First thing first. The Income Tax Department notified two income-tax returns for assessment year 2020-21, on Sunday, January 5, in an attempt to bring more individuals into the mandatory return filing net.
This was introduced against the usual practice of notifying returns in April, with disclosure requirements related to cash deposits, spending on foreign travel, and electricity.
Back to square one, what are ITR 1-Sahaj and ITR 4-Sugam forms and who will be applicable for these?
Any individual having an annual income of up to Rs 50 lakhs from salaries, a house, interest income, family pension income, etc., has to file ITR 1-Sahaj form.
However, if an individual earns upto Rs 50 lakhs annually, but also have a house, deposited more than Rs 1 crore in a bank account or incurred Rs 200,000 on foreign travel or Rs 100,000 on electricity he/she has to file ITR 4-Sugam form.
Besides, ITR 4 will also be applicable to Hindu undivided families (HUFs) and firms (other than limited liability partnerships) having an annual income of up to Rs 50 lakhs, a house (single ownership), having an income from a business and profession computed under a presumptive basis, among other things.
The form will require passport details.
The income earned during 2019-20 is assessed in 2020-21.
In view of this, Naveen Wadhwa, deputy general manager of Taxmann has informed that an individual taxpayer could not file returns either in ITR-1 or ITR-4 if he/she was a joint-owner of a house.
Such taxpayers will have to file another type of forms, which will be notified in due course.
Earlier, an individual was required to file a tax return only if his income exceeded the minimum threshold.
The notification of the returns followed Budget announcements making income-tax return filing mandatory for certain persons even if their income was below the taxable limit. These include people depositing Rs 1 crore and above in current accounts, spending at least Rs 200,000 on foreign travel, incurring electricity bills of Rs 100,000 or …