Direct Taxes in India | EY India

1. 6 April 2021 EY Tax Alert CBDT notifies tax return forms for tax year 2020-21 Executive summary Tax Alerts cover significant tax news, developments and changes in legislation that affect Indian businesses. They act as technical summaries to keep you on top of the latest tax issues. For more information, please contact your EY advisor. This Tax Alert summarizes the key amendments made to the Income Tax Return (ITR) forms for tax year 2020-21, vide Notification No. 21/2021 dated 31 March 2021 (Notification) issued by the Central Board of Direct Taxes (CBDT)1. The Notification has also amended Rule 12 of the Income Tax Rules, 1962 (Rule 12) to curtail eligibility of certain resident taxpayers to file ITR-1 Sahaj and ITR-4 Sugam. As per the Notification, resident taxpayers in whose case a 2% withholding tax has been deducted on cash withdrawals exceeding INR10m (reduced to INR2m in certain cases) made during a tax year, shall be debarred from filing ITR-1 Sahaj. Further, resident taxpayer employees in whose case tax deduction/payment has been deferred in respect of perquisite income accrued due to Employee Stock Option Plans (ESOPs) allotted/ transferred by the employer, being an eligible start-up, shall not be entitled to file ITR-1 Sahaj and ITR-4 Sugam. The modifications made in the new ITR forms are majorly consequential to amendments made in the provisions of the Income Tax Laws (ITL), such as option provided to certain taxpayers to be governed by concessional personal taxation regime, consequential changes due to shift to classical system of dividend taxation and abolishment of Dividend Distribution Tax (DDT), concessional withholding tax rate on interest incurred on foreign currency borrowings procured through an International Financial Services Centre (IFSC), disclosure on tax deferred on perquisite income arising from allotment/transfer of exercise of ESOPs etc. 1Apex body of direct tax administration in India

2. Taxpayers cannot file simplified ITR-1 Sahaj or ITR-4 Sugam, if they have perquisite income arising from allotment/transfer of ESOPs and tax on which is payable or deductible on a deferral basis. The ITL provisions3 provide that tax on perquisite value of ESOPs computed at the time of exercise in the hands of employees of eligible start-ups can be deferred from the exercise date to within 14 days of earlier of the following: o Further, the provisions or disclosures which are redundant and no longer relevant for the current tax year 2020-21, have been eliminated from the ITR forms, such as the separate schedule introduced in the previous tax year 2019-20 for providing details of investments/deposits/payments made from 1 April 2020 to 30 June 2020 for claiming benefit in tax year 2019-20 in line with relief granted vide Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 stands deleted. The reference to adjustment of unabsorbed depreciation while computing tax written down value (WDV) of plant and machinery is deleted as it was a one-time relief option provided to companies opting for concessional tax regime in tax year 2019-20 etc. Expiry of four years (48 months) from end of relevant AY; or ▪ Date of sale of shares; or ▪ Date from exit from the start-up by employee. ▪ Accordingly, the recently notified ITR forms have been amended to embrace the new changes introduced under the ITL and to do away with the old redundant requirements. Key changes in ITR Forms Background ►The CBDT, vide the Notification, has amended Rule 12, as also notified the ITR forms, for all categories of taxpayers for tax year 2020-21 [assessment year (AY) 2021-22]. However, the instructions for filing the ITR forms are awaited. Refer Annexure 1 which explains the applicability of the ITR forms to various categories of taxpayers. 1. Common amendment made in different ITR Forms 1.1. Additional reporting requirement for taxpayers liable to transfer pricing (TP) provisions of the ITL(ITR 3, 5, 6): Erstwhile ITR forms only required taxpayers to state whether they were liable to carry out audit of account under the TP provisions of the ITL and furnish the date of such audit report. However, ITR forms of tax year 2020-21 have been amended to provide for additional reporting requirement – If liable to audit, then whether the accounts of the taxpayer have been audited or not. Thus, requiring information of actual compliance by the taxpayer if liable to audit under the TP provisions of ITL. ►This Tax Alert summarizes the key changes in the ITR forms as compared to the immediately preceding tax year 2019-20. Changes in Rule 12 – Applicability of simplified ITRs curtailed 