Six things to know about the new income tax return forms
Having dropped the controversial provision for mandatory disclosure of foreign trips and dormant bank accounts, the Finance Ministry has finally come out with new and simplified income tax return (ITR) forms. The simplified ITR forms have been brought after the earlier version was opposed by the industry, MPs and assessees for its cumbersome disclosure norms.
The ITR forms, which were notified last month by the CBDT for the current assessment year, had specific columns for banks accounts, IFSC Code, names of joint account holders and foreign visits, including the ones paid by companies.
The good news now is that apart from doing away with some controversial provisions, the new forms -- ITR 2 and ITR 2A -- will have only three pages and other details will have to be filled in schedules, according to a Finance Ministry statement issued recently.
However, "as the software for these forms is under preparation, the new forms are likely to be available for e-filing only by the third week of June. Accordingly, the time limit for filing these returns is also proposed to be extended up to August 31, 2015, for which a separate notification will be issued," says Rama Karmakar, senior tax professional at EY India.
Here are the 6 things you need to know about the new ITR forms:
1) Providing a big relief to assessees, the new ITR forms have been reduced to three. "The number of pages for the new ITR forms has been reduced from 14 pages to 3, making it easier for income tax assesses. The new forms, known as ITR 2 and ITR 2A, will therefore consist of only 3 pages. Any other details that must be filled will have to be included in schedules," informs Adhil Shetty, founder & CEO of BankBazaar.com.
2) Currently individuals/HUFs with income from more than one house property and capital gains are required to file Form ITR-2. "A new ITR 2A form is proposed which can be filed by an individual/HUF that has income from more than one house property, but does not have any income from capital gains, income from business/profession, foreign assets/foreign income," says Karmakar.
3) An individual/Hindu Undivided Family (HUF), who has exempt income without ceiling limit (other than agricultural income exceeding Rs 5,000), can now file Form ITR 1 (Sahaj). Earlier, an individual with exempt income (e.g. dividend income) of more than Rs 5,000 was required to file ITR-2.
4) With regard to foreign travel details, it is now proposed that only the passport number, if available, will be required to be furnished in ITR-2 and ITR-2A. There would be no requirement to provide details of foreign trips/expenditure. This would bring relief to all individuals who travel extensively.
5) The Finance Ministry has done away with the disclosure of details of dormant accounts which are not operational during the last three years. "As regards bank account details in all these forms, only the IFS code, account number of all the current/savings account which are held at any time during the previous year will be required to be filled-up. The balance in accounts will not be required to be furnished," says the Finance Ministry statement.
6) An individual, who is not an Indian citizen and is in India for business, employment or on student visa, will not mandatorily be required to report the foreign assets acquired by him during the prior years in which he was non-resident, if no income is derived from such assets during the relevant financial year.
According to tax experts, the above changes proposed in the ITR forms will provide respite to the taxpayers, including all expatriate employees working in India, by simplifying the process of the tax return filings.
Sonu Iyer, Tax Partner & Human Capital Leader, EY, says, "The government has carefully considered the representations made and suitably dealt with the same by coming out with changed and different forms. Expatriates can also now breathe easy as unnecessary information will not be requested."