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CA Umesh Sharma

CA Umesh SharmaArjuna (Fictional Character): Krishna, the Income Tax department has introduced the new forms for filing the income tax Returns in the financial year 2016-17. The question is, what changes have they made in these forms? On the occasion of Ram Navmi on 4th April, lets discuss the Nine major changes in ITR.

Krishna (Fictional Character): Arjuna, Ramnavmi is celebration of the birth of Lord Rama. We get the teaching of living life within limits i.e. maryada from Him. It is mandatory that the Taxpayer also live within the limits of law. Every year the Income Tax Department brings new forms to file the return of the last financial year. These forms are modified according to the changes in budget and to collect information from the tax payers. Every year these forms come in the month of April, but this year they have arrived on the 31st March 2017. The types of forms depend upon the assesse and his source of income. There were 9 forms in the financial year 2015-16 but this year i.e in financial year 2016-17 there are only 7 forms. Therefore, there is a Saptami instead of Navmi in the New income-tax returns. Now ITR-1 is applicable for those assesse who have salaried income . ITR-2 is applicable for the partners of partnership firm and for salaried persons who have income from capital gains. ITR-3 is applicable for Business and Profession. ITR-4 is for those assesse who are showing income under Presumptive basis. ITR-5 is for Partnership Firms. ITR-6 is for Companies and ITR-7 for trust and other taxpayers.

Arjuna: Krishna, what are the NINE major changes made in the ITR forms this year?

Krishna: Arjuna, the NINE major changes in the ITR forms are as follows:

1. Most important is: Mentioning Aadhar No./Enrollment No. is compulsory for all income tax returns. In case of partnership firms, Aadhar No. of all partners has to be mentioned. This will reduce the use of duplicate PAN and will help find the correct address of tax evaders, etc.

2. Next Change is: Details of cash deposited equal to or above Rs.200000 in the period of Demonetization from 9/11/2016 to 30/12/2016 have to be mentioned in the income tax return. When the details are already available from the Banker to the IT department in this regard, why this information is asked again is not known. It may be for cross checking and finding tax evaders post demonetization.

3. Unexplained credit or investment attracts tax @ rate of 60% plus surcharge irrespective of slab rates. New column is inserted in ITR forms to report such unexplained income.

4. If income from dividend exceeds Rs. 10 Lakhs, then tax at the rate of 10% is applicable. New Column is inserted in ITR Forms for such dividend income in “Schedule OS”. New column has been inserted to report dividend income upto Rs.10 Lakhs and Long Term Capital gain exempt u/s 10(34),10(38) respectively.

5. Government has notified a simple one page form ITR-1 Sahaj for individuals earning income from salary, pension, one house property and income from other sources. New ITR-1 Sahaj has retained those deductions which are most frequently used by the taxpayers under sec 80C which includes LIC premium, PPF contribution etc, 80D which means mediclaim premia, 80G means donation and sec 80TTA means interest on saving bank for which they have provided a separate column.

6. A new field has been provided in new ITR forms for deduction under 80EE which allows deduction on home loan interest for first time home buyers.

7. The government has introduced a new schedule requiring individuals and HUF to declare the value of Assets and Liabilities if their total income exceeds Rs.50Lakhs. Now taxpayers are also required to disclose address of immovable property and description of movable properties under new ITR forms. Further, a new field has been introduced for the disclosure of ‘Interest held in the assets of a firm or AOP as a partner or member’. Such members or partners are also required to disclose name, address, PAN of the firm or AOP.

8. The taxpayers under presumptive taxation need not maintain any books of accounts which means they have to pay tax on profit calculated on the turnover.

(a) In F.Y 2016-17 in case of an assesse whose income does not exceed Rs.2 Crore, a new column has been inserted  in ITR to show income at the rate of 8% of the turnover realized in cash and at the rate of 6% of turnover realized through digital receipts.

(b) In new ITR-4 form, a new column has been inserted which shows an option to avail presumptive taxation scheme for professionals whose total receipts do not exceed Rs.50 lakhs under Section 44ADA. ITR-4 which is now applicable for taxpayer opting for presumptive taxation scheme has a new column under the Schedule TDS-2 to show the receipts as mentioned in form 26AS.

9. Now in case of trusts it is compulsory to mention the internal audits conducted under any other act in form ITR-7. Similarly details will have to be provided about the utilization of funds toward capital or charity purpose.

Arjuna: Krishna, on this occasion of Ramnavmi and New ITR forms, what should the people learn?

