The Central Board of Direct Tax (CBDT) has notified all the Income Tax Return (ITR) forms for the financial year 2021-22 via a vide notification no. 21/2021 in G.S.R 242(E) dated 31/03/2021. To facilitate taxpayers and to reduce compliance burden no any major changes have been made in the ITR forms this year as compared to previous years. But still there are few changes in ITR-1 which you should be aware of.
Who can pay tax under ITR-1?
ITR-1 is also known as Sahaj, is a simple form which is specifically filed by resident individuals to file their returns. An individual who earns income up to Rs 50 lakhs can only file their return in ITR-1. But the income should be earned via following sources such as;
1. Income from salary or pension.
Note: if the income earned from salary or pension is above Rs 50 lakhs then person required to file his/her return in ITR-2.
2. Income from single House Property, other than cases where loss has been brought forward from previous years
3. Income from Other Sources, other than income earned via winning lottery and horse races.
4. Agriculture income up to Rs 10,000
Note: The person will become ineligible to file ITR-1 if he;
- Holds any property abroad
- Earn income via business/ profession and capital gain
- Holds the designation as director of any company
What are the major changes in ITR-1?
The CBDT had notified few significant changes in ITR-1 via a notification dated 31st March 2021. Following are the amendments in ITR-1 form;
1. Tax Deferred on ESOP:
ITR-1 cannot be used by an individual for whom income tax is deferred on ESOPs. From FY 2020-21, if an employee is receiving ESOPs from an eligible start-up then not required to pay tax in the year in which he is exercising the option.
The TDS on the ‘perquisite’ stands deferred to the earlier of the events that are expiry of five years from the year of allotment of ESOPs or the date of sale of the ESOPs by the employee or the date of termination of employment. Such employees won’t be able to file ITR 1. They will have to file ITR-2.
2. TDS deducted under section 194N:
The taxpayer whose tax has been deducted under section 194N cannot file his return under ITR-1. Such taxpayers may file their return via ITR-2 or ITR-3.
Note: As per section 194N, TDS is required to be deducted by banks, co-operative banks or a post office at the rate of 2% or 5%, depending on the amount withdrawn in cash from one or more accounts maintained by the taxpayer.
3. Disclosure of Dividend Income:
In 2020-21 the dividend income became taxable, therefore the ITR-1 asks for the quarterly breakup of dividend income. The dividend income has to be disclosed under “income from other sources.
This information is required for claiming relief on payment of advance tax under section 234C on the dividend income.
Earlier, dividend income was exempt in the hands of the shareholder, but from 1st April 2020 all the dividend income is taxable at the applicable tax rates of assessee.
Note: If your dividend income is more than Rs 5000 then the company will deduct TDS upon the same.
What is the due date for filing ITR-1?
The due date to file ITR-1 is 31st July 2021. The taxpayer needs to file return for income earned from 01st April 2020 to 31st March 2021 by 31st July 2021.
Unless and until Government extends the date, the taxpayer shall file the return latest by 31st July 2021.
The individual shall file ITR earliest by 1st week of June 2021 as by then, the form 26 AS will have all the details of Tax deducted by the employers and the other deductors.