms for AY 2021-22 are being notified.

This year, there are very few changes in the income tax return forms. This will surely provide some ease in compliance burden on tax return preparers as well as tax payers.

In this document, we are indicating some key changes in the Income Tax Return Forms for AY 2021-22. We trust that readers will find the same useful.

 ITR – 1 cannot be filed in the case where tax has been deducted under Section 194N

Section 194N provides that the Tax is required to be deducted if the amount of cash withdrawn during the year exceeds Rs. 20 lakhs in case of certain non-filers of return and Rs. 1 crore in other cases.

Vide Income Tax (7th Amendment) Rule, 2021, the Rule 12 of the Income-tax Rules has been amended to restrict an assessee to use ITR 1, in whose case tax has been deducted u/s 194N.

Further, it is very important to note that the TDS deducted u/s 194N can not be carry forward to any other assessment year. The excess tax deducted under this section, if any, must be claimed as refund in the same of deduction.

Computing cost of acquisition u/s 112A and 115AD:

As you are aware that, in the case of sale of Equity shares/Units of Equity Oriented Mutual Fund/Units of Business Trust, which were acquired before 31.01.2018, the cost of acquisition is computed after considering the Fair Market Value as on 31.01.2018. The ITR has been amended to allow tax payer to insert Sale Price, FMV and Cost of Acquisition in order to effectively calculate the capital gain.

Disclosure of Marginal Relief:

ITR Forms requires the assessee to disclose the marginal relief figure separately for “Surcharge computed before marginal relief” and “Surcharge computed after marginal relief”. This will bring out the effect of marginal relief in the ITR form itself.

Cash donation under Section 80GGA

Additional disclosures of the date on which such cash donation u/s 80GGA has been made, would be required. Tax Return preparer will have to collate the same from clients appropriately.

 Tax on ESOPs allotted by Eligible Start-up:

Tax payer in whose case, the tax is deducted or payable u/s 80-IAC in respect of ESOPs, such person is not be eligible to file tax return in ITR-1 and ITR-4. Accordingly, other appropriate ITR will have to be opted.

Few other important points:

These are not the new changes however, mentioned here for ease of recap.

ITR -1 is not available: –

  • for any individual who is a Director in any company
  • for disclosing income or loss from more than 1 house property or
  • for setting off loss under any Head of Income
  • for individual having total income exceeding INR 50 Lakhs
  • for tax payer having Income from foreign sources
  • for tax payer having Foreign Assets including financial interest in any foreign entity
  • for tax payer being Signing authority in any account outside India

Source: Notification No. 21/2021 dated 31st March 2021 of Income Tax Act, 1961


Disclaimer: The information contained herein is of a general nature and does not contain any expert view or opinion. Please refer source documents for detailed information. Although we try to provide accurate information, there can be no guarantee that such information is accurate as of the time it is received or in the future. We request readers to seek professional advice before arriving at any decision / conclusion after reading of this document. We are not responsible for any loss arising to anyone after referring and relying on this document.

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June 2021