Key changes in ITR Forms for AY 2021-22 - Part 3: ITR 4 Sugam and ITR 5

Form ITR 4

Who is eligible to use this Return Form?

This Return Form is to be used by an individual or HUF, who is resident other than not ordinarily resident, or a Firm (other than LLP) which is a resident, whose total income for the assessment year 2020‐21 does not exceed Rs.50 lakh and who has income under the following heads:‐

(a) Income from business where such income is computed on presumptive basis under Section 44AD (i.e. Gross Turnover upto Rs. 2 crore) or Section 44AE (income from goods carriage upto ten vehicles); or

(b) Income from Profession where such income is computed on presumptive basis under Section 44ADA (i.e. Gross receipt upto Rs. 50 lakh); or

(c) Income from Salary/ Pension; or

(d) Income from One House Property; or

(e) Interest income and / or income from family pension taxable under Other Sources.

• Click here to read Part 1: Key Changes in ITR 1 Sahaj and ITR 2
• Click here to read Part 2: Key Changes in ITR 3

Note 1: The income computed on presumptive basis under sections 44AD or 44AE or 44ADA shall be presumed to have been computed after giving full effect to every loss, allowance, depreciation or deduction under the Income‐tax Act. However, person having loss after giving effect to proviso to sub‐section 3 of Section 44AE shall file ITR5

Note 2: 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.

Who is not eligible to use this Return Form?

This Return Form should not be used by a person who -

(a) is a Director in a company;

(b) has held any unlisted equity shares at any time during the previous year;

(c) has any asset (including financial interest in any entity) located outside India;

(d) has signing authority in any account located outside India; or

(e) has income from any source outside India.

(f) has deferred tax on ESOP received from the employer being an eligible start‐up.

This return form also cannot be used by a person who has any income of the following nature during the previous year:‐

(a) Profits and gains from business and professions which is not required to be computed u/s 44AD, 44ADA or 44AE, such as income from speculative business, agency business, commission or brokerage income etc.;

(b) Capital gains;

(c) Income from more than one house property;

(d) Income under the head other sources which is of following nature:‐

(i) winnings from lottery;

(ii) activity of owning and maintaining race horses;

(iii) income taxable at special rates under section 115BBE;

(e) Income to be apportioned in accordance with provisions of section 5A; or

(f) Agricultural income in excess of ₹5,000.

Further, this return form also cannot be used by a person who has any claims of loss/deductions/relief/tax credit etc. of the following nature:‐

(a) any brought forward loss or loss to be carried forward under any head of income;

(b) loss under the head 'Income from other sources’;

(c) any claim of relief under section 90, 90A or section 91;

(d) any claim of deduction under section 57, other than deduction under clause (iia) thereof (relating to family pension); or

(e) any claim of credit of tax deducted at source in the hands of any other person.

Key changes (as compared to ITR for AY 2020‐21)

(a) Option to avail benefit of new tax regime u/s 115BAC is provided in ITR‐4. Form‐10IE filing is mandatory to avail benefit of new tax regime and should be filed within the due date mentioned as per section 139(1).

(b) Resident Individual having Income‐Tax deferred on ESOP are restricted to file ITR‐4.

(c) Quarterly breakup of dividend income to be provided.

(d) Schedule DI is removed.

Form ITR 5

Who is eligible to use this Return Form?

This Form can be used by a person being a firm, Limited Liability Partnership (LLP), Association of Persons (AOP), Body of Individuals (BOI), Artificial Juridical Person (AJP) referred to in clause (vii) of section 2(31), local authority referred to in clause (vi) of section 2(31), representative assessee referred to in section 160(1)(iii) or (iv),Primary Agricultural Credit Society, Co‐operative Bank other than a primary agricultural credit society or a primary co‐operative agricultural and rural development bank, Primary Co‐ operative Agricultural and Rural Development bank, any other cooperative society, society registered under Societies Registration Act, 1860 or under any other law of any State, trust other than trusts eligible to file Form ITR‐7, estate of deceased person, estate of an insolvent, business trust referred to in section 139(4E) , investments fund referred to in section 139(4F) and Any other AOP /BOI.

