Income Tax Returns FY 2017-18: The forms to choose from and their relevance

With August 31 being the last day for filing income tax returns, some taxpayers may still be puzzled in choosing the appropriate ITR for disclosing their income earned during the previous year. The Central Board of Direct Taxes had notified the new ITR forms for AY 2018-19 well in time through a notification dated April 3, 2018 so as to help the taxpayers to commence their return filing process without any haste.

Ashok Shah, Partner, N.A Shah Associates LLP said taxpayers are required to choose the appropriate ITR depending upon the status and nature of income earned by them during the previous year. “Choosing an appropriate ITR is a most important task as each ITR form serves a different purpose and selection of the wrong ITR may lend up to the taxpayer into unnecessary tax disputes/penalty,” he said.

This ITR form is applicable to the individuals that are an ordinary resident in India deriving income from salaries, one house property, other sources and having total income upto Rs. 50 Lakhs. Further, a resident individual having foreign assets (including financial interest in any entity) or income outside India are not eligible to furnish ITR-1. However, it is pertinent to note that if an individual having only one residential house property, which is let out and computed a loss exceeding Rs 2 lakhs, wants to carry forward such excess loss to subsequent years; he needs to file ITR-2.

“Up to last year, while filing ITR 1 individuals were required to mention only the taxable figure of salary income and income from house property in the ITR form. The new ITR form requires the individual assessees to provide detailed calculation in case of salary & house property income,” said Shah.

ITR 2 is applicable to any individual having total income exceeding Rs. 50 Lacs or having foreign asset/income or having more than one residential house property or income from capital gain or HUF.

This ITR form is applicable to individuals and HUFs deriving income from profits and gains from business or profession along-with any income from salaries or house property or capital gains or other sources. They are further required to fill Balance Sheet and Profit and Loss Account schedule in ITR Form if they maintain books of accounts. If books of accounts are not required to be maintained then the person has to disclose gross receipts, gross profit, expenses, net profit, cash balance, debtors, creditors and stock in trade instead of reporting entire Balance Sheet and Profit and Loss Account.

The ITR-4 form is for resident taxpayers (Individual, HUF, Firm other than LLP), who have opted for presumptive income scheme as laid down under section 44AD, 44ADA and 44AE of the Income Tax Act, 1961.

“The old ITR 4 sought only 4 financial particulars of the business, a) total creditors, (b) total debtors, (c) total stock-in-trade and (d) cash balance. This time the new ITR 4 form seeks more financial details of a business such as the amount of secured/unsecured loans, advances, fixed assets, capital account etc. Further, new ITR 4 seeks GSTR no. of the assessees and turnover as per GST return filed by them,” said Shah.

This form can be used by a person being following: - Private discretionary trust, Limited Liability Partnerships (LLP), a Firm, an Artificial juridical person referred to in section 2(31)(vii), Cooperative Society and Local authority.  They are further required to fill Balance Sheet and Profit and Loss Account schedule in ITR Form if they maintain books of accounts.

This form can be used by Company, other than a company claiming exemption under section 11 of the Income Tax Act.

Shah said that a new Schedule has been inserted in ITR 6 which requires every company, who is not required to get its accounts audited under Section 44AB, to provide details in respect of all transactions entered into during the year with a registered or unregistered supplier under GST. “The new ITR 6 further requires every unlisted company to provide details of all beneficial owners who are holding 10% or more voting power (directly or indirectly) at any time during the previous year 2017-18. These companies are required to provide the name, address, percentage of shares held and PAN of the beneficial owners,” he added.

It is required to be filed when persons including companies fall under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D) or section 139(4E) or section 139(4F). This ITR form is basically meant for following assessees:

-| Trusts claiming exemptions u/s 11 of the Act,

-| Political party,

-| Mutual funds,

-| Securitisation trust,

-| Other specified assessees

So choose your tax return form after taking into consideration the above preliminary information.