Income Tax Return filing: Tax changes to keep in mind while filing ITR for AY2020-21

The normal deduction for the AY 2020-21 allowed beneath Income from Salaries has been elevated to Rs 50,000 from Rs 40,000.

The ITR filing due date for AY 2020-21 stands prolonged to 31 December 2020, and 31 January 2021 for tax audit instances. The ITR varieties notified carry some vital changes corresponding to in reporting necessities, tax deductions and changes launched in Budget 2019. Taxpayers ought to bear in mind these changes while filing their ITR for AY 2020-21 (FY 2019-20).

The Budget 2019 launched interchangeability of PAN and Aadhaar. An particular person who doesn’t have a PAN can quote Aadhaar quantity at numerous locations in the ITR. For instance, the ITRs allow quoting of Aadhaar in the case of a purchaser of immovable property, a tenant while reporting earnings from home property, ITR filing by consultant assessee and many others.

The ITR additionally incorporates new standards launched for mandatorily filing of tax return despite the fact that the gross complete earnings of the person is under the fundamental exemption restrict. The obligatory filing is relevant in case any of the under standards are glad:

1. Deposited in a number of present account(s) an quantity or mixture of quantities exceeding Rs 1 crore through the FY 2019-20

2. Expenditure on journey to a overseas nation incurred of an quantity exceeding Rs 2 lakh in mixture for self or every other individual

Expenditure on consumption of electrical energy exceeding Rs 1 lakh in the combination through the FY 2019-20.

The authorities gave extra time till 31 July 2020 for making tax-saving investments for the FY 2019-20. The ITRs present for a Schedule DI to disclose the small print of the investments and declare deduction. Similarly, the ITRs additionally present for disclosing capital features exemptions for investments made up to 30 September for exemptions beneath part 54 to 54GB.

The ITRs additionally require disclosure of the title of the corporate in which a person is a director or shareholder of unlisted fairness.

The ITRs present for an expanded listing of nature of employment to embody bifurcation between the central authorities and state authorities workers. Also, one other class stands included for ‘not applicable eg. family pension.

The income-tax rebate under section 87A was increased to Rs 12,500 for a total income up to Rs 5 lakh. The ITRs accordingly allow for a tax rebate up to Rs 12,500 in case of resident individuals whose total income (after claiming deductions and exemptions) does not exceed Rs 5 lakh. The amount of the rebate was Rs 2,500 for the last AY 2019-20 for a total income up to Rs 3.5 lakh. The Income-tax Returns should be mandatorily filed if the gross total income is above the basic exemption of Rs 2.5 lakh. The filing is mandatory even if the individual is eligible for a rebate and their tax liability is nil.

The standard deduction for the AY 2020-21 allowed under Income from Salaries has been increased to Rs 50,000 from Rs 40,000.

From the AY 2020-21, while declaring income from house property, an individual can classify two properties as “self-occupied”.  Until AY 2019-20, an individual who had a second vacant house property had to pay the taxes for the notional rent calculated for the said property.

The Budget 2019 amended capital gain exemption under section 54 to allow claim for the purchase or construction of two residential properties instead of one for claiming the deduction. This condition to claim this deduction is that it can be availed only once in a lifetime and the long term capital gain arising should be less than Rs 2 crores.

The ITRs also provide for claiming additional interest deduction under section 80EEA for affordable housing in case of a first time home buyer where the stamp value of property does not exceed Rs 45 lakh. The maximum deduction allowed is Rs 1,50,000 on loan availed by an individual from any financial institution.  Similarly, the ITRs carry an allowance for interest deduction introduced in budget 2019 for loans taken to purchase electric vehicles.

(The author is Founder and CEO, ClearTax)

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