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Which ITR form to fill for FY 2016-17 and tips on how to fill it
June, 14th 2017

The Central Board of Direct Taxes (CBDT) notified tax return forms for the Financial Year (FY) 2016-17 on March 31, 2017. The government also mandated quoting of Aadhaar number/ Aadhaar enrolment number while filing the tax return if the same is filed on or after July 1, 2017. As per a recent notification dated May 11, 2017, relief from obtaining Aadhaar has been provided to below taxpayers: * Taxpayer residing in the states of Assam, Jammu and Kashmir and Meghalaya; * A Non-resident taxpayer as per Income-tax Act, 1961; * A taxpayer of the age of eighty years or more at any time during the previous year; * A taxpayer who is not a citizen of India. 1. Below is a brief synopsis of the tax return forms applicable to an individual taxpayer for filing income tax return for the FY 2016-17: It is very important to file the correct tax return form, as filing of incorrect tax return form may make the tax return defective. Below is a table to help you pick the right form Applicability of the different ITR forms * For ITR-1 Form, only the income which is eligible to be reported in ITR-1 can be clubbed with the income of the taxpayer. For example, if spouse of the individual taxpayer has income only from other sources which needs to be clubbed, Form ITR-1 can be used to report such income. However, if the spouse has earned income from capital gains, then the individual taxpayer will have to file ITR-2. 2. Major changes from last year: A separate column has been inserted in all forms to disclose aggregate cash deposited in excess of INR 2 lakh during the demonetisation period i.e. 9 November 2016 to 30 December 2016. A. ITR-1 form * The form has been simplified and reduced to one pager; * 'Asset and Liability' schedule has been done away with in ITR-1 form since it is required to be filled only when the total income of the taxpayer is more than INR 50 lakh. B. ITR-2 form * Old ITR-2, 2A and 3 have been merged into the new form ITR-2; * 'Asset and Liability' schedule (applicable to individuals having total income more than INR 50 lakh) now requires reporting of additional information with respect to bank balance (including deposits) as on 31 March 2017, description and address of immovable assets, cost of shares and securities as on 31 March 2017, insurance policies, loans and advances given, interest held in assets of a firm or association of persons (AOP) as a partner or member etc.; * 'Schedule IF (i.e. information regarding partnership firms in which the taxpayer is a partner) has been inserted to report details of the partnership firm in case the taxpayer is a partner in one; *'Schedule BP (i.e. details of income from firms in which the taxpayer is a partner)' has been inserted to report details of income in the nature of salary, bonus, commission or remuneration received from partnership firms; * Under the 'Schedule OS (i.e. Other Sources)', additional information is sought with respect to cash credits, unexplained investments, unexplained money, unexplained expenditure, amount borrowed or repaid on hundi, dividend income from Indian companies in excess of INR 10 lakh,

The Central Board of Direct Taxes (CBDT) notified tax return forms for the Financial Year (FY) 2016-17 on March 31, 2017.

The government also mandated quoting of Aadhaar number/ Aadhaar enrolment number while filing the tax return if the same is filed on or after July 1, 2017.

As per a recent notification dated May 11, 2017, relief from obtaining Aadhaar has been provided to below taxpayers:

* Taxpayer residing in the states of Assam, Jammu and Kashmir and Meghalaya;

* A Non-resident taxpayer as per Income-tax Act, 1961;

* A taxpayer of the age of eighty years or more at any time during the previous year;

* A taxpayer who is not a citizen of India.

1. Below is a brief synopsis of the tax return forms applicable to an individual taxpayer for filing income tax return for the FY 2016-17:

It is very important to file the correct tax return form, as filing of incorrect tax return form may make the tax return defective.

Below is a table to help you pick the right form

Applicability of the different ITR forms

* For ITR-1 Form, only the income which is eligible to be reported in ITR-1 can be clubbed with the income of the taxpayer.
For example, if spouse of the individual taxpayer has income only from other sources which needs to be clubbed, Form ITR-1 can be used to report such income. However, if the spouse has earned income from capital gains, then the individual taxpayer will have to file ITR-2.

