Important changes in ITR Forms for AY 2020-21 (FY 2019-20)

This is a list of important changes in ITR forms for Assessment Year 2020-21(Financial Year 2019-20) and how they are a further step in getting more information from the taxpayers to curb tax evasion and make life easy for compliant taxpayers.

Published: January 13, 2020 at 1:53 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.

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.).

Get free money management solutions delivered to your mailbox! Subscribe to get posts via email!

    🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥

    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:

    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.

    Do share this article with your friends using the buttons below.

    🔥Enjoy massive discounts on our courses and robo-advisory tool! 🔥
    Use our Robo-advisory Excel Tool for a start-to-finish financial plan! More than 1000 investors and advisors use this!
    New Tool! => Track your mutual funds and stocks investments with this Google Sheet!
    • Follow us on Google News.
    • Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
    • Join our YouTube Community and explore more than 1000 videos!
    • Have a question? Subscribe to our newsletter with this form.
    • 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.

    Get free money management solutions delivered to your mailbox! Subscribe to get posts via email!

      Explore the site! Search among our 2000+ articles for information and insight!

      About The Author

      Pattabiraman editor freefincalDr 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 nine years of experience publishing news analysis, research and financial product development. Connect with him via Twitter or 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 3000 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 what 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 you 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!
      Both boy and girl version covers of Chinchu gets a superpower
      Both boy and girl version covers of Chinchu gets a superpower.
      Most investor problems can be traced to a lack of informed decision-making. We have all made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, what would it be if we had to groom one ability in our children that is key not only to money management and investing but to any aspect of life? My answer: Sound Decision Making. So in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parents plan for it and teach him several key ideas of decision making and money management is the narrative. What readers say!
      Feedback from a young reader after reading Chinchu gets a Superpower (small version)
      Feedback from a young reader after reading Chinchu gets a Superpower!
      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 for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
      Want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or you buy the new 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 from credible and knowledgeable sources before publication. Freefincal does not publish any paid articles, promotions, PR, satire or opinions without data. All opinions presented will only 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
      Our publications

      You Can Be Rich Too with Goal-Based Investing

      You can be rich too with goal based investingPublished 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 Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis 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

      Travel-Training-Kit-Cover-new This is an in-depth dive analysis 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)