All you need to Know about the new Income Tax Forms 2017-18

The Finance Minister laid out statistics regarding the number of tax payers in India during the Budget Speech 2017, vis-a-vis amount of expense incurred by the individuals disclosed an utter distinction between the acknowledgement of expenditure and income. In order to make changes in the present scenario and draw on ease in revealing the income and filing of income tax returns, the Government of India has taken mindful and careful steps in rolling out the new income tax forms.

The solitary major change in new return forms reported is a simplified one pager form, i.e. ITR 1, for the individuals who have income from sources such as one house property, pension, and salary and income earned from other sources such as interests, etc. This will include more than 90% of the taxpayers an individual category such as pensioners, housewives, salaried class, etc. The Income Tax Forms have become shorter, less complex and can be easily filed and understood by a common man without any assistance of any expert.

Main changes in the Income Tax Returns Forms:

ITR Form No.	Key Changes	Details
ITR 1, 2, 3, & 4	Revelation of AADHAAR number	It is mandatory to mention your AADHAAR number or the enrolment number for AADHAAR (if you have applied for it) in the ITR
ITR 1, 2, 3, 4, 5, 6 and 7	Revelation of cash you deposited between November 9, 2016 and December 30, 2016	A fresh column has been added in all the ITR form to report the cash submitted by the taxpayers to the bank accounts for the period of demonetisation, i.e. from November 9-December 30, 2016. However, the taxpayers have to fill the respective column only if they deposit cash in excess of INR 2 lakhs during the period of demonetisation.
ITR 2, 3, 5, 6 and 7	Income on account at special rates not explained	New columns under the “Schedule OS” has been introduced to report the unexplained income that will be taxed at 60%
ITR 2, 3 and 4	Deductions u/s 80EE of the Income Tax Act	Section 80EE of the IT Act allows deductions on interest on home loans for those who buy a house for the first time up to INR 50,000. This deduction is more than INR 200,000 limit presently allowed for house property covered u/s 24(b)A new field has been offered in the new ITR form under Schedule VI-A to claim interest on home loan u/s 80EE of the IT Act.
ITR 2, 3 and 4	Additional details applicable to the liabilities and assets by the HUFs/Individuals who earn more than INR 50 lakhs	In the previous year, the Government of India commenced a new schedule compelling HUFs/Individuals to make declaration of the value of the liabilities and assets, if the total income earned by them is more than INR 50 lakhs. The taxpayers had to specify the cost of cash and bank balance, shares, vehicles, bullion, jewellery, immovable property etc. Taxpayers now have to reveal the address and description of the immovable properties and movable assets in the new ITR forms. Also, new fields have been inserted in the ITR forms for the revelation of ‘Internet held in the assets of a company or Association of Person (AOP) as a member or partner.” These partners/members also have to reveal the AOP or the firm’s PAN, address and name.
ITR 3 and 5	Details of CA firm that conducts audit	Taxpayers now have to reveal the membership number and the name of CA who signs audit report with registration number, name and the PAN card of the audit firm in new ITR forms
ITR 4	Separation of digital and other receipts under probable taxation scheme	According to the probable taxation scheme provided u/s 44AD of the IT Act, 8% of the gross turnover or receipts are to be deemed as income of the taxpayer. However, as per the Finance Act 2017, it was reduced to 6% for digital receipts of the taxpayer. New columns also have been introduced in ITR 4 to reveal turnover received via digital mode. As a result, columns have been introduced to reveal probable income at 6% and 8%.

The efiling Income Tax forms reported for the fiscal year 2017-18, their relevance and major changes are illustrated in the table below:

Form No.	Applicability
ITR 1	Individual who earn income from one house property, salaries, other sources such as interests etc, and having total income up to Rs. 50 lakhs
ITR 2	HUFs and Individuals who do not carry out profession under any proprietorship or business (The existing ITR 2 and ITR 2A ITR3 have been merged into ITR 2)
ITR 3	HUFs and Individuals who have income from a profession or a proprietary business
ITR 4	Probable income from profession and business
ITR 5	Individuals other than HUFs, individual, company, person filing form ITR 7
ITR 6	Companies other than firms that claim exemption u/s 11 of the IT Act 1961
ITR 7	Individuals including companies needed to furnish income tax returns u/s 139 (4A)/139 (4B)/139(4D)/139(4E)/139(4F) of the IT Act 1961

The idea of the changes made to the ITR forms appear to be ‘simplification’ and the changes like the removal of sections irregularly used by HUFs/Individuals, reflection of non-digital and digital receipts in the probable income cases, a reflection with deduction u/s 80EE are the welcome moves.

While, however, a few changes like further details regarding of assets such as bank and cash balance, shares, vehicles, bullion, jewellery, immovable property, etc, interest in the AOPs and firms, details of CAs would amplify the burden on taxpayers.

The revelation of the deposits while demonetisation in the ITR has become easy to identify the unrevealed incomes and a considerable part of the audit efforts of the revenue on the financial year 2016-17 returns are slated to be fixed on the part of the return. Linking of PAN with AADHAAR and invalidation of the PAN where this type of linking is not done must result in cleaning up of several PAN per person, which has been said to be an imperative road block in determining the demonetisation deposits.

On the whole, the transformations to the ITR forms are welcomed and must be in higher compliance ratio from the taxpayers.

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