Key changes in new ITR Form 3, 4, 5, 6 and 7
I. Introduction:
The new ITR Forms 1, 2 and 4S were notified for the Assessment Year 2015-16 vide Notification No. 41/2015, Dated 15-04-2015. However, in view of representations received from various stakeholders, the CBDT came out with simplified version of ITR forms 1, 2, 2A and 4S.
Now the CBDT has notified the remaining ITR forms, viz, ITR Forms 3, 4, 5, 6 and 7 vide Notification No. 61/2015.
Different forms are prescribed for different taxpayers. The following table gives an overview of the return forms applicable to different taxpayers.
ITR Form Taxpayer
ITR-3 This form shall be used by an individual or HUF:
■ Who is a partner in a firm; and
■ If his income chargeable to tax under the head ‘Profits or gains from business or profession’ does not include any income except income by way of any interest, salary, bonus, commission or remuneration due to, or received by him from such firm.
ITR-4 This form is relevant for an individual or HUF who is carrying on a proprietary business or profession.
ITR-5 This ITR form can be used by a firm, LLP, AOP, BOI, artificial juridical person, cooperative society or local authority. However, a person who is required to file return in ITR 7 shall not use this form.
ITR-6 This form shall be used by a company, other than a company claiming exemption under section 11, to file its return of income.
ITR-7 Applicable to a persons including companies who are required to furnish return under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D) (i.e., trusts, political parties, institutions, colleges, etc.)
II. Key changes in ITR Forms Key changes in ITR forms is highlighted below.
1. Aadhaar Number and passport number
[ITR 3, 4]
Aadhaar number and passport number are required to be given in new ITR forms (if assessee has obtained the same).
2. Date of Formation of HUF
[ITR 4]
HUF is required to report date of its formation in new ITR Form.
3. Return filed pursuant to order of CBDT under Section 119
[ITR 3, 4, 5, 6, 7]
For avoiding genuine hardship, by general or special order, the Board may authorize any tax authority other than CIT (Appeals) to admit an application or claim for any exemption, deduction, refund or any other relief after the expiry of the period specified under the Act.
If assessee is filing return of income pursuant to an order of CBDT under Section 119(2)(b), it shall tick the check-box [ under Section 119(2)(b)] introduced in the new ITR forms.
Generally CBDT extends date of filing of return under Section 119 in cases of natural calamities or when taxpayer faces genuine hardship in certain circumstances. Recently, the due date of filing of return for J&K taxpayers was extended by the CBDT due to devastation caused by flood in J&K.
4. Expenditure on CSR activities
[ITR 6]
An Explanation was inserted in section 37(1) by Finance (No. 2) Act, 2014 to clarify that any expenditure incurred by an assessee on the activities relating to corporate social responsibility (CSR) referred to in section 135 of the Companies Act, 2013 shall not be allowed to be deducted as same could not be considered to be incurred for the purposes of the business or profession.
Thus, ITR 6 has been revised to provide for reporting of expenditure on CSR activities if the same is debited to profit and loss account.
5. Deduction under section 32AC
[ITR 6]
Any company engaged in business of manufacture or production of any article or thing is entitled to claim allowance under Section 32AC for investment in new plant and machinery. Now a particular field is provided in new return form under ‘Schedule BP’ for reporting of investment allowance under Section 32AC.
6. Alternate Minimum Tax
[ITR 4, 5, 7]
The existing provisions of section 115JC provides that alternate minimum tax (‘AMT’) shall be payable at the rate of 18.5% on adjusted total income. Further, the adjusted total income was computed by including only profit linked deductions (i.e., deductions claimed under Part C of Chapter VI-A and deductions claimed under section 10AA) in total income.
However, with a view to include investment linked deduction in adjusted total income, Section 115JC was amended by Finance (No.2) Act, 2014 to provide that total income shall be increased by the deduction claimed under section 35AD for purpose of computation of adjusted total income.
Accordingly, the return forms have been revised to include Section 35AD deduction for computation of adjusted total income.
7. Foreign portfolio investors/Foreign Institutional investors
[ITR 5, 6]
Foreign Institutional Investor (FII) and Foreign Portfolio Investor (FPI) are required to furnish their SEBI registration number in the new return Form.
8. Details of all bank accounts held by assessee
[ITR 3, 4, 5, 6, 7]
Under new ITR form, an assessee is required to furnish details of all bank accounts held by him in India at any time during the previous year. However immunity has been provided to the taxpayer from furnishing details about the bank accounts which have become dormant.
