Income Tax return for FY 2020-21 were announced, however till date only ITR 1 and 4 were available for filing. Now ITR 2 is also available for filing on e filing website.
So, let’s have a look on what are some important amendments in ITR 2 and who are eligible to file the same.
First of all ITR 2 is the biggest and exhaustive return as far as Individual and HUF is concerned where Individual and HUF is not earning income from business and ITR 2 is also the first and basic return for non resident individual to file in India.
Let’s first see who are eligible to file ITR 2 Form:
This Return Form is to be used by an individual or a Hindu Undivided Family (HUF) who is not eligible to file Form ITR‐1 (Sahaj) and who is not having any income under the head “Profits or gains of business or profession”
This Return Form should not be used by an individual whose total income for the Assessment Year 2021‐22 includes Income under the head “Profits or Gains of Business or Profession”.
Below are the major amendments in ITR 2:
Option to avail benefit u/s 115BAC is provided in ITRs: For assessee opting under 115BAC are not eligible for certain deductions and allowances as mentioned below :
- Loss under the head House Property is not allowed to be set off
- Certain allowances u/s section 10 (LTA, HRA, allowances granted to meet expenses in performance of duties of office,
- Allowances granted to meet personal expenses in performance of duties of office, Allowance received by MP/MLA/MLC)
- Deductions u/s 16 (Standard Deduction ,Entertainment allowance and Professional tax.
- Interest payable on borrowed capital for self‐occupied property
- Standard Deduction in case of family pension
- Chapter VIA Deduction (life insurance, health insurance premium, pension funds, provident fund, donation etc except Contribution made by employer to notified pension scheme u/s 80CCD(2))
Option of Filing ITR in response to notice u/s 153A and 153C is removed from ITR as requirement to file ITR under these sections is omitted.
In Schedule CG (capital gain), 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
In schedule OS (Income from other sources):
(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.
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”
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.
In Schedule EI, 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.
Schedule DI (Details of Investment) has been removed as it was relevant only for AY 20‐21
Sl.No. 8 “Gross tax payable (higher of 1d and 7)” of Schedule Part B TTI has been bifurcated in below two fields
Sl.No. 8a – “Tax on income without including income on perquisites referred in section 17(2)(vi) received from employer, being an eligible start‐up referred to in section 80‐IAC ( Schedule Salary)”
Sl.No. 8b – “Tax deferred ‐ relatable to income on perquisites referred in section 17(2)(vi) received from employer, being an eligible start‐up referred to in section 80‐ IAC”
Tax on ESOP received from eligible start‐up will be deferred and is payable by the assessee within fourteen days—
(i) after the expiry of forty‐eight months from the end of the relevant assessment year; or
(ii) from the date of the sale of such specified security or sweat equity share by the assessee; or
(iii) from the date of the assessee ceasing to be the employee of the employer who allotted or transferred him such specified security or sweat equity share, whichever is the earliest.
Now, assessee needs to disclose surcharge before “Marginal Relief” and after “Marginal relief” in Schedule Part BTTI.
In Schedule TDS, earlier TDS credit is allowed only if corresponding income is being offered for tax this year , however exception is being added for TDS u/s 194N.
Disclaimer: The views presented in the above article are personal views of our team and has no legal binding. For any legal opinion consult a tax professional.
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