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Know the correct income tax return form applicable to you for FY 2018-19

There are some additional points which require due consideration at the time of selecting the correct tax return form.

ET CONTRIBUTORS|
Updated: Jul 19, 2019, 12.32 PM IST
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Selection and filing of the correct tax return form is necessary as filing of an incorrect tax form may render the ITR as defective.
Start ITR filing work: Avoid late filing penalty
By Shalini Jain

The Central Board of Direct Taxes (CBDT) notified tax return forms for the Financial Year (FY) 2018-19 on April 01, 2019.

While the type of tax return forms largely remain unchanged from previous year (no basic change in forms with respect to category of taxpayers who are required to file Form ITR 1, 2, 3 and 4), there are some additional points which require due consideration at the time of selecting the correct tax return form at the time of filing the income tax return for FY 2018-19.

The instructions to fill ITR 2 and ITR 3 tax return forms released by CBDT last week should help the taxpayers in providing correct information in the tax return form. To help the individual taxpayers pick the correct tax return form, a brief synopsis of the applicable tax return forms has been tabulated below:

ITR Form number Type of taxpayer Residential status Type of income
ITR 1 (SAHAJ) Individuals* Resident and Ordinarily Resident (ROR) Income from salary, one house property, other sources (interest etc.). Total income should not exceed INR 50 lakhs
ITR 2 Individuals and HUFs (i) Non-resident (NR), (ii) Resident but not Ordinarily Resident (RNOR), (iii) ROR Income from salary, more than one house property, capital gains and income from other sources.
ITR 3 Individuals and HUFs (i) NR, (ii) RNOR, (iii) ROR Income from salary, house property, income from business or profession, capital gains and income from other sources
ITR 4 (SUGAM) Individuals*, HUFs and firms (other than LLP) ROR Income from salary, one house property, other sources, income from business or profession computed under Section 44AD, 44ADA and 44AE. The total income should not exceed INR 50 lakhs
*Director in a company or an individual having investment in unlisted equity shares of a company is not eligible to file ITR 1 and ITR 4.

Selection and filing of the correct tax return form as per the residential status, source and quantum of income is necessary as filing of an incorrect tax form may render the income tax return as defective.

The below checkbox summarises the pre-requisites on the basis of which you can select the correct tax return form for the FY 2018-19
ITR-Table

Some of the key changes in tax forms have been highlighted below:
  • Salary reporting in the income tax return has been made consistent with salary reported in Form 16 of an employee. Till last year, net taxable salary after eligible exemptions was required to be reported in ITR 1 and ITR 4 tax return form.
  • An individual who is a Director in a company or has invested in unlisted equity shares in any company is not eligible to file ITR 1 and ITR 4 tax return form. No such restriction was applicable in previous years. Further, certain details with respect to the company are also required to be provided in which the individual is a Director in ITR 2 and ITR 3.
  • Details with respect to investment made in unlisted equity shares are required to be provided in ITR 2 and ITR 3.
  • Specific details are requested in ITR 2 and ITR 3 tax return forms for number of days spent in India to correctly determine the residential status of the individual. In case an individual qualifies as Non-resident of India, country where the individual qualifies as a Resident of is required to be specified along with taxpayer's identification number of that country.
  • Specific column has been added to report long term capital gains from sale of equity shares or units of equity oriented mutual funds which have become taxable with effect from FY 2018-19 in ITR 2 and ITR 3.
  • Separate schedule has been inserted in ITR 1 and ITR 2 to report donations made for scientific research or rural development under Section 80GGA of the Income Tax Act 1961.
  • In ITR 2 and ITR 3 forms, in the Schedule EI which is relevant to report exempt incomes, separate column to report income exemption claimed under Double Taxation Avoidance Agreement (DTAA) has been inserted.
Enhanced reporting in relation to assets located outside India is required in ITR 2 and ITR 3 forms. Instructions to fill the tax return forms provide guidance on details to be reported by the taxpayers.

In the past, CBDT has introduced new reporting requirements in the tax return forms as and when the return filing utility is updated. The taxpayers should watch out for such changes at the time of filing of the income tax return.

(The writer is Tax Partner, People Advisory Services, EY)

(Also contributed by Akshay Sharma, Manager, People Advisory Services, EY)

(Views expressed are their personal)

(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
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