15 key changes in this year's Income Tax return forms
July, 02nd 2014
1. Unclaimed Credit of Taxes Deducted at Source (TDS) / Taxes Collected at Source (TCS) Brought Forward and Carried Forward: Taxpayers are required to disclose information in respect of TDS / TCS in specified schedules in the tax returns. Earlier, there was no mechanism to carry forward the TDS / TCS that was not pertaining to the given tax year. However, the new forms provide for details to be entered in respect of unclaimed TDS / TCS of the earlier tax year(s) and unclaimed TDS/TCS of the present tax year to be carried forward to the subsequent year.
2. Direct Credit of Tax Refund: Earlier, taxpayers were given an option to claim refund through cheque or credit into bank account. With an intention to expedite and align the refund process with process applicable to the corporate taxpayers, the new forms have done away with such an option of claiming refund through cheque. Accordingly, going forward, all taxpayers will now receive the legitimate tax refunds directly into their bank account.
3. Computation of Income from Capital Gains: The forms provide an upgraded new schedule for computing gains arising from transfer of capital assets in each of the prescribed categories. Additionally, information in respect of intra head adjustments of capital loss also needs to be disclosed in the newly prescribed form.
4. Additional Debtor wise Information for Bad Debts: Non-corporate taxpayers claiming deduction in respect of bad debts are now required to disclose in their tax return the PAN number of every debtor whose quantum of bad debt exceeds INR 0.1 million. Earlier, such disclosure requirement was applicable to corporate taxpayers, firms, association of persons, body of individuals, co-operative societies and local authorities.
5. Intra Head Adjustments: A taxpayer is entitled to set off loss from one source with the income from another source falling within the same head. In the newly prescribed forms, information in respect of intra head loss adjustment is required to be furnished.
6. Date of Furnishing Report: Disclosing the information in respect of the date of furnishing the following.
1. Form 3CEB (in case of taxpayers having international transaction with associated enterprises) and / or 2. Form 20B / 29C (in case of taxpayer paying tax on books profits or adjusted total income)
has now being extended to non-corporate taxpayers as well. Thus, all taxpayers will need to provide the date of furnishing of aforesaid forms in the newly prescribed tax return forms.
7. Transaction(s) with Notified Jurisdictions: Recently, the Central Government has notified Cyprus as a notified jurisdictional area. As a consequence to this notification, all taxpayers will have to report any transaction(s) entered with Cyprus in the new forms.
8. Unique Identification Number: Every corporate taxpayer and Limited Liability Partnership has been provided with a unique Corporate Identity Number by the Ministry of Corporate Affairs ('MCA'). The aforesaid taxpayers will now have to mention such unique number in the new prescribed forms.
Additionally, the aforesaid taxpayers will have to provide the information in respect of the Director Identification Number or Designated Partner Identification Number (issued to each director and partner by the MCA) in the newly prescribed forms apart from their PAN and other information such as their name, designation and residential address.
9. Buy Back of Unlisted Shares by the Indian Corporate Taxpayer: The Finance Act 2013 enlarged the scope of taxation by levying distribution tax on Indian corporate taxpayer(s) buying back its unlisted shares. Accordingly, a schedule has been inserted in the newly prescribed forms which mandate Indian corporate taxpayer(s) to disclose necessary information in respect of buy back of unlisted shares and tax paid thereon.
10. Tax on Book Profit for Specified Corporate Taxpayer: The Finance Act 2012 extended the provisions relating to tax on book profit to specified corporate taxpayers (engaged in Insurance, Electricity and Banking sectors) even though the financial statements are not prepared on the basis of Schedule VI of the Companies Act, 1956. Accordingly, in the newly prescribed forms, the classification in respect of aforesaid specified corporate taxpayer has been inserted.
11. Advance Pricing Agreement (APA): Every taxpayer who has entered into an APA is required to provide the information in respect of date of entering into the APA in the newly prescribed form.
12. Non-Deductible Business Expenditure: In the newly prescribed forms, information in respect of the following non-deductible business expenditure has been inserted, namely:
1. contribution to pension schemes, 2. amount of securities transaction tax, 3. expenditure of capital nature and 4. expenditure not wholly for the purpose of business or profession.
13. Deeming Business Income: The Finance Act 2013 provided that in computing business income from transfer of land or building (not being capital assets), stamp duty ready reckoner value should be adopted in case the actual transaction value is less than the former. The newly prescribed forms provide disclosure in respect of such ready reckoner value which exceeds the actual transaction value.
14. Units in Free Trade Zones / Special Economic Zones: Taxpayer(s) claiming exemption in respect of units in Free trade zones / Special economic zones shall provide the information in respect of the relevant tax year in which the eligible unit commenced manufacturing / producing specified articles along with the amount of exemption claimed in the newly prescribed forms.
15. Payments to Non-Residents: Disclosing the information in respect of specified payments to non-residents has now being extended to all taxpayers including non-corporate taxpayers. Accordingly the following specified payments