Highlights of Key changes in new ITR Forms 3, 4, 5, 6 and 7
Introduction:
The new ITR
Forms 1, 2 and 4S were notified for the Assessment Year 2015-16 vide
Notification No. 41/2015, Dated 15042015. However, in view of representations
received from various stakeholders, the CBDT came out with simplified version
of ITR forms 1, 2, 2A and 4S.
Now the CBDT has
notified the remaining ITR forms, viz, ITR Forms 3, 4, 5, 6 and 7 vide
Notification No. 61/2015. Different forms are prescribed for different
taxpayers. The following table gives an overview of the return forms applicable
to different taxpayers.
ITR Form:
ITR-3
This form shall
be used by an individual or HUF:
·
Who
is a partner in a firm; and
·
If
his income chargeable to tax under the head 'Profits or gains from business or
profession' does not include any income except income by way of any interest,
salary, bonus, commission or remuneration due to, or received by him from such
firm.
ITR-4
This form is
relevant for an individual or HUF who is carrying on a proprietary business or
profession.
ITR-5
This ITR form
can be used by a firm, LLP, AOP, BOI, artificial juridical person, cooperative
society or local authority. However, a person who is required to file return in
ITR 7 shall not use this form.
ITR-6
This form shall
be used by a company, other than a company claiming exemption under section 11,
to file its return of income.
ITR-7
Applicable to a
persons including companies who are required to furnish return under section
139(4A) or section 139(4B) or section 139(4C) or section 139(4D) (i.e., trusts,
political parties, institutions, colleges, etc.)
Key changes in ITR forms is highlighted below
Aadhaar Number and passport number
[ITR 3, 4]
Aadhaar number
and passport number are required to be given in new ITR forms (if assessee has
obtained the same).
Date of Formation of HUF
[ITR 4]
HUF is required
to report date of its formation in new ITR Form.
Return filed pursuant to order of CBDT under Section
119
[ITR 3, 4, 5, 6,
7]
For avoiding
genuine hardship, by general or special order, the Board may authorize any tax
authority other than CIT (Appeals) to admit an application or claim for any
exemption, deduction, refund or any other relief after the expiry of the period specified under the Act.
If assessee is
filing return of income pursuant to an order of CBDT under Section 119(2)(b),
it shall tick the checkbox [under Section 119(2)(b)] introduced in the new ITR forms.
Generally CBDT
extends date of filing of return under Section 119 in cases of natural
calamities or when taxpayer faces genuine hardship in certain circumstances.
Recently, the due date of filing of return for J&K taxpayers was extended
by the CBDT due to devastation caused by flood in J&K.
Expenditure on CSR activities
[ITR 6]
An Explanation
was inserted in section 37(1) by Finance (No. 2) Act, 2014 to clarify that any
expenditure incurred by an assessee on the activities relating to corporate social
responsibility (CSR) referred to in section 135 of the Companies Act, 2013
shall not be allowed to be deducted as same could not be considered to be
incurred for the purposes of the business or profession.
Thus, ITR 6 has
been revised to provide for reporting of expenditure on CSR activities if the
same is debited to profit and loss account.
Deduction under section 32AC
[ITR 6]
Any company
engaged in business of manufacture or production of any article or thing is
entitled to claim allowance under Section 32AC for investment in new plant and
machinery. Now a particular field is provided in new return form under
'Schedule BP' for reporting of investment allowance under Section 32AC.
Alternate Minimum Tax
[ITR 4, 5, 7]
The existing
provisions of section 115JC provides that alternate minimum tax ('AMT') shall
be payable at the rate of 18.5% on adjusted total income. Further, the adjusted
total income was computed by including only profit linked deductions (i.e.,
deductions claimed under Part C of Chapter VIA and deductions claimed under
section 10AA) in total income.
However, with a
view to include investment linked deduction in adjusted total income, Section
115JC was amended by Finance (No.2) Act, 2014 to provide that total income
shall be increased by the deduction claimed under section 35AD for purpose of
computation of adjusted total income.
Accordingly, the
return forms have been revised to include Section 35AD deduction for
computation of adjusted total income.
Foreign portfolio investors/Foreign Institutional
investors
[ITR 5, 6]
Foreign
Institutional Investor (FII) and Foreign Portfolio Investor (FPI) are required
to furnish their SEBI registration number in the new return Form.
Details of all bank accounts held by assesse
[ITR 3, 4, 5, 6,
7]
Under new ITR
form, an assessee is required to furnish details of all bank accounts held by
him in India at any time during the previous year. However immunity has been
provided to the taxpayer from furnishing details about the bank accounts which
have become dormant.
