All you need to know about new ITR forms for AY 2018-19

Last Updated: Fri, Jul 06, 2018 16:29 hrs
Income Tax Returns (PTI Photo)

Budget 2018 brought about changes like taxation rules of long term equity investments and a few other changes but, the one thing it did leave unchanged is the income tax slab rate. But a few additional tax filing-related changes were also announced in early April 2018 and some of these have gone nearly unnoticed. These changes are being brought into effect from AY 2018-19 onwards and many of these key changes are evident from the tweaking of the ITR forms.

In case you are wondering why this would affect you, consider this- your income tax refund being processed correctly is primarily dependant on accurate and timely filing of your income tax return (ITR) using the appropriate ITR form. In the following sections, we will discuss the key ITR form-related changes that are applicable for AY 2018-19 and what you would need to consider when filling them out.

Different ITR Forms and their Applicability for AY 2018-19

The current count of separate ITR forms stands at seven for AY 2018-19 and the following is a tabular representation of which form is applicable to which group of individuals, companies or businesses.

Table1 – ITR Forms and their Applicability for AY 2018-19 (Updated 5th April 2018)*

ITR Form Number

Applicability of Form

ITR 1 – Sahaj

For all Resident Indians (excluding resident not ordinary resident and non-resident tax payers) with income from salary, single house property and income from other sources (capital gains, interest income, etc.) up to Rs. 50 lakhs annually. Also applicable for other individuals and HUFs who do not have gains and profits from profession and business.

ITR 2

For all RNOR (resident not ordinary resident) and also for HUFs and individuals with any income apart from income generated under the “Profits and Gains from Business or Profession” heading.

ITR 3

For HUFs and individuals with income from gains and profit of profession or business.

ITR 4 – Sugam

For individuals having presumptive income from profession or business.

ITR 5

For all tax filers except individuals, HUFs, companies and persons submitting ITR-7 form

ITR 6

For all companies except those having exemption claims under Section 11

ITR 7

For individuals and companies legally required to file ITR as per Sections 139 (4A), 139 (4B), 139 (4C), 139 (4D), 139 (4E) or 139 (4F).

*The data provided is for illustrative purposes only and subject to change based on tax authority guidelines.

Source: Cleartax.

Filing requirement of ITR 2

Prior to AY 2018-19, ITR 1 was used by resident Indians, RNORs (resident not ordinary residents) and non-resident Indians (NRI) for return filing. This has now changed, as ITR 2 will have to be submitted by RNORs and NRIs. Of course, this change will have no impact on resident Indians or others filing their returns using any of the other income tax return forms.

Detailed reporting required for house property and salary income

The new versions of ITR 1 and ITR 4 require you to provide specifics regarding your income from salary as well as residential property. Such break-up was not necessary in earlier versions of the ITR and consequently, a few additional rows have been added to the new forms. As it stands now, some of the details that will have to be mentioned separately when filing returns from AY 2018-19 onwards include – deductions under Section 16, taxable allowances, total valuation of perquisites, profit from salary, etc. This change introduced by the IT Department is considered to be in line with the recent tax department initiatives with respect to matching ITR figures with data from a range of alternate sources including Statement of Financial Transactions, TDS Returns, etc. The following is an extract of the relevant section:

Source: Cleartax

Introduction of the Late Filing Fee

As per the Finance Act of 2017, a penalty in the form of late filing fee is now payable by the tax payer under Section 234F if ITR has not been filed within the due date as provided in Section 139 (1). All of the new ITR forms (ITR 1 to ITR 7) feature a new field in this regard and the late fee is a minimum of Rs. 1,000 for tax payers with income of up to Rs. 5 lakhs, while this fine can be as high as Rs. 10,000 in case late filers with higher annual income. Earlier filing late did not have this late fee and the only adverse impact was usually a delay in your income tax refund. The applicable penalties and deadlines as per the newly introduced rule are as follows:

  • In case your taxable income is Rs. 5 lakhs or less, applicable late filing charges beyond 31st July, 2018 (the tentative final date for timely ITR filing) is capped at Rs. 1000.

  • In case of higher taxable income i.e. >Rs. 5 lakhs for the year, if you ITR is filed before 31st December 2018, but after the 31st of July, the applicable penalty will be Rs. 5000. If ITR for FY 2017-18 is filed between 1st January 2019 and 31st March 2019, the late filing penalty will be Rs. 10,000 as per the new rule.

  • Also remember that the final date to file belated returns for FY 2017-18 is the 31st of March 2019. Beyond this date, late filing will not be allowed even if you are paying the applicable late filing fees.

What these changes mean for you

First and foremost, ensure that you are filling out the correct ITR as that is mandatory to ensure that your filing will in fact be accepted by tax authorities. Such acceptance is of course the key to ensuring timely refunds as well as for ensuring that you don't receive an easily avoidable notice from the IT Department. The other obvious consideration in this regard is that you must file your ITR within the due date failing which you can incur substantial fines of up to Rs. 10,000 for late filing. So all in all these relatively small changes in the new ITR forms have the potential to provide the government with key benefits such as increased collection and better compliance at the cost of tardy and/or confused ITR filers.

Some additional ITR Filing pointers to consider

In the following section, we will discuss some general pointers to help ensure that your ITR filing is completed smoothly:

Applicable IT Slab Rates:

For AY 2018-19 the Income Tax slab rates have remained unchanged when compared to the rates for AY 2017-18. The following are the currently applicable Income Tax slab rates*:

Annual Taxable Income

Income Tax Rate for Individuals

Income Tax Rate for Senior Citizens (Age >60 years to <80 years )

Income Tax Rate for Super Senior Citizens (80 years of age and above)

Up to Rs. 2.5 lakhs

Nil

Nil

Nil

Over Rs. 2.5 lakhs to Rs. 3 lakhs

5%

Nil

Nil

Over Rs. 3 lakhs to Rs. 5 Lakhs

5%

5%

Nil

Over Rs. 5 Lakhs to Rs. 10 Lakhs

20%

20%

20%

Over Rs. 10 lakhs

30%

30%

30%

* Rebate of up to Rs. 2500 is applicable to tax payable in case taxable income is Rs. 3.5 lakhs or less. Some additional charges to consider as per existing rules are – 10% additional surcharge on income exceeding Rs. 50 lakhs but less that Rs. 1 crore annually. Similarly 15% surcharge is applicable in case annually income exceeds Rs. 1 crore. A health and education cess of 4% is additionally applicable on income tax plus surcharge (if applicable).

Source: Cleartax.

Keep Form 16, Form 16A and Form 26AS handy:

In case you are salaried, your employer will provide you with a copy of your Form 16 and it shows details of your salary income, which comes in handy at the time of ITR filing. Form 16A contains details of TDS (tax deducted at source) with respect to income you might have received from sources other than salary such as interest income from FD/RD. Using Form 26AS you can crosscheck your TDS deductions and ensure accuracy of your ITR filing.