The new ITR Forms released by the Income Tax department would see various changes in the return to be filed for FY 13-14 (AY 14-15). At the very outset the department requires transparency of transactions made by the taxpayers at each level of tax avoidance. The new Form also brings in few features which will remove certain difficulties faced by taxpayers.
The following changes can be noticed on the new ITR Forms while filing you return of Income:
1. Claiming Unclaimed TDS/TCS of earlier year in the current year. The government has brought in amendments in few sections of TDS. With the new provisions assessee’s are required to deduct tax at source on cash or accrual basis, whichever is earlier. Therefore, if someone is raising an invoice is also required to make advance payment of TDS.
The previous ITR forms did not provide any such feature to carry forward the excess TDS. The new ITR form is a relief to such taxpayers as previously they were required to disclose the entire TDS as a deduction and claim excess TDS as refund. The Schedule TDS/TCS has 2 new columns introduced for claiming TDS in the returns.
2. Provide debtors PAN for any claimed bad-debts. Individuals claiming bad debts deductions in their returns are also required to furnish PAN of the debtor, if available, responsible for bad debts of Rs. 1 lakh or more.
3. Tax refunds to become faster as credit through ECS only. Previously taxpayers faced issues in claiming refund. The department issued cheque for any refund above Rs. 50,000. Most of these cheques were undelivered or returned back resulting in delay and claiming for re-issuance of refund. The new ITR Form has dropped the option of claiming refund via Cheques and can now only be claimed through ECS. It’s a relief to Individuals who do not have permanent address and to NRI’s working abroad paying excess TDS and claiming refund.
4. Corporates to provide Unique Identification Numbers issued by MCA The new ITR Forms now requires Companies and LLP’s to provide their CIN and LLPIN in their returns. The Directors detail along with their DIN is also required to be furnished in the return.
5. Claiming rebate under section 87A The new ITR Form has a provision to claim rebate under section 87A. Resident Individuals whose total income is not exceeding Rs. 500,000 is eligible to a rebate which will be lesser of 100% of income-tax or Rs. 2,000.
6. Certain payment to non-residents to be disclosed separately The new ITR 4 Form requires Individuals to separately disclose payments made to non-residents in regard to Compensation, Commission, Royalty, Professional/consultancy fees/Fee for technical services and Interest.
7. Private discretionary trust now to file ITR-5 A trust where discretion is there among the trustees over the use of its income and capital are known as Discretionary Trust. The new ITR-5 Form now allows such trust to file their return of income. It gives trustee the power to decide which beneficiary would receive the funds and up to what extent.
8. Cyprus Transactions to be reported The transactions enter with the entities in Cyprus, a non-co-operative jurisdiction, is required to be reported to claim any deductions on expenditure and payments made. The new ITR Form requires prescribed information to be furnished for transactions in Cyprus notified under section 94A.
9. Closely held company to report buy-back of shares With the insertion of a new Chapter XII-DA by the Finance Act 2013, the government has brought restrictions on buy-back of its shares among the closely held domestic companies. The new ITR-6 form has a Schedule BBS where such companies are required to report all details in regard to buy-back of shares during the year.
10. Advance Pricing Agreements (APA) information to be provided As per the Finance Act 2012, an assessee entering into APA is required to furnish modified return under section 92CD and report the date of APA if return was filed under section 92CD after entering into the APA. The new ITR form provides an option to file return under section 92CD.
11. New computation of Capital Gains The computation of Capital Gains under Schedule CG has been changed with revised computation for STCG income under section 50C for sale of land or building, section 115AD for sale of securities by FII’s and section 115AC for sale of bonds or GDR’s by a non-residents.
12. Income Charged at special rate to be disclosed separately The new ITR Form requires separate disclosure of incomes charged at special rate under Schedule SI for income taxable under section 115AD, 115AB, 115AC, 115AD, etc.
13. Sale of Land and Building involving Stamp Duty Valuation to be disclosed Any deemed income under the head 'Profits and Gains of Business or Profession' under section 43CA on sale of land or building with respect to its stamp duty valuation shall be reported in the new ITR Form.
14. Expenditure made under section 36 and 37 to be reported Certain expenditure which is disallowed under section 36 and 37 are required to be reported in the new ITR Form. The disallowed expenditure to be disclosed are contribution to pension scheme under section 80CCD, STT payment on securities not included in business income, expenditure relating to capital nature and expenditure not incurred wholly and exclusively for business or profession.
To Conclude: The Income Tax department is in pursuit of collecting information from taxpayers to the maximum. With the new government coming in, and focusing on governance through information technology, this might be a step towards start of exchange of information amongst various departments of government.