The 'dormant'
account shall be those current and saving bank accounts which have not been
operational for more than 3 years.
Following
details shall be reported in respect of each bank account held by assessee in
India:
(a) IFSC Code of
the Bank
(b) Name of the
Bank
(c) Name of
joint holders (if any) (withdrawn)
(d) Account
Number
(f) Nature of
the bank account, i.e., current account or saving account
Details of change in partners/members
[ITR 5]
A new column has
been inserted to require the assessee to furnish the details of change in the
partners/members of the firm/AOP/BOI, as the case may be, during the previous
year. Following details shall be furnished in the table newly inserted in Part
A General:
(a) Name of the
partner or member
(b) Status as to
whether admitted or retired
(c) Date of
admission or retirement
(d) Percentage
of share (if determinate)
Details of interest rate and remuneration payable to
partners/members
[ITR 5]
New ITR 5
requires disclosures of rate of interest and remuneration paid/payable to the
partners or members in firm/AOP/BOI or settlor/trustee/beneficiary in the
trust, as the case may be.
Detail of Salary/remuneration paid to
partners/members
[ITR 5]
New ITR Forms
requires separate disclosures of salary or remuneration paid or payable to the
partners during the year.
Bifurcation of interest paid to resident and non-resident
[ITR 5]
New ITR 5
requires separate disclosure of interest paid:
(a) Outside
India or paid in India to a Non Resident
(b) Paid in
India or paid to a resident
All interest
payments shall be bifurcated to indicate how much interest has been paid to:
(a) The
partners; and
(b) Others
Verification
[ITR 3, 4, 5, 6,
7]
Where return is
being furnished under section 92CD, assessee shall provide an additional
declaration that the critical assumptions specified in the agreement have been
satisfied and all the terms and conditions of the agreement have been complied
with.
Securities held by FIIs
[ITR 3, 4, 5, 6]
Section 2(14) of
the Act was amended by the Finance (No. 2) Act, 2014 to provide that securities
held by FIIs shall be deemed as 'Capital Assets'. The amendment was made to end
the controversy of categorization of income of FIIs as business income or
capital gains.
Consequential changes
have been made in ITR forms in this regard.
Sale of units of business trust
[ITR3,4, 5, 6]
The Finance (No.
2) Act, 2014 introduced a new Chapter XIIFA in the Income Tax Act to provide
for special provisions relating to business trust. The special taxation regime
contains provisions for taxability of income in the hands of business trusts
and the income distributed to its unit holders.
Consequential
amendment is made to Section 10(38) to provide that long-term capital gain
arising from transfer of unit of a business trust on which securities
transaction tax (STT) is paid shall be exempt from tax.
Similarly,
Section 111A has been amended to provide that short-term capital gain arising
from transfer of unit of a business trust on which STT is paid shall be chargeable
to tax at reduced rate of 15%.
Necessary
changes have been made in this regard in the ITR forms.
Reporting of amount that has remained unutilized in
capital gains account
[ITR 3, 4, 5, 6]
If assessee is
unable to roll over the investment in new capital asset within the specified
time period so as to avail of the exemptions under section 54, 54B, etc., he
can deposit the sum in capital gains account scheme.
In that case,
exemption to be granted to assessee shall be aggregate of actual investment in
new capital asset and amount deposited in capital gains account scheme before
due date of filing of return of income. The amount so deposited in the capital
gains account scheme should be utilized for investment in specified asset within
specified time limit, otherwise the unutilized amount shall be chargeable to
tax in the previous year in which the time limit expires. The unutilized amount
would be taxable as short-term capital gain/long-term capital gain, depending
upon the nature of original capital gain.
In ITR forms,
requisite details are required to be provided in respect of amount so deposited
in capital gains account scheme.
The details
which are required to be provided if amount is deposited in capital gains
account scheme are as follows:
(a) Previous
year in which asset is transferred
(b) Section
under which exemption is claimed
(c) Year in
which new asset is acquired
(d) Amount
utilized out of capital gains account scheme to acquire new asset
(e) Amount that
has remained unutilized in capital gains account scheme or amount which is not
used for making investment in specified new asset
Details of income taxable under DTAA
[ITR 3, 4, 5, 6]
If capital gain
or residuary income of assessee is taxable as per provisions of the DTAA
entered into between India and a foreign country, of which the assessee is a
resident, following details shall be furnished in the return:
(a) Name of the
Country and Code
(b) Relevant
Article of the DTAA
(c) Rate of tax
under DTAA (applicable in case of residuary income)
(d) Confirmation
if TRC has been obtained
(e)
Corresponding section of the Act which prescribe the rate of tax (applicable in
case of residuary income)
(f) Amount of
income
Further, the
special tax rate on capital gain or residuary income and tax on such income as
per DTAA shall be disclosed separately in Schedule SI.
