Filing Tax Returns This Year: What Has Changed

Changes in tax form: ITR-1, Also known as Sahaj Form, is one of the most commonly used tax forms. It can be filled by a resident individual whose total income from salary or pension is . It is not more than that ₹50 lakhs, up to a house property and agricultural income ₹5,000

If a person is a director of a company, or holds investments in unlisted equity shares, he is not eligible to file a return using the ITR-1 form.

However, this year the eligibility criteria for this form has been revised. Section 194N of the Income Tax Act requires banks, post offices and co-operative banks to deduct TDS (tax deducted at source) for non-filers. As per the newly notified forms, such taxpayers will not be able to file returns using ITR-1.

This year, you will also have to mention in the tax form whether you are opting for the new tax regime or the old one.

Further, you have to declare dividend income from shares and equity instruments this year under the head ‘Income from other sources’, as now dividend income is taxable. Earlier, dividend income was shown under the head ‘Exempt Income’.

In the Finance Act, 2020, deferment of taxes was allowed to employees receiving ESOPs (Employee Stock Option Scheme) from eligible startups.

TDS on perquisite is deferred to the date of expiry of five years from the year of allotment of ESOP, date of sale of ESOP by the employee, or termination of employment, before the following events. Such employees will not be able to file ITR-1; Instead they have to file ITR-2. The relevant ITR has been amended accordingly.

Pre-filled information: The tax department will provide some of the pre-filled income to the taxpayers from this year. “Taxpayers are asked to verify the details in each section. These details are pre-filled from various sources, but it is advisable to double check them with genuine information. If there is any mismatch, the taxpayer will edit the already filled details,” said Tarun Kumar, a New Delhi-based chartered accountant.

JSON Feature: Till last year, returns could be filed through taxpayer login or using Excel and Java utilities available for e-filing. “This year, the department has abolished Java or Excel utility and introduced JSON (JavaScript Object Notation) utility for e-filing. There is a common offline utility for filing ITR-1, ITR-2, ITR-3 and ITR-4 for the assessment year 2021-22. Though returns can be filed through JSON utility, it is advisable to use e-filing platform as it is the easiest way to file returns.”

Time limit extended, but no relief from penal interest: Extension of time limit does not provide any relief from penal interest that a taxpayer has to pay in case of outstanding tax liability under self-assessment tax or advance tax. Delay in filing ITR attracts interest under section 234A.

Suppose the deadline for filing ITR is 31st July, and a person files ITR on 5th August, then interest will be charged at the rate of 1% per month on the tax payable. However, like last year, the government has provided relief under section 234A to those taxpayers whose self-assessment tax is up to Rs 1 lakh. ₹1 Lac.

Penal interest is levied on delay in filing ITR under sections 234B and 234C. Under section 234B, if the taxpayer has not paid advance tax or has paid less than 90% of the tax liability, he is required to pay interest at the rate of 1%. Under section 234C, interest is levied if the advance tax paid is less than the prescribed installments.

If there is shortfall in advance tax payment, interest at the rate of 3% is charged for that particular quarter.

Therefore, it is better for the taxpayers to file their ITR and pay the due tax on time to avoid interest penalty.