The ‘dormant‘ account shall be those current and saving bank accounts which have not been operational for more than 3 years.
Following details shall be reported in respect of each bank account held by assessee in India:
(a) IFSC Code of the Bank
(b) Name of the Bank
(c) Name of joint holders (if any) (withdrawn)
(d) Account Number
(f) Nature of the bank account, i.e., current account or saving account
9. Details of change in partners/members
[ITR 5]
A new column has been inserted to require the assessee to furnish the details of change in the partners/members of the firm/AOP/BOI, as the case may be, during the previous year. Following details shall be furnished in the table newly inserted in Part A – General:
(a) Name of the partner or member
(b) Status as to whether admitted or retired
(c) Date of admission or retirement
(d) Percentage of share (if determinate)
10. Details of interest rate and remuneration payable to partners/members
[ITR 5]
New ITR 5 requires disclosures of rate of interest and remuneration paid/payable to the partners or members in firm/AOP/BOI or settlor/trustee/beneficiary in the trust, as the case may be.
11. Detail of Salary/remuneration paid to partners/members
[ITR 5]
New ITR Forms requires separate disclosures of salary or remuneration paid or payable to the partners during the year.
12. Bifurcation of interest paid to resident and non-resident
[ITR 5]
New ITR 5 requires separate disclosure of interest paid:
(a) Outside India or paid in India to a Non Resident
(b) Paid in India or paid to a resident
All interest payments shall be bifurcated to indicate how much interest has been paid to:
(a) The partners; and
(b) Others
13. Verification
[ITR 3, 4, 5, 6, 7]
Where return is being furnished under section 92CD, assessee shall provide an additional declaration that the critical assumptions specified in the agreement have been satisfied and all the terms and conditions of the agreement have been complied with.
14. Securities held by FIIs
[ITR 3, 4, 5, 6]
Section 2(14) of the Act was amended by the Finance (No. 2) Act, 2014 to provide that securities held by FIIs shall be deemed as ‘Capital Assets’. The amendment was made to end the controversy of categorization of income of FIIs as business income or capital gains.
Consequential changes have been made in ITR forms in this regard.
15. Sale of units of business trust
[ITR- 3, 4, 5, 6]
The Finance (No. 2) Act, 2014 introduced a new Chapter XII-FA in the I-T Act to provide for special provisions relating to business trust. The special taxation regime contains provisions for taxability of income in the hands of business trusts and the income distributed to its unit holders.
Consequential amendment is made to Section 10(38) to provide that long-term capital gain arising from transfer of unit of a business trust on which securities transaction tax (STT) is paid shall be exempt from tax.
Similarly, Section 111A has been amended to provide that short-term capital gain arising from transfer of unit of a business trust on which STT is paid shall be chargeable to tax at reduced rate of 15%.
Necessary changes have been made in this regard in the ITR forms.
16. Reporting of amount that has remained unutilized in capital gains account
[ITR 3, 4, 5, 6]
If assessee is unable to roll over the investment in new capital asset within the specified time period so as to avail of the exemptions under section 54, 54B, etc., he can deposit the sum in capital gains account scheme.
In that case, exemption to be granted to assessee shall be aggregate of actual investment in new capital asset and amount deposited in capital gains account scheme before due date of filing of return of income.
The amount so deposited in the capital gains account scheme should be utilized for investment in specified asset within specified time-limit, otherwise the unutilized amount shall be chargeable to tax in the previous year in which the time-limit expires. The unutilized amount would be taxable as short-term capital gain/long-term capital gain, depending upon the nature of original capital gain.
In ITR forms, requisite details are required to be provided in respect of amount so deposited in capital gains account scheme.
The details which are required to be provided if amount is deposited in capital gains account scheme are as follows:
(a) Previous year in which asset is transferred
(b) Section under which exemption is claimed
(c) Year in which new asset is acquired
(d) Amount utilized out of capital gains account scheme to acquire new asset
(e) Amount that has remained unutilized in capital gains account scheme or amount which is not used for making investment in specified new asset
17. Details of income taxable under DTAA
[ITR 3, 4, 5, 6]
If capital gain or residuary income of assessee is taxable as per provisions of the DTAA entered into between India and a foreign country, of which the assessee is a resident, following details shall be furnished in the return:
(a) Name of the Country and Code
(b) Relevant Article of the DTAA
(c) Rate of tax under DTAA (applicable in case of residuary income)
(d) Confirmation if TRC has been obtained
(e) Corresponding section of the Act which prescribe the rate of tax (applicable in case of residuary income)
(f) Amount of income
Further, the special tax rate on capital gain or residuary income and tax on such income as per DTAA shall be disclosed separately in Schedule SI.
