With the onset of new Financial Year i.e., 1^st April, 2016, it’s now high time to get the returns filed for FY 15-16 (AY 16-17) as the Finance Ministry has notified the new ITR forms with certain mandatory disclosures for the taxpayers.

 

The new ITR-4S gives relaxation to Firms w.r.t.  Presumptive Income . It also provides various changes such as – disclosure of assets and liabilities by ultra-rich taxpayers and extra deduction of investment in NPS. This change in the ITR shall require the taxpayers to maintain their Books of Accounts too, so as to declare the correct value of their assets and liabilities.

 

The Form has already been released by the Department, so the taxpayers should get prepared with their documents and start filing their returns within the stipulated time (31^st July, 2016). As the forms are released with the start of the Assessment Year 2016-17, this time the extension of the above due date is not likely to be made by the department, so it’s time to get the returns filed at the earliest. The New ITR 4S – Even Firms Can Also File with the following characteristics :

 

Applicability of ITR 4S

 

ITR 4S can be used by the Individuals/ HUF/ Partnership Firm having the following incomes:

 

• Business income where such income is computed in accordance with special provisions referred to in section 44AD and 44AE of the Act for computation of business income; or

• Income from Salary/Pension; or

• Income from one house property (excluding cases where loss is brought forward from previous years); or

• Income from other sources (excluding winnings from lottery and income from race horses).

 

NOTE:

• The income computed shall be presumed to have been computed after giving full effect to every loss, allowance, depreciation or deduction under the Income-tax Act.

 

• Further, in a case where the income of another person like spouse, minor child, etc is to be clubbed with the income of the assessee, this Return Form can be used only if the income being clubbed falls into the above income categories.

 

Non – Applicability of ITR 4S

 

The Form 4S cannot be used by the taxpayers having the following income:

• Income from more than one House Property

• Income from winnings from lottery or income from race horses.

• Income includes any income chargeable to tax under the head “Capital Gains”. –

• Agricultural income in excess of Rs. 5,000.

• Income from Speculative Business and other special incomes.

• Income from a profession as referred to in sub-section (1) of section 44AA or income from an agency business or income in the nature of commission for brokerage.

• Person claiming Relief of foreign tax paid under Section 90 or 90A or 91.

• Individual who is a Resident and has –

  (i) assets (including financial interest in any entity) outside India

        OR

  (ii)signing authority in any account located outside India.

• Any resident having income from any source outside India.

 

When ITR 4S shall not apply at the option of the Assessee

 

ITR 4S, Business Form, shall not apply at the option of the assessee, if-

 

• the assessee keeps and maintains all the books of account and other documents referred to in section 44AA in respect of the business.

 

• the assessee gets his accounts audited and obtains a report of such audit as required under section 44AB in respect of the business. In the above scenarios, Regular ITR-4 should be filed and not ITR 4S.

 

Key Changes in the ITR Form 4S

 

• Even Firms can file ITR 4-S for Presumptive Income:-

 

Under the existing provisions of Rule 12, earlier the firms were required to file ITR 5 even for presumptive income. The new ITR 4S now with the amended Rule 12  allows the firms to file the same for presumptive income. Accordingly, a separate row has been provided for in the Form to claim deduction of interest and salary paid by the firms to the partners.

 

 

• Declaration of value of assets and liabilities by Individuals earning above Rs.50 lakhs:-

 

The new ITR form, requires individuals to declare the value of assets and liabilities if their total income exceeds Rs. 50 lakhs. A new reporting schedule i.e., ‘Schedule AL – Asset and Liability at the end of the year’ has been introduced in the ITR. Assets include immovable assets and movable assets.

 

Immovable assets: taxpayers have to disclose the cost of land and building.

Movable assets: taxpayers have to disclose the cost of Jewellery, bullion, vehicles, Yachts, boats, aircraft and cash in hand.

 

However, it has not yet come with the required instructions for determining the cost of the immovable and movable assets. Further, the taxpayers are also required to disclose all liabilities in relation to such assets.

 

• Additional deduction for contribution to NPS under Section 80CCD :-

 

Finance Act, 2015 introduced a new Sub – Section (1B) in Section 80CCD to provide for an additional deduction of up to Rs. 50,000 for investment in National Pension Scheme. Accordingly, a new row is now introduced in the ITR Form to claim benefits of such additional deduction.

 

The above changes in the ITR form bring in the new reliefs and challenges for the taxpayers. So, start filing your returns and get your accounts prepared at earliest without any delay.

 

Download ITR-4S. 

 

For any queries or filing your returns, please get in touch with us @ taxmantra.com .

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