Last Updated on October 1, 2023 at 8:16 pm
Ringing in the new year, the Income Tax Department (ITD) has notified the heavily used Income Tax Return (ITR) forms ITR-1 (Sahaj) and ITR-4(Sugam) for the Assessment Year 2020-21(FY 2019-20). Here is a list of changes taxpayers need to be aware of.
Before we begin, thank you for the fantastic response to the lectures on goal-based portfolio management. For those interested, this is the contents and sign-up details
About the author: Anjesh Bharatiya is a 30+ taxman by profession and a Chemical Engineer by education. He has been an investor in the stock market since age 15! He likes to write about personal finance, stock markets, government policies, taxation, philosophy and football.
Join 32,000+ readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email! (Link takes you to our email sign-up form)
🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥
Generally, ITR forms are only released in April but this time, the Department has been pro-active and released two of the most commonly used forms in January itself. The remaining forms, which are longer and more detailed, are also expected soon. ITR-1 (Sahaj) is used by taxpayers having total income up to Rs 50 lakh including income from salary, one house property and/or other sources (interest etc.).
Similarly, ITR-4(Sugam) is used by small businessmen/professionals who file their returns under presumptive scheme of taxation as per Sections 44AD, 44ADA or 44AE with total income up to Rs.50 lakhs. However, there have been some important changes in these two forms which need to be kept in mind by the taxpayer. The Department wants more information from the taxpayers and with the use of Artificial Intelligence, will be able to match the income declared with the spending done by the taxpayer.
The Department has already launched “Project Insight” which will actively monitor data from various sources to promote better tax compliance. Thus, the new ITR forms are a further step in gleaning more information from the taxpayers to curb tax evasion and make life easy for compliant taxpayers. Let’s look at the major changes introduced in the two forms:
Major changes:
- If a businessman has deposited more than Rs 1 crore in one or more current accounts, the total amount needs to be mentioned in the ITR-4 form.
- In the same vein, the businessman also needs to mention the opening balance of cash in hand, the opening balance of bank accounts, the total amount received in cash during the year, the total amount of cash outflow, total withdrawals from a bank account and closing balance of both cash in hand and bank accounts in the ITR-4 form. However, he/she is no longer required to provide details of unsecured loans, sundry debtors, sundry creditors, amount of closing stock, etc.
- If you hold a valid Indian passport, the passport number also needs to be mentioned in ITR-1/ITR-4 even if you didn’t travel abroad during the year.
- The new ITR-1 & ITR-4 Forms also seek more details of your employer including TAN (if tax is deducted), nature of employer and address of the employer. You can also add more than one employer to compute the salary income. In previous years, there was only one column to feed the salary details in these forms and thus, salary from more than one employer had to be aggregated.
- Another field that has been added to the ITR-1 form is the PAN or Aadhaar details of your tenant if you have rented out a property and the details of any rent which was due but not received. The form will also ask you to submit the complete address of your house property irrespective of whether it is self-occupied, let out or deemed to be let out.
- The Department had also disallowed use of ITR-1 or ITR-4 forms for taxpayers who were joint-owners in house property. However, after concerns were raised from various quarters that such taxpayers will have to file the more complex ITR-2 or ITR-3 forms, this exclusion has been rolled back.
- If you have deposited more than Rs 1 crore in a bank account or have spent Rs 2 lakh on foreign travel (self or any other person) or Rs 1 lakh on electricity bills, you also can breathe easy. Initially, such people were not also allowed to use the new ITR-1 form. But the Department has rolled back its previous stand and now, you can file your return in ITR-1 form without mentioning the above details. However, as per the previous budget, anyone who has made these transactions will mandatorily have to file his/her income tax return i.e. there is no escaping from filing the return itself. Now, if you have spent Rs 2 lakh or more on foreign travel, you will have to file your return mentioning the Passport details and therefore, the Department will still have information about your foreign travels even if you file the ITR-1 form. So, it should be ensured that your income reflected in the ITR matches with the spending made on foreign travels.
Final Word
The remaining ITR Forms i.e. ITR-2, ITR-3, ITR-5, ITR-6 and ITR-7 are also likely to be notified shortly. You can check your eligibility for these forms by visiting this link and selecting the Assessment Year as & when the forms are notified:
https://www.incometaxindiaefiling.gov.in/downloads/incomeTaxReturnUtilities?lang=eng
However, it is not possible to file your returns for the AY 2020-21 early as the return preparation utilities will be out only by April 2020. It is very important to choose the correct form while filing your return of income and voluntarily disclose all the details as required in those forms. With the increasing use of emerging technologies by the Income Tax Department, small lapses may lead to big headaches if you are not careful and upfront in disclosing your income details.
🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 7000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! ⇐ More than 2,500 investors and advisors use this!
Track your mutual funds and stock investments with this Google Sheet!
We also publish monthly equity mutual funds, debt and hybrid mutual funds, index funds and ETF screeners and momentum, low-volatility stock screeners.
- Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
- Have a question? Subscribe to our newsletter using the form below.
- Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.
Join 32,000+ readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email! (Link takes you to our email sign-up form)
About The Author
Dr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market condition is!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course! Increase your income by getting people to pay for your skills! ⇐ More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!
Our new book for kids: “Chinchu Gets a Superpower!” is now available!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Do you want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & its content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
- Twitter @freefincal
- Subscribe to our YouTube Videos
- Posts feed via Feedburner.
Our publications
You Can Be Rich Too with Goal-Based Investing
Published by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
This book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.Your Ultimate Guide to Travel
This is an in-depth dive into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically, with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)