The ITR filing due date for AY 2020-21 stands extended to 31 December 2020, and 31 January 2021 for tax audit cases. The ITR forms notified carry some significant changes such as in reporting requirements, tax deductions and changes introduced in Budget 2019. Taxpayers should bear in mind these changes while filing their ITR for AY 2020-21 (FY 2019-20).

The Budget 2019 introduced interchangeability of PAN and Aadhaar. An individual who does not have a PAN can quote Aadhaar number at various places in the ITR. For example, the ITRs enable quoting of Aadhaar in the case of a buyer of immovable property, a tenant while reporting income from house property, ITR filing by representative assessee etc.

The ITR also incorporates new criteria introduced for mandatorily filing of tax return even though the gross total income of the individual is below the basic exemption limit. The compulsory filing is applicable in case any of the below criteria are satisfied:

1. Deposited in one or more current account(s) an amount or aggregate of amounts exceeding Rs 1 crore during the FY 2019-20

2. Expenditure on travel to a foreign country incurred of an amount exceeding Rs 2 lakh in aggregate for self or any other person

Expenditure on consumption of electricity exceeding Rs 1 lakh in the aggregate during the FY 2019-20.

The government gave additional time until 31 July 2020 for making tax-saving investments for the FY 2019-20. The ITRs provide for a Schedule DI to disclose the details of the investments and claim deduction. Similarly, the ITRs also provide for disclosing capital gains exemptions for investments made up to 30 September for exemptions under section 54 to 54GB.

The ITRs also require disclosure of the name of the company in which an individual is a director or shareholder of unlisted equity.

The ITRs provide for an expanded list of nature of employment to include bifurcation between the central government and state government employees. Also, another category stands included for ‘not applicable eg. family pension.

The income-tax rebate under section 87A was increased to Rs 12,500 for a total income up to Rs 5 lakh. The ITRs accordingly allow for a tax rebate up to Rs 12,500 in case of resident individuals whose total income (after claiming deductions and exemptions) does not exceed Rs 5 lakh. The amount of the rebate was Rs 2,500 for the last AY 2019-20 for a total income up to Rs 3.5 lakh. The Income-tax Returns should be mandatorily filed if the gross total income is above the basic exemption of Rs 2.5 lakh. The filing is mandatory even if the individual is eligible for a rebate and their tax liability is nil.

The standard deduction for the AY 2020-21 allowed under Income from Salaries has been increased to Rs 50,000 from Rs 40,000.

From the AY 2020-21, while declaring income from house property, an individual can classify two properties as “self-occupied”.  Until AY 2019-20, an individual who had a second vacant house property had to pay the taxes for the notional rent calculated for the said property.

The Budget 2019 amended capital gain exemption under section 54 to allow claim for the purchase or construction of two residential properties instead of one for claiming the deduction. This condition to claim this deduction is that it can be availed only once in a lifetime and the long term capital gain arising should be less than Rs 2 crores.

The ITRs also provide for claiming additional interest deduction under section 80EEA for affordable housing in case of a first time home buyer where the stamp value of property does not exceed Rs 45 lakh. The maximum deduction allowed is Rs 1,50,000 on loan availed by an individual from any financial institution.  Similarly, the ITRs carry an allowance for interest deduction introduced in budget 2019 for loans taken to purchase electric vehicles.