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Income Tax Return: Lack of instructions makes ITR filing difficult for AY 2020-21

Some modifications have been integrated within the ITR Forms as a result of extension of compliance deadlines on account of the Covid-19 lockdown.

Along with importing Excel and Java utilities of the Income Tax Return (ITR) Forms on the incometaxindiaefiling.gov.in web site, the Central Board of Direct Taxes (CBDT) additionally publishes the PDF information containing instructions to assist filing of the respective tax filing utilities.

However, regardless of the due date of filing returns being postponed by 4 months for the Assessment Year (AY) 2020-21 and the Income Tax Department having ample time after notifying the ITR Forms – particularly ITR-1 – no instructions / clarifications have been issued thus far to make the filing of return of earnings handy.



For these taxpayers, who file their returns themselves, the instructions act as a prepared reckoner and are essential, as some modifications have been integrated within the ITR Forms as a result of extension of compliance deadlines on account of the Covid-19 lockdown.

CA Geetanshu Bhalla, who’s a working towards Chartered Accountant and Mentor at The Virtual Compliance, highlights some difficulties that the assessees might face as a result of lack of instructions/ clarifications and likewise recommends some steps to resolve the problems.

1. Missing of Instructions to fill the earnings tax return

Instructions associated to the ITR filing not solely make clear the information that which schedule is obligatory to fill by whom or learn how to fill the actual schedule but in addition information on numerous elements associated to filing of earnings tax return together with the disclosure of worth of property and liabilities, alternate rate for use for conversion of international property, and so forth.

CBDT has not issued the instruction for filling the earnings tax return for AY 2020-21, even supposing the unique due date of filing of earnings tax return has handed away lengthy again.

Recommendation / Comments

Instructions are half and parcel of the earnings tax return kinds as kinds categorically ask the taxpayers to confer with the instructions to fill the earnings tax return. Delay within the difficulty of instructions could also be thought-about as delay in notifying the Income Tax Return kinds. CBDT ought to difficulty the instruction for filing the earnings tax return on the earliest.

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2. Foreign Asset disclosure

Resident and ordinarily resident taxpayers are required to reveal their international property whether or not holding as beneficiary or in any other case whereas filing their earnings tax return. Non-compliance would trigger an imposition of penalty of Rs 10 lakh on him below the Black Money Act along with permit the prolonged time interval of 16+1 years to the earnings tax division to provoke the earnings tax scrutiny if earnings from such property is evaded.

Recommendation / Comments

There are two essential elements associated to this. One is the definition of accounting 12 months and the opposite is the alternate rate for use for conversion of international property into INR. Last 12 months, CBDT clarified each for AY 2019-20. However, this 12 months, CBDT has neither issued any contemporary clarification but, nor it has clarified that final 12 months instruction and clarification can be relevant for AY 2020-21. Delay in difficulty of such clarifications would end in undue hardship with the taxpayers left with small token of time for filing their earnings tax return. Accordingly, CBDT ought to difficulty clarification on this regard on the earliest.

Furthermore, take the case of Mr. Gupta (title modified), having a number of financial institution accounts and investments positioned outdoors India and such accounts and investments have peak stability on numerous totally different dates. As per final 12 months tips, Mr. Gupta is meant to gather alternate rate for every such day from SBI for conversion functions, which is kind of cumbersome and a waste of time and efforts for each taxpayers in addition to banks. Hence, CBDT ought to present the power of alternate rate for use for conversion on its E-filing portal to keep away from the circumstances of hardship with the taxpayers.

3. Disclosure of directorship

Directors of the businesses are required to reveal inter-alia the title of firms wherein he’s director.

Recommendation /feedback

Last 12 months, CBDT had issued the clarification exempting the non-resident administrators to reveal the main points of international firms wherein they’re administrators offered such international firms don’t have any taxable nexus with India. The mentioned clarification was relevant for AY 2019-20. No clarification is issued until but for AY 2020-21, accordingly, CBDT should difficulty the clarification on this regard on the earliest.

Moreover, take the case of Mr. Sharma (title modified) who’s director of 2 USA-based firms along with 14 Indian firms. Now, at current, he’s required to reveal all 16 firms even supposing particulars of 14 firms are available with MCA and the Govt of India. Hence, for my part, this clause must be restricted to hunt the main points of international firms wherein Indian resident taxpayers are administrators. Seeking the information which is already accessible not solely wastes the time of taxpayers, but in addition the division time to course of the information. Alternatively, the earnings tax division can present the MCA knowledge within the pre-fill utility and may ask the taxpayer to validate the identical once more.

4. Schedule AL – Assets and Liabilities on the finish of the 12 months

Taxpayers having complete earnings exceeding Rs 50 lakh are required to reveal the main points of movable and immovable property, together with liabilities, whereas filing the earnings tax return.

Recommendation /feedback

Instructions to fill the earnings tax return have to be issued on the earliest, in any other case a number of queries together with valuation of such property, and so forth would trigger undue hardship for taxpayers.

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