New Tax Forms seek more Disclosures
Come tax filing season and you can always trust the income tax department to come up with something new! Revamped return forms, a widening of the compulsory e-filing net and exemptions from filing returns for certain categories of assesses were the salient changes in the last few seasons. This year, the department has asked for more information/disclosures in the ITR forms applicable to salaried individuals, especially in the ITR 2 forms. So if you are among those who usually file returns only at the eleventh hour, get off to an early start this year to understand the changes. It may save you a lot of headache as the deadline nears.
If you are a salaried individual and are filing ITR 2, be ready for a detailed disclosure of the exemptions you are claiming under the ‘Income from Salary’ head in ‘Schedule S’. While the earlier version of the ITR 2 required only the total of allowances exempt under Section 10 to be shown, you now need to break this down into elements such as leave travel concession, house rent allowance, tax paid by employer on non-monetary perquisites and other allowances. Your Form 16 should be able to help you here. But there is a risk that many companies may not give the break-up in Form 16. So it makes sense to check with the accounts department of your employer right away.
A second change is in the section dealing with bank account details. Remember receiving a cheque last year for your tax refund? Well, you might be lucky. Many of you could have encashed your refund cheque, but there could have been others whose cheques were lost in transit or whose names were misspelt, making them run from pillar to post before the amount reached their hands. To do away with these hassles, the department has done away with the cheque option. Refund amounts will compulsorily be credited to your bank account from this year onwards. Provisions have also been made for the new deduction under Section 80EE. Under this, up to ?1 lakh can be claimed as deduction for interest payments on home loans borrowed by certain first-time home buyers. So if you fulfil the conditions, remember to fill in the details in this column to lower your tax liability.
Similarly, remember the ?2,000 tax rebate for those with total income less than ?5 lakh? A column for this rebate (Section 87A) has been added too.
Cautious on capital gains
Much of the changes in ITR 2 are in the capital gains section, so much so that this segment has been mainly responsible for increasing the length of ITR 2 from 10 pages last year to 12 pages now! For example, the new forms require disclosure of long-term capital gains under each asset class separately, unlike last year. So whether you earned your long-term gains from the sale of land/building, from sale or bonds/debentures, or from sale of listed securities/units/zero-coupon bonds has to be stated separately.
Moreover, if you claim exemption from capital gains based on certain investments such as a new house or under the Capital Gain Accounts scheme, details regarding these are also sought. A schedule for set-off of current year capital losses against current year capital gains is provided additionally from this year. With annexures to the return done away with in recent years, such detailed disclosure requirements could have been incorporated to make it easier for authorities to act on the information, if necessary.
Business Line, New Delhi, 22-06-2014