18. Details about the foreign assets and foreign income
[ITR 3, 4, 5, 6, 7]
The ITR forms seek more details about the foreign assets and income from any source outside India. Schedule FA is substituted which requires assessee to provide detailed information about such foreign assets and income. The additional disclosures in the new ITR form shall be as under:
(1) Foreign Bank Account:
(a) Status of account holder (i.e., Owner/Beneficial Owner/Beneficiary)
(b) Date of opening of such bank account;
(c) Interest accrued in the account; and
(d) Details about the interest offered to tax in the return.
(2) Financial Interest in a foreign entity:
(a) Nature of financial interest (direct, beneficial ownership or beneficiary) in such entity;
(b) Date since such interest is held;
(c) Income accrued from such interest;
(d) Nature of income; and
(e) Details about the income offered to tax in this return.
(3) Foreign Immovable Property or any other capital asset
(a) Whether ownership in such asset is direct or beneficial or as beneficiary;
(b) Date of acquisition of such asset;
(c) Income derived from such asset;
(d) Nature of income; and
(e) Details about the income offered to tax in this return
(4) Signing authority in any foreign account
(a) Whether income accrued in such account is taxable in assessee’s hands; and
(b) If yes then furnish details about the income offered to tax in this return
(5) Trustee or Beneficiary or Settlor in a foreign trust
(a) Date since the position of trustee or beneficiary or settlor held in foreign trust;
(b) Whether income derived from the trust is taxable in assessee’s hands; and
(c) If yes, details about the income offered to tax in this return
(6) Any other income derived from any source outside India
(a) Country Name and Code;
(b) Name and address of the person from whom income is derived;
(c) Amount of income derived;
(d) Nature of income;
(e) Whether income is taxable in assessee’s hands; and
(f) If yes, details about the income offered to tax in this return.
19. Concessional tax rate in case of sale of listed securities (other than unit)
[ITR 3, 4, 5, 6]
As per the existing proviso to Section 112, if tax payable on long-term capital gains arising on transfer of a capital asset, being listed securities or units or zero coupon bonds, exceeds 10% per cent of the amount of capital gains before allowing for indexation adjustment, then such excess shall be ignored.
The Finance (No. 2) Act, 2014 amended the said proviso to provide that the concessional rate of tax of ten per cent shall be available only for long-term capital gain arising from transfer of listed securities (other than unit) and zero coupon bonds.
Therefore, consequential amendment is made to ITR forms in accordance with the amendment.
Now Long term capital gain from sale of MF is includable in this scheduled only if sale is on or before 10-07-2014
20. Agricultural income
[ITR 3, 4, 5, 6]
The Schedule EI in ITR forms requires assessee to provide following figures separately:
(a) Gross agricultural receipts
(b) Expenditure incurred on agriculture
(c) Unabsorbed agricultural loss of previous eight assessment years
(d) Net agricultural income for the year.
21. Apportionment of TCS to spouse if taxpayer is governed by Portuguese Civil Code
[ITR 3]
A taxpayer is liable to apportion his income (other than salary income) equally with his spouse if he is governed by the Portuguese Civil Code as per section 5A. Accordingly, taxpayer shall also apportion the amount of TDS and TCS in respect of income so apportioned to his spouse.
Under existing forms, there was an option to apportion the amount of TDS only and not for TCS. Under new ITR form, an option has been introduced to apportion the amount of TCS also.
22. Reporting of deemed let-out house property
[ITR 3, 4, 5, 6, 7]
If assessee owns more than one house, one house can be claimed by him as self-occupied while all other houses shall be deemed to be let out. Assessee shall be required to select a check-box in the ITR Form to indicate whether a house owned by him shall be deemed to be let-out.
23. Reshuffling of Schedules
[ITR 3, 4, 5, 6, 7]
The information required to be filed in the following Schedules has been reshuffled:
Schedule IT – Details of payments of Advance Tax and Self-Assessment Tax
Schedule TDS1 – Details of Tax Deducted at Source from Salary
Schedule TDS2 – Details of Tax Deducted at Source on Income
Schedule TCS – Details of Tax Collected at Source on Income