New tax return forms seek more details

The government issued new income tax return forms on Friday, seeking more disclosures from those who claim exemption from a large farm income, directors on the boards of companies, people with foreign assets or accounts banks, as well as those that have shares in unlisted companies.

In a major change, the ease of filing paper returns will now be available only to those over 80 years. The government has said that residents must submit form ITR-1 or Sahaj form with a total income of up to Rs. 50 lakh salary or pension, one house property, other sources, such as interest income and agricultural income up to Rs 5,000. People are required to file tax returns for FY2018-19 before July 31.

For employees, the details of some of the allowances, such as house rent, leave trips, children's education and relocation should also be shared. Previously, tax authorities had searched for details of taxable deductions, but now there is a change to exempt allowances.

Additional details should be provided in case the agricultural income exceeds 5 lakhs, which will include the district with the pin code where the land is owned, the measurement of the land and the details of irrigation.

"Several changes have been introduced to seek further details for cross-validation of income/information in an enhanced automated environment. This not only promises more efficiency for the government but also lesser questioning from tax authorities seeking further details while processing the returns. It will also help to check income escaping cases," said Kuldip Kumar, partner at consulting firm PricewaterhouseCoopers.

Those with assets abroad must provide details of the deposit account abroad, custodial accounts abroad, equity and interest on debt and details of the insurance contract or annuity contract.

"Taxpayers need to be very careful this time and will need to collate additional details/reporting requirements well in advance this year, in order to be able to fulfil the reporting requirements prescribed in new ITR forms. We also expect greater automated scrutiny of ITRs, based on extensive data/details required and furnished in ITRs," said Shailesh Kumar, director at Nangia Advisors.

The tax department has also searched for details of those who are not residents. "The tax return forms have clearly tried to bring more transparency through disclosures for globally mobile employees who avail of relief under the tax treaty. Details of residence in foreign countries, along with tax identification number, additional disclosure of assets held outside India, basis of determination of residential status in India and availability of tax residency certificate from foreign countries are some of the additional details which would be required to be quoted in the return of income," said Amarpal Chadha, partner at EY India.

This will help the government verify whether non-residents, such as software professionals working abroad are paying taxes, since the information will now be available under the automatic information exchange protocol, explained PwC's, Kuldip Kumar.

In addition, a break-up of cash and non-cash donations should be provided in case you wish to claim tax benefits for contributions made under the PM Relief Fund or to an eligible blind school.