1.2. Additional reporting requirement for long- term capital gains computed on transfer of specific securities (ITR 2, 3, 5, 6): Under the ITL, long-term capital gains arising from transfer of equity shares, units of equity-oriented mutual funds or units of business trust is taxable at 10% in excess of INR0.1m, provided such transfer is chargeable to Securities Transaction Tax (STT). The provision has been made applicable to income arising to Foreign Portfolio Investors (FPIs) also. Pursuant to the same, taxpayers are required to provide details of such long-term capital gains in Schedule 112A and Schedule 115AD of the ITR forms. For tax year 2020-21, these schedules have been amended to specifically include a column wherein the taxpayer is required to mention the nature of security acquired i.e., whether a share or a unit. This is in addition to providing other information ►Rule 12 provides for specified taxpayers (such as small taxpayers and taxpayers offering income under presumptive taxation) to file their returns under the simplified ITRs (ITR-1 Sahaj and ITR-4 Sugam) containing only few disclosure requirements. ►The CBDT, vide the Notification, has amended the scope of Rule 12 and curtailed certain taxpayers from filing the above mentioned simplified ITRs. The Notification provides that: A taxpayer cannot file simplified ITR-1 Sahaj if a 2% withholding tax has been deducted on cash withdrawals exceeding INR10m (reduced to INR2m in certain cases2) made by the taxpayer in a tax year. o 2Refer Section 194N of the ITL 3Refer Section 191(2) and Section 192(1C) of the ITL

3. such as International Securities Identification Number (ISIN) code of share/unit, name of the share/unit etc. being CG Schedule and Schedule VI-A also stand deleted. (ii)Schedule VI-A is appended with a note stating that where deduction in respect of investments/deposits/payments for the period 1 April 2020 to 31 July 2020 has been claimed in returns of tax year 2019-20 (i.e., AY 2020-21), the same cannot be claimed again in the returns of subsequent tax year 2020-21 (i.e., AY 2021-22). 1.3. Computation of income from life insurance business deleted (ITR 5, 6): In the ITR forms notified for tax year 2019- 20, a separate line item was included for the purpose of computation of income from life insurance business, requiring details of net profit/loss from life insurance business and additions/deductions made. This detailed break-up computation of income from life insurance business stands deleted in the ITR forms notified for tax year 2020-21. The taxpayers are now required to only provide for a single total figure for profits and gains arising from life insurance business. The other changes made to the ITR forms for tax year 2019- 20 with respect to life insurance business continue to be applicable, such as separate disclosure of losses to be carried forward from life insurance business which is provided under Schedule CFL. 1.5. Additional reporting requirement for certain donations made towards scientific research or rural development (ITR 2, 5, 6): Schedule 80GGA of the ITR forms dealing with reporting requirements related to donations made towards scientific research or rural development, as provided under Section 80GGA of the ITL, is amended to provide for an additional disclosure requirement of “date of donation in cash”, besides the taxpayer providing information about the amount of cash donation made. 1.4. Deletion of the “Schedule DI – Details of Investment”(ITR 1, 2, 3, 4, 5, 6): Due to explosion of the COVID-19 pandemic, the President had promulgated Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 20204 on 31 March 2020 to grant various procedural relaxation for compliance under various laws. It included extension of last date of carrying out requisite investments/deposits/payments to claim various benefits under the ITL for tax year 2019-20 from 31 March 2020 to 30 June 2020. Pursuant to the said relief, a separate schedule was introduced for ITR forms applicable to tax year 2019-20 to furnish details of investments/deposits/payments made on or after 1 April 2020 to 30 June 2020 with respect to which deductions are to be claimed under Chapter VI-A of the ITL and/or amount utilized from the Capital Gains Account Scheme for various capital gains exemption provision compliances. Thedeadline related to certain capital gains compliances was further extended to 30 September 2020 and to Chapter VI-A deductions to 31 July 2020 by Notification No. 35/2020 dated 24 June 2020. 