ITR-1 & ITR-4 Updates for AY 2020-21

The Central Board of Direct Taxes (CBDT) has released revised provisions regarding Income Tax Returns. Taxpayers who are joint owners of a house property are now permitted to file ITR-1 and ITR-4 for the Assessment Year (AY) 2020-21, provided they satisfy other eligibility criteria. Furthermore, the ITR-1 form for AY 2020-21 remains applicable for individuals who have deposited over Rs 1 crore in bank accounts, or those who have spent Rs 1 lakh on electricity bills or Rs 2 lakh on foreign travel.

Following the notification on January 3, 2020, the CBDT released ITR-1 and ITR-4 forms early to assist taxpayers in gathering necessary information for FY 2019-20. Below is a detailed breakdown of the changes.

Latest Updates Regarding COVID-19 Relief

To provide relief during the pandemic, the filing deadline for individual taxpayers for AY 2020-21 was extended to January 10, 2021. The notified forms include ‘Schedule DI’, allowing taxpayers to claim deductions for investments made during the extended window from April 1, 2020, to July 31, 2020.

Changes in ITR-1

Several modifications have been made to the ITR-1 form:

• House Property Losses: Individuals with brought forward or carry forward losses under ‘Income from house property’ are no longer eligible to use ITR-1.
• Tenant Details: If the property is rented, the taxpayer must furnish the tenant’s name along with their PAN or Aadhaar number.
• Passport Disclosure: A new field in ‘Part A – General Information’ requires taxpayers to declare if they hold a valid Indian passport and provide the passport number if applicable.
• Employment Details: The ‘Nature of Employment’ section has been relocated from Part A to section B1 of ‘Part B – Salary Schedule’.
• Other Sources: A specific column has been added under ‘Income from other sources’ to claim deductions under Section 57(iv) regarding interest received on compensation or enhanced compensation under Section 56(2)(viii).

Changes in ITR-4

Similar to ITR-1, the ITR-4 form has undergone specific updates for FY 2019-20:

• House Property Losses: Taxpayers with brought forward losses from house property cannot use ITR-4.
• Tenant Details: For rented properties, the tenant’s name and PAN/Aadhaar are mandatory.
• Passport Disclosure: Taxpayers must disclose valid Indian passport details in Part A.
• High-Value Transactions: Additional disclosures are now required if the taxpayer has:
  • Deposited more than Rs 1 crore in one or more current accounts.
  • Incurred expenses exceeding Rs 2 lakh on foreign travel for themselves or others.
  • Paid electricity bills totaling more than Rs 1 lakh during the year.
• Representative Filing: If a representative is filing the return, their Aadhaar number must be provided.
• Partnership Details: Taxpayers must disclose if they are partners in a firm, including the firm’s name and PAN. Further details such as partner names, addresses, share percentages, PAN, Aadhaar, interest on capital, and remuneration must also be listed.
• Employment Details: ‘Nature of Employment’ has moved to section B1 of ‘Part B – Salary Schedule’.
• Business Financials: The section previously titled ‘Financial particulars of the business’ is now ‘Particulars of cash and bank transactions relating to presumptive business’. Taxpayers must report opening cash/bank balances, total receipts, and total payments/withdrawals.
• Other Sources: A dedicated column for Section 57(iv) deductions has been added.

General Applicability for All Forms

• Mandatory Online Filing: Electronic filing is compulsory for all registered taxpayers, with an exemption only for super senior citizens (above 80 years) who do not have business or professional income.
• Late Filing Fees: Since April 1, 2017, failing to file by the due date attracts a penalty of up to Rs 10,000 under Section 234F. A specific field is provided in the returns to declare the fee payable under this section.