New ITR 1 to 7 for AY 2020-21 notified by CBDT – Detailed analysis of important amendments

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CBDT has notified ITR 1 to 7 for AY 2020-21. As we know the due date for filing ITR was extended to 30.11.2020. However one thing needs to be kept in mind that only ITR has been notified still utility has not been released so one cannot file its return of income till the time ITR utility is not available.

Now, ITR 1 and 4 can be even filed by a person owning a house property jointly with 2 or more person.

Some of the important changes in ITR are:

Change no. 1 In ITR 1 to 4:

There are 3 important questions introduced in the ITR:

Have you deposited amount or aggregate of amounts exceeding Rs. 1 Crore in one or more current account during the previous year?

Have you incurred expenditure of an amount or aggregate of amount exceeding Rs. 2 lakhs for travel to a foreign country for yourself or for any other person?

Have you incurred expenditure of amount or aggregate of amount exceeding Rs. 1 lakh on consumption of electricity during the previous year?

In all the above 3 questions you need to answer yes or no and if yes you need to also mention the amount.

Thus, a person who is covered under the above 3 provision need to compulsorily file their return. Since ITR 1 and 2 cannot be filed by people having business and they people filing ITR 1 and 2 won’t have current account but since the above 3 conditions have been introduced by section 139 it had to be included in all ITR.

Change no. 2 in ITR 1 to 6:

During this pandemic and lockdown, government gave a relaxation that a person can make investment u/s 80C to 80U and 54 to 54GB for FY 2019-20 upto 30.06.2020 instead of 31.03.2020. However people were confused on how they will claim such deduction.

CBDT has introduced the solution to same:

First you need to answer whether any investment for FY 2019-20 has been made after 31.03.2020, if yes one needs to provide details of same in “Schedule DI” that out of total deduction how much of it relates to period between 01.04.2020 to 30.06.2020.

However still the confusion is what will Income tax officer do if an assessee claims the same again in FY 2020-21. It would have been better if they had asked for receipt number or something like that. However everything is on self declaration so we need to wait till next year for same and see how this thing is tackled.

Change no. 3 in ITR 3, 5 and 6:

In Budget 2020, there was an amendment in section 44AB according to which audit limit of Rs. 1 crore would be enhanced to 5 crore if cash receipts and cash payment is less than 5% of total receipt and total payment respectively.

Also, many people were confused whether the new audit limit would apply for FY 2019-20 or FY 2020-21 and the release of ITR has removed this doubt and the new limit would be applicable for FY 2019-20.

However still complete definition of receipt and payment has not been provided by CBDT used in this provision.

In this regard they have made introduced 2 changes in ITR Form which are again self declaration:

(a2i) If No , Whether during the year Total sales/turnover/gross receipts of business exceeds Rs. 1 crores but does not exceed Rs. 5 crores?

(a2ii) If Yes is selected at a2i, whether aggregate of all amounts received including amount received for sales, turnover or gross receipts or on capital account like capital contributions, loans etc. during the previous year, in cash, does not exceed five per cent of said amount?

(a2iii) If Yes is selected at a2i, whether aggregate of all payments made including amount incurred for expenditure or on capital account such as asset acquisition, repayment of loans etc., in cash, during the previous year does not exceed five per cent of the said payment?

Even though the above information doesn’t provide information it gives a hint that receipt and payment would include all revenue and capital receipt and payment.

Change no. 4 in ITR 6:

As we know 2 new sections were introduced and reduction of tax rate was offered to domestic companies now same has been introduced in ITR for section 115BAA and 115BAB but before that one needs to file Form.

Thus, these are major amendments in the new ITR’s released for FY 2019-20.

To read or analyse full ITR CLICK HERE.

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