1.6. Elimination of bifurcation of carried forward losses into pass through losses and others (ITR 2, 3, 5, 6): Erstwhile provisions of the ITL provided that where the net computation of income of an investment fund was a loss, such loss had to be captured at the level of the investment fund only and the same could not be passed on to the unitholders of the investment fund. However, Finance (No. 2) Act, 2019 changed such treatment and provided that losses arising from tax year 2019-20, with respect to losses other than arising under the head of income from business and profession, shall be passed on to the unitholders meeting stipulated conditions. Schedule CFL of ITR forms, notified for previous tax year 2019-20, provided for details of losses to be carried forward to future years, with separate bifurcation with respect to house property loss, short-term capital loss and long-term capital loss into normal losses and losses made available due to pass through from investment fund. This requirement has been deleted from the ITR forms notified for tax year 2020-21 and, consequently, no bifurcation is now required to be made. Considering that the extension of time limit for claiming deduction under Chapter VI-A of the ITL or investments for claiming exemption from capital gains was only for tax year 2019-20, the following amendments have been notified in the ITR forms of tax year of 2020-21: 1.7. Deletion of reference of distribution of accumulated loss by Investment fund to its unitholders (ITR 5,6): As stated at Para 1.6,earlier losses were captured at the investment fund level only and not subjected to pass through in hands of the unitholders. However, Finance (No. 2) Act, 2019 provided that for losses accumulated with the investment fund as on 31 March 2019, with respect to income other than income from business and profession, shall (i) Schedule DI capturing the relevant information of the above relaxation is deleted. Consequently, the references of Schedule DI in other schedules, 4Refer our Tax Alert, “COVID 19 Impact - Government extends various timelines up to 30 June 2020 and provides relaxations under various direct tax laws in India” dated 1 April 2020

4. be considered as loss of the unitholders and shall be allowed to be carried forward by such unitholders. Pursuant to the same, ITR forms of previous tax year 2019-20 were amended to provide a separate line item in Schedule CFL (details of losses to be carried forward to future years) to provide for losses distributed by investment fund amongst its unitholders. Considering that such adjustment of accumulated losses was allowed to be made only in tax year 2019-20, the above line item has been deleted from ITR forms of current tax year 2020-21. excess of such threshold limit is less than the amount of surcharge. The ITR forms have been amended to disclose the effect of marginal relief by inserting two separate columns when calculating surcharge for the taxpayer i.e., “surcharge computed before marginal relief” and “surcharge after marginal relief”. 2. Key changes which are consequential to amendments made in provisions of the ITL: 2.1. Disclosure on whether the taxpayer, being an individual/HUF or co-operative society, has opted for concessional tax regime for respective tax year (ITR 1, 2, 3, 4, 5): Finance Act, 2020 (FA 2020) provided for a concessional personal tax regime, wherein individuals and HUFs will be taxed at reduced slab rates subject to certain conditions being met, such as surrendering claim of certain exemptions and deductions. These provisions are introduced as optional provisions, wherein the individuals and HUFs can decide to opt- in or not. The taxpayers opting for the above provisions are required to notify the tax authority of the same in a separate form viz., Form 10-IE which is released by the CBDT. Pursuant to the above amendment, the ITR form in Part-A of General Schedule requires the taxpayer individual/HUF to choose whether it is opting for the concessional personal tax regime or not for the relevant tax year. Further, if the taxpayer is opting for the concessional provisions, then additional information of the date of furnishing Form 10-IE, along with acknowledgment number for the same, is to be reported. The latter requirement of information relating to Form 10-IE is present only in ITR Forms 3 and 4, and not in ITR Forms 1 and 2. 