ITR1 and ITR4 changes for FY 2020-21

There have been a few changes in ITR 1 and 4. The Income Tax department informed that tax forms ITR 1 to 7 shall be changed for assessment year 2021-22 via a notification on Thursday. 

from incometax website

Conditions have been prescribed under which a taxpayer cannot file ITR 1 and 4:

1.A person whose tax has been deferred in respect of ESOPs alloted by an eligible startup cannot file ITR 1 or 4.In such a case, the employee who exercises the option need not pay tax at the time he/she converts the ESOPs into shares. 

From FY21, an employee receiving ESOPs from an eligible startup need not pay tax in the year of exercising the option.This is as per the amendment made in Budget 2020.

The TDS on this perquisite stands deferred to earlier of the events that is 

-expiry of five years from the year of allotment of ESOPs or

-date of sale of the ESOPs by the employee or 

-date of termination of employment. 

All such employees have to file ITR 2 as they cannot file ITR 1 and 4. 

2.The taxpayers whose TDS were deducted u/s 194N of the Income Tax Act cannot file ITR 1.

For FY 2020-21,return in ITR 1 cannot be filed by a taxpayer whose tax has been deducted under section 194N. Banks, co-operative banks or a post office are required to deduct TDS u/s 194N from sum paid in cash from one or more accounts maintained by the recipient. 

Tax is deducted at 2% or 5% depending on the amount withdrawn irrespective of the fact that the taxpayer has filed income tax return in the past three years or not. All such taxpayers can resort to filing either ITR 2 or 5.

In addition to the above,ITR 1 can be filed by a person whose salaried income does not exceed Rs.50 lakh and he/she has one residential property and the agricultural income earned by them is below Rs.5,000. 

ITR 4 can be filed by those taxpayers who have opted for the presumptive tax regime and their turnover does not exceed Rs.2 crore. 

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Krishna Rath is a SEBI Registered Investment Adviser, and since 2015 has been educating netizens on investments and insurance. Krishna is a fee only SEBI RIA and is Odisha's first SEBI RIA. With background in IT, Krishna is changing the advisory space with new innovations in AdvisoryTech.

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