Who is not eligible to use this Return Form?

A person who is required to file the return of income under section 139(4A) or 139(4B) or 139(4D)shall not use this form.

Key changes (as compared to ITR for AY 2020‐21)

(a) Option to avail benefit u/s 115 BAD is provided in ITRs, after filing Form 10IF, for Co‐ operative societies being:

• Primary Agricultural Credit Society
• Primary Co‐operative Agricultural and Rural Development bank
• Co‐operative Bank other than "a primary agricultural credit society' or "a primary co‐operative agricultural and rural development bank'
• Other Cooperative Society

(b) For co-operative societies opting under 115BAD, tax will be charged at 22% and surcharge will be charged at 10% from Rs.1/‐ onwards. Also, such assessee’ s are not eligible for certain deductions and allowances as mentioned below:

• Exemption u/s 10AA
• Additional depreciation under clause (iia) of sub‐section (1) of section 32
• Deduction u/s 32AD / 33AB / 33ABA
• Deduction under sub‐clause (ii) or sub‐clause (iia) or sub‐clause (iii) of sub‐ section (1) or sub‐section (2AA) of section 35
• Deduction under section 35AD
• Deduction under section 35CCC or
• Deduction under Chapter VIA except 80JJAA and 80LA(1A) incase of IFS unit.
• Any amount in brought forward losses to the extent of above deductions will not be allowed to set off and carry forward and
• Any brought forward loss to the extent of unabsorbed depreciation will be added back to the asset.

(c) Option of Filing ITR in response to notice u/s 153A and 153C is removed from ITR as a requirement to file ITR under these sections is omitted.

(d) In AY 2020‐21 , the threshold limit for a person carrying on business was increased from one crore rupees to five crore rupees in cases where the cash receipts or payments by a business don’t exceed 5% of the such receipts or such payments, however in AY 2021‐22 , the limit of five crore rupees is increased to ten crore rupees

(e) The existing restriction of 17 codes in Nature of business/profession schedule is removed.

(f) Loss (negative value) under "No books of account' at sl.no.65 in Sch P&L is restricted. Instructions to Form ITR-5 (A.Y. 2021-22)

(g) In schedule BP, Income/ receipts credited to profit and loss account considered under head "other sources' has been bifurcated into 2 parts as

• "Dividend income' and
• "Other than dividend income'

(h) All the fields related to 115B - Income Life insurance Business i.e.,

• sl no.4b, Sl.no.Table E "Computation of income from life insurance business referred to in section 115B " of Schedule BP,
• sl no.iv of Sch CYLA, Sl.no.iii of Schedule BFLA,
• Col 8 of Schedule CFL and
• sl no.12 of Schedule SI have been removed. And corresponding mapping has been updated in Part B‐TI

(i) Section 44BBB is removed from Sl.no.4a and sl.no.36 of Schedule BP In Schedule DPM, the column "3a. Amount as adjusted on account of opting for taxation section 115BAD" and "3b. Adjusted Written down value on the first day of previous year (3) + (3a)" has been added . Hence corresponding mapping changes are made in schedule DPM

(j) CBDT vide notification dated 20th September 2019 increased depreciation to 45% on motor cars, motor buses etc wrt assets purchased on or after the 23rd day of August, 2019 but before the 1st day of April, 2020 and is put to use before the 1st day of April, 2020. Therefore, no additions will be allowed in 45% block from the AY 2021‐22 w.r.t to such assets.

(k) In Schedule CG, the allowable difference between full value of consideration u/s. 50 C and value of property as per stamp authority has been increased from 1.05 times to 1.10 times

(l) In schedule OS,

(i) The existing drop related to "Dividend income' is bifurcated into 2 parts i.e "Dividend income [other than (ii)]' and "Dividend income u/s 2(22)(e)' and respective changes are done in sl.no.2e _DTAA field and in sl.no.10(i)_Quarterly breakup of Dividend income.

(ii) Dividend will now be taxable from Rs.1/‐ as the section 115BBDA is omitted. Accordingly Interest expenditure u/s 57(1) to earn Dividend can be claimed at sl.no.3.

