ITR Filing For FY 2020-21: Changes In ITR Forms You Should Know

1. ITR 1 cannot be filed if TDS credit in relation to Section 194N is being claimed:

Section 194N of the Income Tax Act specifies deduction of TDS in case a person withdraws cash over the specified limit given therein. Nonetheless, if a taxpayer goes on to claim TDS credit in respect of Section 194N then he or she cannot file his/ her income tax return in form 1 or ITR1.

Also, it is pertinent to note that the TDS deducted under section 194N cannot be carried forward to any other assessment year. The excess tax, if any, needs to be claimed in the same year of deduction as refund amount.

2. Disclosure of Marginal Relief:

For "Surcharge computed before marginal relief" and "Surcharge computed after marginal relief", ITR forms require the disclosure of marginal relief amount. This will produce the impact of marginal relief in the ITR form itself.

3. Inclusion of modifications in the dividend regime:

As per the Finance Act 2020, dividend regime saw a complete overhaul with Dividend Distribution tax being total abolished. Likewise, Schedule OS or Other source has been modified to include dividend income i.e. taxable in the hands of the shareholders.

Also, in all of the ITR forms a quarterly summary of dividend income would have to be provided that would help in the calculation of interest liability under section 234C.

Schedule EI for exempt income which included dividend amount exemption up to Rs. 10 lakh has also been changed accordingly. In an earlier regime, the company paid DDT on dividends and shareholders were taxed only in cases where dividend amount exceeded the threshold value of Rs. 10 lakhs.

4. Calculation of cost of acquisition u/s 112A and 115AD:

The form has also been changed to let the taxpayer include all such fields such as sale price, cost of acquisition and FMC or fair market value in order to properly compute capital gain. For all security sales including equity share, equity oriented mutual funds or units of business trust, the cost of acquisition is calculated after factoring the FMV as on 31st January, 2018.

5. Other changes:

i) JSON utility: For offline filing of ITR, the Income tax department introduced the JSON utility which would ease the burden of taxpayers filing return by themselves. Also, the new and improved e-filing portal due to be launched on June 7 will offer immediate processing of ITRS and will be more interactive and user-friendly.

ii) Schedule 112A and Schedule 115AD in the notified income tax form has required to fillin the details with respect to long term capitals gains arising on transfer of securities which may be equity shares, units of equity mutual funds or units of business trust subject to the STT being levied on such transfer that is transaction happening on stock exchanges. The Taxpayer will now have to clarify and disclose whether such gains or losses are arising due to Share or Units. Such clarification is needful in understanding the nature of transaction clearing and assessing the income in better manner. Also in the budget of 2019 the government announced grandfathered clause for all listed gains till 31st Jan 2018, in terms with section 55 of Income Tax Act, 1961 would be required to be reported in the ITR as well.

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