2. Major changes from last year:

A separate column has been inserted in all forms to disclose aggregate cash deposited in excess of INR 2 lakh during the demonetisation period i.e. 9 November 2016 to 30 December 2016.

A. ITR-1 form

* The form has been simplified and reduced to one pager;

* 'Asset and Liability' schedule has been done away with in ITR-1 form since it is required to be filled only when the total income of the taxpayer is more than INR 50 lakh.

B. ITR-2 form

* Old ITR-2, 2A and 3 have been merged into the new form ITR-2;

* 'Asset and Liability' schedule (applicable to individuals having total income more than INR 50 lakh) now requires reporting of additional information with respect to bank balance (including deposits) as on 31 March 2017, description and address of immovable assets, cost of shares and securities as on 31 March 2017, insurance policies, loans and advances given, interest held in assets of a firm or association of persons (AOP) as a partner or member etc.;

* 'Schedule IF (i.e. information regarding partnership firms in which the taxpayer is a partner) has been inserted to report details of the partnership firm in case the taxpayer is a partner in one;

*'Schedule BP (i.e. details of income from firms in which the taxpayer is a partner)' has been inserted to report details of income in the nature of salary, bonus, commission or remuneration received from partnership firms;

* Under the 'Schedule OS (i.e. Other Sources)', additional information is sought with respect to cash credits, unexplained investments, unexplained money, unexplained expenditure, amount borrowed or repaid on hundi, dividend income from Indian companies in excess of INR 10 lakh, royalty income from patents etc.

C. ITR-3 form

* Under the 'Schedule OS', additional information is sought with respect to cash credits, unexplained investments, unexplained money, unexplained expenditure, amount borrowed or repaid on hundi, dividend income from Indian companies in excess of INR 10 lakh, royalty income from patents etc.

3. General guidance on filling and submitting the tax return forms:

* The name filled in the ITR form should be as per the Permanent Account Number (PAN) card;

*The taxpayer should ensure that e-mail address, phone number and postal address are correctly stated in the tax return since the same are used by Income-tax Department for future correspondence with the taxpayer. Quoting of PIN code is mandatory;

* Quote Aadhaar/ Aadhaar enrolment number (if applicable) if filing the tax return after 30 June 2017;

* ITR-1 form can be filed in paper form only by:
a) An individual of the age of 80 years or more at any time during the financial year for which the return is being filed ; or

b) An individual or HUF whose income does not exceed INR 5 lakh and no refund is claimed in the return of income.

* In case the return is filed in paper form, no document (including TDS certificate) should be attached to the return;

* While filling ITR-1 in paper form, ITR-V should be duly filled;

*All other return forms have to be filed electronically;

* Check Form 26AS for income and taxes reported by the deductor so that there is no mismatch with the income and credit of taxes claimed in the tax return vis-à-vis Form 26AS;

* Ensure that outstanding taxes are paid before filing the tax return and use correct challan to avoid mismatch;

*Report all bank accounts held in India at any time during FY 2016-17 provided they have been operated in last three years. This includes reporting of joint accounts in which the taxpayer is the primary holder;

* Bank balance (including deposits) and cash in hand as on 31 March needs to be reported in 'Asset and Liability' schedule. While a common man may not know exact amount of cash held physically on 31 March 2017, it should be ensured that the amount that the amount declared in the tax return can be reasonably justified in case of scrutiny by the Income-tax Department;

* As per the CBDT notification on foreign tax credit rules, a resident taxpayer claiming credit of taxes paid outside India on doubly taxed income should file Form 67 along with specified certificate or statement on or before the due date of filing the tax return. The manner to file Form 67 and certificate or statement is yet to be prescribed by the CBDT;