Details about the foreign assets and foreign income
[ITR 3, 4, 5, 6,
7]
The ITR forms
seek more details about the foreign assets and income from any source outside
India. Schedule FA is substituted which requires assessee to provide detailed
information about such foreign assets and income.
The additional
disclosures in the new ITR form shall be as under:
(1) Foreign Bank Account:
(a) Status of
account holder (i.e., Owner/Beneficial Owner/Beneficiary)
(b) Date of
opening of such bank account;
(c) Interest
accrued in the account; and
(d) Details
about the interest offered to tax in the return.
(2) Financial Interest in a foreign entity:
(a) Nature of
financial interest (direct, beneficial ownership or beneficiary) in such
entity;
(b) Date since such
interest is held;
c) Income
accrued from such interest;
(d) Nature of
income; and
(e) Details
about the income offered to tax in this return.
(3) Foreign Immovable Property or any other
capital asset
(a) Whether
ownership in such asset is direct or beneficial or as beneficiary;
(b) Date of
acquisition of such asset;
(c) Income
derived from such asset;
(d) Nature of
income; and
(e) Details
about the income offered to tax in this return
(4) Signing authority in any foreign account
(a) Whether
income accrued in such account is taxable in assessee's hands; and
(b) If yes then
furnish details about the income offered to tax in this return
(5) Trustee or Beneficiary or Settlor in a
foreign trust
(a) Date since
the position of trustee or beneficiary or settlor held in foreign trust;
(b) Whether
income derived from the trust is taxable in assessee's hands; and
(c) If yes,
details about the income offered to tax in this return
(6) Any other income derived from any source
outside India
(a) Country Name
and Code;
(b) Name and
address of the person from whom income is derived;
(c) Amount of
income derived;
(d) Nature of
income;
(e) Whether
income is taxable in assessee's hands; and
(f) If yes,
details about the income offered to tax in this return.
Concessional tax rate in case of sale of listed
securities (other than unit)
[ITR 3, 4, 5, 6]
As per the
existing proviso to Section 112, if tax payable on long-term capital gains
arising on transfer of a capital asset, being listed securities or units or
zero coupon bonds, exceeds 10% per cent of the amount of capital gains before
allowing for indexation adjustment, then such excess shall be ignored.
The Finance (No.
2) Act, 2014 amended the said proviso to provide that the concessional rate of
tax of ten per cent shall be available only for long-term capital gain arising
from transfer of listed securities (other than unit) and zero coupon bonds. Therefore,
consequential amendment is made to ITR forms in accordance with the amendment. Now
Long term capital gain from sale of MF is includable in this scheduled only if
sale is on or before 10072014
Agricultural income
[ITR 3, 4, 5, 6]
The Schedule EI
in ITR forms requires assessee to provide following figures separately:
(a) Gross
agricultural receipts
(b) Expenditure
incurred on agriculture
(c) Unabsorbed
agricultural loss of previous eight assessment years
(d) Net
agricultural income for the year.
Apportionment of TCS to spouse if taxpayer is
governed by Portuguese Civil Code
[ITR 3]
A taxpayer is
liable to apportion his income (other than salary income) equally with his
spouse if he is governed by the Portuguese Civil Code as per section 5A.
Accordingly, taxpayer shall also apportion the amount of TDS and TCS in respect
of income so apportioned to his spouse.
Under existing
forms, there was an option to apportion the amount of TDS only and not for TCS.
Under new ITR form, an option has been introduced to apportion the amount of
TCS also.
Reporting of deemed let-out house property
[ITR 3, 4, 5, 6,
7]
If assessee owns
more than one house, one house can be claimed by him as self occupied
while all other
houses shall be deemed to be let out. Assessee shall be required to select a
checkbox
in the ITR Form
to indicate whether a house owned by him shall be deemed to be let-out.
Reshuffling of Schedules
[ITR 3, 4, 5, 6, 7]
The information
required to be filed in the following Schedules has been reshuffled:
Schedule IT –
Details of payments of Advance Tax and Self-Assessment Tax
Schedule TDS1 –
Details of Tax Deducted at Source from Salary
Schedule TDS2 –
Details of Tax Deducted at Source on Income
Schedule TCS – Details
of Tax Collected at Source on Income
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