When you file your tax returns this year, you will have to brace up for a string of new disclosures in all the income tax return (ITR) forms. Tax-payers will have to reveal if they have deposited over Rs 1 crore in their current accounts, spent over Rs 2 lakh during international travel or incurred electricity expenses of over Rs 1 lakh.
Some of the changes were expected as these formed part of ITR-1 (Sahaj) and ITR-4 (Sugam) forms released in January 2020. However, fresh notification of these forms as well as others (Forms ITR-2 to 7) was warranted given the multitude of COVID-19-induced changes, particularly, the extension of tax-saver investment deadline to June 30. The finance minister announced this extension to provide relief to individuals who were unable to make their tax-saver investments before March 31, owing to the national lockdown.
The new forms also provide seek details of tax-saver investments made between April 1 and June 30. The due date for filing tax returns in assessment year 2020-21 (financial year 2019-20) is November 30, instead of July 31.
Details of tax-saver investments made in Q1 2021
If you have made tax-saver investments eligible for deduction under sections 80C, 80D, 80E and so on or donations under section 80G, between April 1 and June 30, you will have to share the details. Under schedule DI, you will also have to specify the eligible amount of deduction during 2019-20 and deduction attributable to investments made between April 1 and June 30. The purpose is to ascertain the April-June investments that are to be taken into account for computing deductions for 2019-20.
The income tax department will be seeking certain specific details of your expenses this year. If you have spent over Rs 2 lakh on foreign travel this year or more than Rs 1 lakh on electricity consumption, you will have to reveal the same.
“Taxpayers are likely to face practical difficulties with reporting information with respect to foreign travel and electricity consumption. Detailed instructions on ITR forms are awaited to understand how these amounts must be calculated,” says Archit Gupta, Founder and CEO – Cleartax.in. This apart, in cases where tax-payers happen to be central, state or public sector undertaking employees, they will have to specify this in the form.
No ITR-1 for joint owners of house properties
You can no longer use ITR-1, the simplest form, if you jointly own a house property. Similar is the case with ITR-4. Now, it is quite common for couples to purchase houses jointly to increase home loan eligibility and maximise tax benefits on housing loans. Principal repaid is eligible for deduction under section 80C, subject to the overall limit of Rs 1.5 lakh, and interest paid of up to Rs 2 lakh under section 24. This time round, they will have to use ITR-2, which seeks extensive disclosures.
More than one account allowed for tax refund
The new forms allow tax-payers to select more than one bank account for receiving tax refunds. “The refund will be credited to an account as decided by (the I-T department’s) central processing centre after processing the return,” says Gupta. You would, however, be better off choosing only one to ensure ease of monitoring at time of refund credit.