Krishna: Arjuna, just like Lord Ram took care of Brother Laxman, Wife Sita, Disciple Hanuman, Friend Sugreev, Sons Lav, kush, etc, each and every person should take care of their Mother and Father, Brother and Sister and family members and must ensure that they should file each and every family member’s income tax return and should ensure that they respect the law and do not indulge in tax evasion as they could suffer from serious financial trouble. Family planning and Tax planning should go hand in hand.

Author Bio

1. Central Council Member of ICAI. 2. Vice-Chairman of WIRC of ICAI for the period 2015-2021. 3. Youngest Chairman of Aurangabad Branch of WIRC of ICAI in 2002. 4. Author of Popular Tax articles series based on Krishna and Arjuna conversation i.e “KARNEETI” published in Lokmat on every View Full Profile

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  1. Mahes Ray says:

    As per Para 3 (e) of General Instructions on ITR-1 Sahaj (AY 2017-18) one having income under the head “Capital Gains” e.g., short-term capital gains or long-term capital gains from sale of house, plot, shares etc cannot use this form for filing return.
    On the other hand ITR-1 Sahaj (AY 2017-18) under the head “Exempt income (for reporting purposes)” calls for reporting exempt income u/s 10 (38) i.e. income from Long Term Capital Gain. This appears to be contradictory of General Instruction on ITR-1 Sahaj (AY 2017-18).
    Clarification on this issue will be very helpful.

  2. Premsagarkunde says:

    I am so happy to. Go thru this RamNavmi celebration… Wonderful Article explaining ITRs to needy tax payers. U have given infmn in depth…Tq…i


    I have not aadhar. In Assam our area no any aadhar centre kowar can I submit Income Tax Return without aadhar? Please advise me.

  4. Dalvinder Singh says:

    Reduced rate of 6% is applicable from ay 2018-19
    This is clearly stated in notes on clauses in finance bill 2017. They have not introduced any column in itr 4 to show turnover attracting 6% tax. Please clarify.
    Below is an extract from the notes on clause 21 of The Finance Bill 2017:-

    “It is proposed to insert a proviso to the said sub-section (1) so as to reduce the existing rate of deemed total income of eight per cent. to six per cent., in respect of the amount of total turnover or gross receipts which is received by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account during the previous year or before the due date specified in sub-section (1) of section 139 in respect of that previous year. However, the existing rate of deemed profit and gains of eight per cent. referred to in the provisions of the said section, shall continue to apply in respect of total turnover or gross receipts received in any other mode.

    This amendment will take effect from 1st April, 2017 and shall accordingly, apply in relation to assessment year 2018-2019 and subsequent years.”

  5. Chandru says:

    Dear Umesh Sharma
    Lord Ram did not take care of, Wife Sita, and his Sons Lav, kush but sent Seetha with brother Lakshman to forest just because some washerman was commenting about Lord Ram about bring back Seetha home from Srilanka after she stayed there (though not in the house of Ravan). Lord Ram brought her back home after having done the AGNI Pariksha. Here the so called authorities do not believe “we seetha” even when we do AGNI Pariksha and pass that test. There were few Union ministers in the past, who said that they have forgotten to file IT returns for SIX continuous years, just because they were busy in politics as if they are the only people who talk sense and as if we all bluff without any sense. In fact we common people always disclose all of our income without any fear and the ITOs always catch us only. Can we afford to forget like those UNION minister to file IT returns for SIX continuous years? The bureaucrats (IAS) will support that minister for their self interest to remain in power or being power hungry. Hence please do not cheat the public anymore taking the names of ARJUNA & KRISHNA and Lord RAM. Enough is enough already all the politicians are taking us for a RIDE and why do you also join that stream?

  6. GRaamchandran says:

    There has been difficulty in filing RETURNS for persons who are earning income by way of commission/brokerage/service charges where there is no application of SEC 44AA TO SEC44AE. ITR-4 SUGAM is meant only for those who earn income by way of business or trade and who can estimate their income on percentage basis. Hence there is no scope for those persons who have their income only by way of commission from INSURANCE COMPANIES of financial institutions and offering services. There shpul be separate ITR FORM for those persons who are having only professional income and whosde total receipts does not edxceed five lakhs and eligible for refunds.

  7. puranam kuppuswamy says:

    style of explaining is good.
    written in lucid manner,though not exhaustive
    i commend the writer for the desi style of giving information on the new IT Return changes(Navami)


    In case of HUF is the Aadhar of Karta to be quted ?
    If HUF has one house Self occupied and Interest from Bank Deposits which ITR is to be used ?
    Kindly clarify

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June 2024