* Reporting and disclosure requirement in ITR-3 form has been enhanced to ensure compliance by the taxpayers. However, a layman may not have complete details of requisite information sought in the tax return form and hence seeking help of a tax expert may be advisable;

* Taxpayers should ensure that the tax returns they file are verified, either manually or electronically, within 120 days of filing to avoid annulment of the tax return;

* In case the taxpayer wishes to manually verify the ITR-V form by sending a signed hard copy to CPC Bangalore, he should ensure that ITR-V is printed on A4 size paper and signed with blue ink only before sending to CPC Bangalore;

* ITR-V can be e-verified by generating electronic verification code using Aadhaar, net banking, bank account number, demat account or registered e-mail address and mobile number etc. of the taxpayer;

* Instructions for filling the tax return forms issued by CBDT and annexed to the relevant ITR form should be referred to before filing the tax return.

royalty income from patents etc. C. ITR-3 form * Under the 'Schedule OS', additional information is sought with respect to cash credits, unexplained investments, unexplained money, unexplained expenditure, amount borrowed or repaid on hundi, dividend income from Indian companies in excess of INR 10 lakh, royalty income from patents etc. 3. General guidance on filling and submitting the tax return forms: * The name filled in the ITR form should be as per the Permanent Account Number (PAN) card; *The taxpayer should ensure that e-mail address, phone number and postal address are correctly stated in the tax return since the same are used by Income-tax Department for future correspondence with the taxpayer. Quoting of PIN code is mandatory; * Quote Aadhaar/ Aadhaar enrolment number (if applicable) if filing the tax return after 30 June 2017; * ITR-1 form can be filed in paper form only by: a) An individual of the age of 80 years or more at any time during the financial year for which the return is being filed ; or b) An individual or HUF whose income does not exceed INR 5 lakh and no refund is claimed in the return of income. * In case the return is filed in paper form, no document (including TDS certificate) should be attached to the return; * While filling ITR-1 in paper form, ITR-V should be duly filled; *All other return forms have to be filed electronically; * Check Form 26AS for income and taxes reported by the deductor so that there is no mismatch with the income and credit of taxes claimed in the tax return vis-à-vis Form 26AS; * Ensure that outstanding taxes are paid before filing the tax return and use correct challan to avoid mismatch; *Report all bank accounts held in India at any time during FY 2016-17 provided they have been operated in last three years. This includes reporting of joint accounts in which the taxpayer is the primary holder; * Bank balance (including deposits) and cash in hand as on 31 March needs to be reported in 'Asset and Liability' schedule. While a common man may not know exact amount of cash held physically on 31 March 2017, it should be ensured that the amount that the amount declared in the tax return can be reasonably justified in case of scrutiny by the Income-tax Department; * As per the CBDT notification on foreign tax credit rules, a resident taxpayer claiming credit of taxes paid outside India on doubly taxed income should file Form 67 along with specified certificate or statement on or before the due date of filing the tax return. The manner to file Form 67 and certificate or statement is yet to be prescribed by the CBDT; * Reporting and disclosure requirement in ITR-3 form has been enhanced to ensure compliance by the taxpayers. However, a layman may not have complete details of requisite information sought in the tax return form and hence seeking help of a tax expert may be advisable; * Taxpayers should ensure that the tax returns they file are verified, either manually or electronically, within 120 days of filing to avoid annulment of the tax return; * In case the taxpayer wishes to manually verify the ITR-V form by sending a signed hard copy to CPC Bangalore, he should ensure that ITR-V is printed on A4 size paper and signed with blue ink only before sending to CPC Bangalore; * ITR-V can be e-verified by generating electronic verification code using Aadhaar, net banking, bank account number, demat account or registered e-mail address and mobile number etc. of the taxpayer; * Instructions for filling the tax return forms issued by CBDT and annexed to the relevant ITR form should be referred to before filing the tax return.

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