ITR Forms and Tax Audit New Report for FY 2020-21

Arjuna (Fictional Character): Krishna, new ITR forms have been notified by CBDT on 01/04/2021, what is your view on that?

Krishna (Fictional Character): Arjuna, CBDT has notified the ITR-1 to ITR-7 for F.Y. 2020-21 and stated that no significant changes have been made to ITR forms as compared to the previous year to help the taxpayers and minimize compliance burden in view of the ongoing crisis due to COVID pandemic.

Arjuna (Fictional Character ): Krishna, what are the major changes in these ITR?

Krishna (Fictional Character ): Arjuna, only the minimum changes that are required due to amendment in the Income Tax Act have been incorporated in the ITR forms. Some of the changes are as follows-

1. Taxpayer will have to specify whether he is opting or not for the new taxation regime which provides for lower tax rates subject to non-claiming of certain deductions/ exemptions.
2. The Dividend income earned in financial year 2020-21 will have to be reported quarter-wise to facilitate calculation of advance tax payable and interest thereon.
3. ITR-1 (Sahaj) cannot be filed by a taxpayer if TDS is deducted on cash withdrawals exceeding 1 crore u/s 194N.
4. If deduction for investment/deposit/payment for the period 01/04/2020 to 31/07/2020 have been already claimed for financial year 2019-20 cannot be claimed again.

Arjuna (Fictional Character ): Krishna, CBDT has notifed changes in Tax Audit Report for F.Y. 2020-21 on 01/04/2021?

Krishna (Fictional Character ): The two major changes made in tax audit report are as follows:

1] The details of difference between the actual consideration and stamp duty valuation on transfer of any land or building are to be reported in clause 17 of the tax audit report. However, in order to boost the real estate sector, Budget 2021 provided that there can be a difference between the two upto 20% as against the previous limit of 10% subject to certain conditions. The Tax auditor now is required to report whether the taxpayer is covered by the new proviso.

2] As the dividend received from companies is now taxable in the hands of investors from financial year 2020-21, Clause 36 relating to dividend distribution tax paid by companies is deleted.

Arjuna : Krishna, what should the people learn from the above?

Krishna : Arjuna, the department notified the ITR forms and tax audit report on the first day of new financial year itself and made minimum changes in the ITR form and tax audit report so that the taxpayers can make the compliance with ease in these times of Covid pandemic. However, the department should also make available the utilities for online filing at the earliest so that the purpose is served.

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