TAXING TIMES: While selling property, if buyer has deducted tax, seller has to furnish PAN details of the buyer for claiming the TDS credit
The income tax return (ITR) forms for each year are notified after the end of the financial year incorporating changes applicable from the relevant financial year. The Income Tax Department has notified new ITR forms on April 1, 2019. Let us see what are the provisions of new the ITR forms that are applicable to individuals.
Who can use ITR1
Conditions to be satisfied for being eligible to use some of the forms have become more restrictive. Till the previous year resident individuals could use ITR1 if their source of income comprised only salary, income from owning one house property and income from other sources and the total taxable did not exceed Rs 50 lakh. So you could not use ITR1 if you had business income or taxable capital gains. You also could not use ITR1 if you had any asset outside India, a signing authority for any foreign account or foreign income. Likewise, you were not eligible to use ITR1 if you were claiming benefits for taxes paid outside India or had agricultural income exceeding Rs 5,000.
Now more restrictions have been imposed to disqualify certain individuals from using ITR1. So if you are the director of a listed or unlisted company or had investments in an unlisted company in the previous year, you cannot use ITR1 for the financial year ended March 31, 2019. Investment can be in any private limited company or a public limited company which is not listed.
Even if your income includes income of any other person on which tax has been deducted you cannot use ITR1 for this year. Moreover, in case you are offering any income under the head "Income from other sources" and claiming any expenditure in respect of such income, you can not use ITR1.
This restriction will cover cases of letting out of plant and machinery and furniture or subletting of any property where depreciation and interest, etc are claimed. It would also cover cases of salaried people who earn income by moonlighting and claim expenditure against such income. This restriction, however, would not apply in case of income in the nature of family pension on which you can claim standard deduction upto one-third of the pension subject to a maximum of Rs 15,000.
Who can use ITR4
Likewise there are some changes in eligibility criteria to use ITR4 which is used in case you have any business income taxable on presumptive basis. Till last year there was no monetary restriction in terms of total income for using ITR4. From this year, one cannot use ITR4 if the taxable income exceeds Rs 50 lakh in which case one will have to use ITR3. Likewise, even non-resident could use ITR4, but from this year only resident individuals will be able to use ITR4, subject to fulfillment of certain other conditions.
The additional restrictions which have been made applicable to ITR1 equally apply to ITR4. Likewise you will not be able to use ITR4 if you have any brought forward losses or losses to be carried forward or owned more than two houses.
There are no changes in eligibility criteria for filing ITR2 (used by HUF, individuals who can not use ITR1 and who do not have any taxable business income) and ITR3 (used by all individuals who can not use either ITR1, ITR2 or ITR4).
Additional details to be furnished
Those who are filing ITR2 or ITR3 have to provide history of their stay in India to help the I-T department determine your residential status for income tax purposes. Moreover, in case you derive any rental income from house property on which tax has been deducted, you have to provide details of TAN/PAN of the tenant for claiming the credit for the tax deducted by the tenant. Likewise in case any tax has been deducted by the buyer in respect of sale of any immovable property sold by you, you have to mandatorily furnish details of the PAN of the buyer for claiming the TDS credit.
Changes in ITR filing process
Till previous year only two category of taxpayers were allowed to file their income tax returns in physical form. This included individuals who have completed 80 years of age, referred to as very senior citizen, before end of the year and were only using ITR1 or ITR4. The other category included individual tax payers whose taxable income did not exceed Rs 5e lakh and who were not claiming any refund for the excess taxes paid/deducted. Now only the very senior citizen individual taxpayers using ITR1 and ITR4 will be entitled to file physical returns. All other individuals will have to file ITR electronically.
KNOW YOUR ITR
- If you were director of a listed or unlisted company or had investments in an unlisted company in the previous year, you cannot use ITR-1
- One cannot use ITR-4 if the taxable income exceeds Rs 50 lakh
The writer is an investment and tax expert
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