The Central Board of Direct Taxes (CBDT) has come out with new income tax returns (ITRs), aligning them with the changes made in the Finance Act, 2020. However, the department has not changed ITRs significantly, considering Covid-19 crisis.
Naveen Wadhwa, expert at Taxmann, said one of the amendments carried out in the Finance Act, 2020, allowed to defer the payment of tax on Employees’ Stock Option (ESOPs) allotted by eligible start-ups.
Subsequently, rules were amended to provide that these assesses will not be eligible to furnish their returns of income in ITR-1 and ITR-4. Corresponding changes have been made to these two forms, Wadhwa said.
ITR form 1 (Sahaj) and ITR form 4 (Sugam) are simpler forms that cater to a large number of small and medium taxpayers. Sahaj can be filed by an individual having income up to Rs 50 lakh from salary, one property, and interest rates etc. Similarly, Sugam can be filed by individuals, Hindu Undivided Families and firms (other than limited liability partnerships) with an annual income up to Rs 50 lakh from business and profession computed under presumptive taxation provisions.
Presumptive taxation provisions allow companies below a threshold to not keep detailed accounts of books.
If an employee has received ESOPs from an eligible start-up in respect of which the tax has been deferred, he/she can file ITR 2 and 3. Part B of Schedule TTI (Computation of tax liability on total income) in these forms seeks the disclosure of the tax amount which has been deferred in this respect, Wadhwa said.
Similarly, the Finance Act, 2020, amended section 194N to provide that every banking company, cooperative bank or post office will deduct TDS at 2 per cent if an assessee withdraws in aggregate over Rs 20 lakh and up to Rs 1 crore and TDS of 5 per cent if he withdraws over Rs 1 crore. Subsequently, rules were amended to not allow these assesses to file Sahaj form. These changes have been made in ITR1.