Major changes in new ITR forms for FY 2017-18: Check now

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New Delhi : The new tax return forms released for Financial Year (FY) 2017-18 on 3 April 2018 is likely to create difficulties to evade tax on HRA. The new income tax return (ITR) form-2 requires tax payers to give their tenant's PAN while providing details of income from house property. Such detail was kept optional till the last financial year.

The new income tax return form attempts to digitally collect as much information as possible, to process the tax returns efficiently. 

Take a look at the major changes in the new ITR forms, following its impact on salaried taxpayers: 

  • The option Non-Resident (NR) and Not Ordinarily Resident (NOR) taxpayers has been removed from the scope of ITR-1, the Revenue Authorities, therefore can make sure that all the returns filed under ITR-1 are simple and have the same scope of income. This change might help the authorities process the returns faster.
  • The new ITR-1 requires additional details on 'Income from Salaries' and 'Income from House Property' which were not necessary till last financial year. Tax payers would now be required to provide the breakup of salary like taxable allowances, value of perquisites, deduction for professional tax etc and details of income from house property such as gross rent received, tax paid on property, interest payable and so on. This change will obviously give a better picture of how income from the salaried tax payers has been calculated.
  • The new ITR-2 form can be used by individuals and Hindu Undivided Families (HUFs) who do not have any income from business or profession, unlike last year where information regarding partnership firm could be furnished in ITR-2 itself. This change has separated the taxpayers with any kind of income from business or profession, who would now be required to file either form ITR-3 or ITR-4-Sugam, which require extensive details to be furnished.
  • Individuals eligible as NR can receive their refund in a foreign bank account just by providing the details of any one foreign bank account, in the new ITR-2 form which specifically mentions the same.
  • The new ITR-2 form asks details in line with the new clause introduced by Finance Act 2017, for taxing any sum of money or property received (in excess of Rs 50,000) without consideration under specified circumstances [i.e. Section 56(2)(x)]. This will allow the Revenue Authorities to collect details of such income and make sure that the same have been offered to tax.
  • As per the Finance Act 2017, taxpayers would need to pay a fee of Rs 5,000, if their tax return is filed after the due date (i.e. 31 July) and before 31 December of the subsequent financial year. The fee payable would be Rs 10,000 if the tax return is filed after 31 December of the subsequent financial year. The new ITRs have appropriate space to capture this information wherever applicable. Taxpayers should be mindful of this change, as till FY 2016-17, there was no fee payable for delay in filing of tax return till the end of the subsequent FY (i.e., 31 March). This would ensure that tax returns are filed in a timely manner and the Revenue Authorities have adequate time to process the same. 
  • The new ITR-2 form seeks tax payers to furnish the PAN of the tenant while providing details of income from house property, if available. Providing this detail was optional till FY 2016-17. This change should give more data to the Revenue Authorities to enable them to bring together the PAN of the tenant and the landlord, where an exemption for House Rent Allowance (HRA) is claimed, since employees need to furnish PAN of their landlord to the employer.
  • The new forms also requires the PAN of the tenant to be furnished (in the TDS Schedule) by landlords, since individual tenants paying rent in excess of Rs 50,000 are required to deduct tax at source from FY 2017-18 onwards 
  • Also, the verification process in the new ITR forms has been changed a bit. Now the person signing the tax return needs to declare in what capacity he is filing the tax return and that he is competent to prepare the return and verify it. This puts more responsibility on persons preparing and filing the tax return by ensuring that they confirm the information submitted through the tax return. Well, the form of last financial year only asked the taxpayers to verify that the information submitted through the tax return is correct. 

Unlike lots of changes in the new ITR forms, there is a similarity that, just like the previous year, Form ITR-1 (Sahaj) can be filed by individual taxpayers who have Income from salaries, one house property, other sources (interest etc.) and whose income is less than Rs 50 lakh. This is a simplified form, but can be used only by an Ordinary Resident (OR) in India.