Buying a house is a dream for many people in India. In the form of the "Housing for All" Program, the government has provided individuals with various tax incentives to enable them to buy a house. In the financial year 2018-19, an individual benefited from additional tax benefits at the same cost if the real estate is owned jointly. But with the recent notification of income tax department, if the property owned jointly, you cannot avail the tax benefits and file ITR 1 form or ITR4 form as previously.
Why Joint Owners of the Property Cannot File ITR 1 Or ITR4?
Recently the government has introduced new ITR Filing Forms of FY 2020-21. The income tax department usually notifies ITR forms in the first week of April for the assessment year. However, this year, on January 3, the government itself has announced latest ITR forms for the assessment year 2020-21. While an ordinary resident with a return not exceeding Rs 50 lakhs can file ITR-1, known as Sahaj, all Hindu Undivided Families (HUFs) and companies with total incomes up to Rs 50 lakhs, as well as those having presumptive income from business and profession can apply for ITR-4, known as Sugam.
What is ITR?
Income Tax Return (ITR) is the taxpayer’s information form for the income tax department to file reports on their earned income and taxes. Until now seven different forms have been announced by the department including ITR 1, ITR 2, ITR 3, ITR 5, ITR 6 and ITR 7. On or before the specified deadline, each taxpayer should submit their ITR. The ITR forms are subject to different criteria depending on a taxpayer's sources of income, income amount earned, HUF, businesses, etc.
AY 2020-21 Revised ITR Filing Forms
Two significant changes were made to ITR forms according to a new notification by the government. The first amendment shall prevent an individual taxpayer either in ITR-1 or ITR-4 from filing a return if he or she has a joint ownership property. This change requires a person to furnish a return of income, according to the notification. Secondly, the ITR-1 form is not valid for those who deposited Rs 1 crore on their bank account and have incurred Rs 1 lakhs or 2 lakhs, respectively for foreign journeys or electricity, added the notification.
What is ITR-1 Sahaj?
The ITR-1 Sahaj involves income from salaries, the income of one house property, income from other sources (exclusive of lottery and income from racehorses), and agricultural income up to Rs.5000, for a person whose total income for the 2019-20 assessment year is included.
What is ITR-4 Sugam?
The ITR-4 Sugam applies to individuals and HUFs, partnership companies (excluding LLPs), who are residents with income from an enterprise or profession. It is also applicable to people who have opted for the allocated income scheme under Section 44AD, Section 44ADA and Section 44AE of the Income Tax Act. Nevertheless, the taxpayer is required to file ITR-3 if the turnover of the company exceeds Rs 2 crores.
New Notifications of Income Tax Department
The Tax Department has notified new income tax return filing forms for individuals in the assessment year 2020-21 are as follows.
- Ownership of Property: Individual taxpayers who have joint ownership of the property cannot file ITR 1 or ITR4.
- Passport: If you hold the taxpayer, you have to reveal the passport number. This should be provided in ITR 1-Sahaj and ITR 4-Sugam. It is expected to become mandatory in other ITR forms also when it is notified.
- Money deposit: It is mandatory for those filing ITR 4-Sugam to disclose, the amount deposited in a bank account in exceeding Rs 1 crore in the FY.
- International travel: You have to report the actual amount spent if you contributed more than Rs 2 lakhs on travelling abroad in the FY.
- Usage of electricity: If the total electricity bill during the fiscal year is above Rs 1 lakhs have to notify the real electricity consumption.
Who Can File ITR 1 Sahaj?
In ITR 1-Sahaj, is for the resident individuals with a total income up to Rs 50 lakhs, income from salaries, a single property, income from interests, family pension revenues etc. and farm income up to Rs 5000.
Who Cannot File ITR1 Sahaj?
An individual who is not either a director or investor in unlisted securities, who has declared or has replaced any of the losses under the head ‘Income from House Property’ or must furnish a return on income under Section 139(1) of the Act, under the seventh clause.
Who Can File ITR 4-Sugam?
ITR 4-Sugam is for residents, HUFs, and Firms (other than LLP) with an income of up to 50 lakhs, one house in Hyderabad, business income and occupation computed under sections 44AD, 44ADA and 44AE and interest income, a family pension, and agricultural income of up to Rs 5000.
Who Cannot File ITR 4-Sugam?
It does not apply to a person who is a manager or has invested in non-listed shareholdings or who has reported losses under the heading of house property's income.
To ensure you comply with taxes, filing ITR on time is helpful in many aspects. For the financial year 2020-21, the e-filing season started, and the deadline is 31 July 2020. Be a responsible citizen and file taxes early to avoid problems of the last minute.
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By: Shailaja K