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TAX MANAGEMENT August 2019

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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.

To help the individual taxpayers pick the correct tax return form, a brief synopsis of the applicable tax return forms has been listed below:
1)Form ITR-1 SAHAJ
Individual being a resident (other than not ordinarily resident) having total income up to INR 50 Lakhs having income from salaries, one house property, other sources (Interest etc.) and agricultural income upto INR 5,000.

2)Form ITR-2
Individual and HUF not having income from profits and gains of business or profession.

3)Form ITR-3
Individual and HUF having income from profits and gains of business or profession.

4)Form ITR-4
Individual, HUF and Firm (Other than LLP) being a resident having total income upto INR 50 Lakhs and having income from business and profession which is computed under section 44AD, 44ADA or 44AE.

5)Form ITR-5
Person other than Individual, HUF, company and person filing Form ITR-7.

6)Form ITR-6
Companies other than companies claiming exemption under section 11.

7)Form ITR-7
Persons including companies required to furnish return under section 139(4A) or 139(4B) or 139(4C) or 139(4D) only

From now onwards, facility of paper filing is available only to those who are aged more than 80 years at any time during the previous year and who are furnishing return in Form ITR-1 (SAHAJ) and Form ITR-4 (SUGAM).

HIGHLIGHTING THE ADDITIONS BEING MADE IN ITR FOR THE ASSESSMENT YEAR 2018-2019 –
FORM ITR-1 SAHAJ

Similar to the old format, the gross total income, in the new ITR-1 SAHAJ, is also divided into three section –
•Section B1 – Salary / Pension;
•Section B2 – House Property;
•Section B3 – Income from other sources.
However the same has been made more detailed. In case of house property, if the individual is owning the house property, he is required to provide details of the same like whether it is self-occupied, let out or deemed let out.

ITR-1 NOT APPLICABLE for Residents who are:
It is important to note here that from now onwards, Form ITR-1 SAHAJ cannot be used by the-
•individual having directorship in any Company or
•individual who has invested in unlisted equity share capital or
•individual who has claimed deduction u/s 57, other than deduction claimed under clause (iia)
•individual who is assessable for the whole or any part of the income on which tax has been deducted at source in the hands of a person other than the assessee.
FORM ITR-2
List of new information inserted in FORM ITR-2 is being detailed hereunder
POINT NO. (d) –
Residential Status in India (for individuals)

Earlier only residential status i.e. Resident, Non-Resident or Resident but Not Ordinarily Resident was to be provided, however, as per the newly introduced FORM ITR-2 applicable for AY 2019-2020, individual details of the residential status needs to be provided. The same is detailed hereunder –
A. Resident –
•You were in India for 182 days or more during the previous year;
•You were in India for 60 days or more during the previous year, and have been in India for 365 days or more within the 4 preceding years.
B. Resident but not Ordinarily Resident –
•You have been a non-resident in India in 9 out of 10 preceding years;
•You have been in India for 729 days or less during the 7 preceding years.
C. Non-resident –
•You were a non-resident during the previous year.
Residential Status in India (for HUF) – Resident / Resident but not ordinarily Resident / Non-resident. Details of residential status for HUF is added for the first time.
POINT NO. (H) – NEWLY INTRODUCED DIRECTORSHIP DETAILS –
Whether you were Director in a company at any time during the previous year?
If yes, following details needs to be provided –
•Name of the Company,
•PAN,
•Whether its shares are listed or unlisted? and
•Director Identification Number.

POINT NO. (I) – NEWLY INTRODUCED DETAILS OF HOLDING OF UNLISTED EQUITY SHARES –
Whether you have held unlisted equity shares at any time during the previous years?
If yes, following details needs to be provided –
•Name of the Company,
•PAN,
•Opening Balance,
•Shares acquired during the year,
•Shares transferred during the year and
•Closing balance.
SCHEDULE FA – DETAILS OF FOREIGN ASSETS AND INCOME FROM ANY SOURCE OUTSIDE INDIA
Additional information needs to be provided with respect to Point A covering foreign bank account. The information to be provided in older format as compared to the same to be provided in newer format is being summarized below
A1. Details of Foreign Depository Accounts held (including any beneficial interest) at any time during the relevant accounting period.
A2. Details of Foreign Custodial Accounts held (including any beneficial interest) at any time during the relevant accounting period.
A3. Details of Foreign Equity and Debt Interest held (including any beneficial interest) at any time during the relevant accounting period.
A4. Details of Foreign Cash Value Insurance Contract or Annuity Contract held (including any beneficial interest) at any time during the relevant accounting period.

ITR-4 Sugam NOT APPLICABLE for:
1) Firm which is Not Resident.
2) HUF which is NOT ordinarily Resident.
3) Resident, other than not ordinarily resident  who is :
i. Director in any company;
ii. Has held any unlisted equity share at any time during 2018-19.
iii. Has total income, exceeding Rs. 50 lacs.
iv. Owns more than one house property.
v. Has any brought forward loss or loss to be carried forward under any head of income;
vi. Is assessable for the whole or any part of the income on which tax has been deducted at source in the hands of a person other than the assessee.

(Shubham is a Chartered Accountant and MBA (Finance). She is on the forum of “Economic Times” experts on Taxation.   She specialises in Individual Taxation and Taxation of Freelancers & Small businesses. She can be reached on info@taxfile.in for answering your tax related questions.)

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