How will taxpayers fly their Kite of Income Tax Return this Sankranti?

Arjuna (Fictional Character): Krishna, the eve of Makarsankranti where people celebrate it by flying different types of Kites. This year new Income Tax returns have been notified by CBDT. How shall the tax payers fly the new ITR?

Krishna(Fictional Character): Arjuna, Generally, on Makar Sankranti we say that “Til Gul ghya, god god bola”. But the Government always do different things. It says to taxpayers, “”Til Gul ghya, Tax lavkar dyaa”, i.e, Take the Til Gul, pay tax regularly”. If we compare Law and kite flying then the person who is flying kite is Trader, “kite” is Income Tax Return, “Chakri” means books of accounts, “Air” means Tax collection, “Cutting of Kites” means E-assessment and Scrutiny, and “String” means Law. But this year, the Government has bring the new string of E-assessments in its market. The person taking “Page” is tax officer and most important is the person giving ease (Dhil) is Tax consultant.

Arjuna: Krishna, who can fly kite of ITR-1, who cannot fly Kite of ITR-1 and what are the new characteristics of this Kite (ITR-1)?

Krishna: Arjuna, The Taxpayers who can fly kite of ITR-1 are Taxpayers who have total income upto Rs 50 Lakhs, having Income from Salary and One House Property.

The Taxpayers who cannot fly kite of ITR-1 are Taxpayers who are directors in any company or Taxpayers who have invested in unlisted shares or have any brought forward loss under Income from House Property or taxpayers who jointly own more than One House Property

The new characteristics of ITR-1 kite are as follows:

1. If the taxpayer is having a valid passport, taxpayer is required to provide the passport number which is mandatory.
2. The nature of employment is not required to be provided now in the new ITR-1.
3. Total of Gross salary from all the employers is also required to be provided. Earlier the taxpayer could provide total salary earned from all employers in one column.
4. The new requirement of Address of the property are required to be provided, If the property is let out, then the details of  tenent’s name, PAN or Aadhaar are also required to be reported. (if available)
5. In Income from House Property, the amount of rent which could not be realized is required to be reported.
6. In income from other sources deduction u/s 57(iv) is required to be reported.
7. Section-wise deductions u/s 80 are required to be reported.

Arjuna: Krishna, who can fly kite of ITR-4, who cannot fly Kite of ITR-4 and what are the new characteristics of this Kite (ITR-4) ?

Krishna: The Taxpayers who can fly kite of ITR-4 are Taxpayers who are Individual or HUF’s with total income upto Rs 50 Lakhs, and paying Income Tax under presumptive basis.

The Taxpayers who cannot fly kite of ITR-4 are Taxpayers who are directors in any company or Taxpayers who have invested in unlisted shares or taxpayers who jointly own more than One House Property.

The new characteristics of ITR-4 kite are as follows:

1. If the taxpayer is having a valid passport, taxpayer is required to provide the passport number which is mandatory.
2. A new insertion has been made which provides if the Income Tax return is filed under seventh proviso of Section 139(1) which provides that if any taxpayer (other than Company and Firm) is not required to file return of Income Tax but has incurred the following expenditure:

1. If the taxpayer has deposited cash exceeding Rs 1 Cr in One or more Current Account, then disclosure if required to be given.
2.  If the taxpayer has incurred foreign expenditure on self or any other person above Rs 2,00,000, then disclosure if required to be given.
3. If the taxpayer has incurred electricity expenditure above Rs 1,00,000,  then disclosure if required to be given.

then such taxpayer have to compulsorily file his Income Tax Return.

3. Disclosure is required if the taxpayer is a partner in a firm- If Yes then details are required are-

1. Name of the Firm
2. PAN Card of the Firm

4. Details of the partners which were partners in the firm are required to be disclosed. The Details required are-

1. Name and Address
2. Percentage of Share
3. PAN
4. Aadhar Card/ Enrollment Number
5. Rate of Interest on Capital
6. Remuneration Paid/ Payable

5. Total of Gross salary from all the employers are also required to be provided.
6. Also the new requirement of Address of the properties are required and the tenants details like name, PAN or Aadhaar of tenant. (if available)
7. The amount of rent which could not be realized is required to be reported.
8. In income from other sources deduction u/s 57(iv) is required to be reported.
9. Section-wise deductions u/s 80 are required to be reported.

Arjuna: Krishna, when shall be the case where situations like “paich” shall arise between Taxpayer and Tax Authorities ?

Krishna: Arjuna, These are the following where situations like “paich” shall arise between Taxpayer and Tax Authorities-

1. If the taxpayer has deposited cash exceeding Rs 1 Cr in One or more Current Account, then disclosure if required to be given.
2.  If the taxpayer has incurred foreign expenditure on self or any other person above Rs 2,00,000, then disclosure if required to be given.
3. If the taxpayer has incurred electricity expenditure above Rs 1,00,000,  then disclosure if required to be given.
4. Taxpayers who pay tax on presumptive basis or not maintaining books of accounts, are mandatorily required to provide the details of the following in case of Cash and Bank-

1.  Opening Balance of Cash and Bank
2. Receipts during the previous year in Cash and Bank.
3.  Payment/ Withdrawal during the previous year in Cash and Bank.
4. Closing Balance of Cash and Bank.

Taxpayers shall take care while filing ITR-4 because any mistake while filing their return will have an impact on their Income.

Arjuna: Krishna, What lesson should taxpayer take from this?                        

Krishna: Arjuna, the kite of taxpayer filing with ITR 1 can fly safely as the wind/changes are least effecting them but the Taxpayers and consultant flying the kite of ITR-4 should take a high alert in cash and bank receipts and withdrawal as it is like tying of the kite properly so as to float in the air with an ease. So they are required to tie the kite properly with maintaining proper books of accounts. The taxpayers need to fly their Kite of ITR-4 with proper care because since E-Assesment has been introduced, any tax officer can make “paich” with the taxpayer.