(iii) The existing drop down at Sl. No. 2d "115AD(1)(i)‐ Income received by an FII in respect of securities (other than units referred to in section115AB)" bifurcated into 2 drop downs as under:‐

• 115AD(1)(i)‐Income being Dividend received by an FII in respect of securities (other than units referred to in section115AB) @20%
• 115AD(1)(i)‐Income being other than dividend income received by an FII in respect of securities (other than units referred to in section115AB) @20%

(iv) Further new drop downs are inserted in sl. No. 2d and Sl. No. 2e wrt "Interest referred to in section 194LC(1)' and Distributed income being Dividend referred to in section 194LBA

(v) Section 115BBDA is removed from AY 2021‐22 onwards hence corresponding drop downs are removed from sl. No. 2c, 2d and 2e of schedule OS and respective changes are done in sl.no.10(i)_Quarterly breakup of Dividend income.

(vi) In existing Sl. No. 10 "Information about accrual/receipt of income from Other Sources'

• Field "Dividend Income u/s 115BBDA' is changed to "Dividend income' due to finance Act changes
• New line item is inserted to capture the quarter wise break up of "Dividend income which is taxable at DTAA Rates'. This information will be used to calculate interest u/s 234C.

(m) In Schedule CFL, the bifurcation of PTI loss and other than PTI loss has been removed from "HP loss', "Short term capital loss' and "Long term capital Loss' also corresponding changes mapping /other changes are made in field "Loss distributed among the unit holder"

(n) In Schedule CFL, the column "5b. Amount as adjusted on account of opting for taxation under section 115BAD" and "5c. Brought forward Business loss available for set off during the year" has been added . Hence corresponding mapping changes are made in schedule CFL

(o) In Schedule CFL, fields "Current year loss distributed among the unit‐holder (Applicable for Investment fund only)' has been added and corresponding changes done in CFL.

(p) Also, the field "Loss distributed among the unit holder (Applicable for Investment Fund only)' is deleted as it has no relevance. In Schedule UD, "Amount as adjusted on account of opting for taxation under section 115BAD '' field has been added as an adjustment for 115 BAD and so only balance loss can set off against income in Schedule BFLA.

(q) In Schedule 80GGA, w.e.f. 01.06.2020, the eligible limit of Donation in cash is changed from Rs. 10,000 to Rs. 2,000. Hence date field is inserted to capture date of donation in cash

(r) In schedule 80IB , the deductions claimed in following sections are removed due to sunset clause and corresponding mapping changes are made in schedule VI‐A

(i) Deduction in respect of industrial undertaking located in industrially backward states specified in Eighth Schedule [Section 80‐IB(4)]

(ii) Deduction in respect of industrial undertaking located in industrially backward districts [Section 80‐IB(5)]

(iii) Deduction in the case of an undertaking operating a cold chain facility [Section 80‐IB(11)]

(s) In Schedule EI, the field for "Dividend Income '' is removed from exempt income as for AY 2021‐22 onwards dividend income will be taxable in the hands of shareholders . similarly corresponding Changes are also made in schedule OS, schedule Pass Through Income (PTI) to remove reference of section 115O

(t) In schedule TPSA, dropdown for the financial year (FY 2019‐20 or FY 2020‐21) for which option u/s 92CE(2A) is exercised in AY 2021‐22 is inserted

(u) Schedule DI (Details of Investment) has been removed as it was relevant only for AY 20‐21

(v) In Schedule Part B TI "Sl. No.11b' Part C deductions claimed under chapter VI‐A, restriction of ii5 of BFLA is removed due to deduction claimed u/s 80P

(w) Now, the assessee needs to disclose surcharge before "Marginal Relief' and after "Marginal relief' in Schedule Part BTTI.

(x) In Schedule TDS, earlier TDS credit is allowed only if corresponding income is being offered for tax this year , however an exception is being added for TDS u/s 194N. Also the label is amended to include form 16D for the claim of TDS

(y) Annexure 2 is inserted in instructions wrt ITR fields which should be tallied with corresponding amount mentioned in the Tax Audit report i.e Form 3CA‐3CD/3CB‐3CD, if applicable.

(z) Upload level validations table is modified wrt mapping changes and new rules.