1.8. Reference to Form 16D inserted in Schedule of “Tax Payments” (ITR 3, 4, 5, 6, 7): As per the provisions of the ITL, every individual and Hindu Undivided Family (HUF) responsible for paying to a resident a sum for carrying out any work (including supply of labor for carrying out any work) in pursuance of a contract, by way of commission or brokerage or by way of fees for professional services during the tax year, shall be required to deduct tax from such payment or at the time of credit of such sum to the account of the resident (whichever is earlier) at 5%, if the aggregate of the sums paid/credited to account of a resident exceeds INR5m during a tax year. The tax deductor is required to furnish information of the same in certification of tax deducted - Form 16D. Schedule “Tax Payments” is amended to include reference to Form 16D in the context of reporting requirement of Tax Deducted at Source (TDS) deducted on behalf of the taxpayer under such provision of the ITL and reflected in such form. 1.9. Additional instruction provided in respect of claim of TDS credit (ITR 2, 3, 4, 5, 6, 7): Schedule Part B- TTI (computation of tax liability on total income), inter alia, included information in relation to “tax payments” made by the taxpayer in the form of advance tax, self-assessment tax, TDS etc. In case of disclosure requirement related to TDS credit claimed by the taxpayer, the ITR form provided that TDS credit can be claimed in a particular tax year only if the corresponding income on which the tax is deducted has been offered to tax in the same tax year. This instruction has been amended by the Notification to provide that it is not applicable if tax has been deducted @ 2% on cash withdrawals made in excess of INR10m (reduced to INR2m in certain cases5) under the provisions of the ITL. A similar concessional tax regime was also introduced by FA 2020 for taxpayers, being co-operative societies. These provisions are also optional in nature. Accordingly, Part A–General Schedule of ITR -5 which, inter alia, is applicable to co- operative societies has also been amended to provide that taxpayers, being co- operative societies, are required to state whether they are opting in for the concessional tax regime or not for the respective tax year. Further, if the taxpayer is opting for the concessional provisions, then additional information of date of furnishing Form 10-IE, along with acknowledgment number for the same, is to be reported. 1.10. Separate disclosure of effect of marginal relief in case of taxpayer (ITR 2, 3, 5): Under the provisions of the ITL, a marginal relief is provided when taxable income is beyond a threshold limit after which surcharge is payable, but the net income in 2.2. Adjustment of unabsorbed depreciation to tax WDV of block of assets, if taxpayer individual/HUF/co-operative society has opted for concessional income tax regime (ITR 3, 5): As explained at Para 2.1, a new 5Refer Section 194N of the ITL

5. and simplified personal income tax regime was introduced by FA 2020, where individuals and HUFs are subjected to tax at reduced slab rates, provided they surrender certain exemptions, deductions and allowances. One such allowance to be given up is additional depreciation on plant and machinery. The unabsorbed depreciation arising due to such additional depreciation in the past is also deemed to be given full effect to and shall not be available for set-off in subsequent years. However, a one-time window is provided to taxpayers opting for concessional tax regime in tax year 2020-21, wherein such unabsorbed depreciation brought forward as on 1 April 2020 shall be allowed to be adjusted to tax WDV of the block of assets as on 1 April 2020 in the manner prescribed. 2.3. Amendments pursuant to revert to classical system of dividend taxation and abolishment of DDT (i)The classical dividend taxation regime was reinstated by FA 2020 by abolishing DDT. Under the erstwhile dividend taxation regime, DDT was levied on the payer company or mutual fund, while the dividend income remained exempt from tax in the hands of the shareholder or unitholder. FA 2020 abolished DDT and shifted the incidence of tax on the dividend from the payer company to the hands of the shareholders or unitholders. (ii)Section 115BBDA of the ITL provided for taxation of dividends in the hands of shareholders, where dividend was received from domestic companies (subjected to DDT) and was in excess of INR1m in a tax year. Considering that under the classical dividend taxation regime, the entire income is taxable in the hands of shareholders, this section was deleted by FA 2020. The ITR forms of tax year 2020-21 have been amended to provide for a separate line item for such adjustment to WDV of block of assets in Schedule DPM (depreciation on plant and machinery). Further, the section also provides that bought forward losses pertaining to certain exemptions and deductions shall also be deemed to be given full effect to and not available for claim by taxpayers. Consequent to the above, amendments have been made in Schedule CFL (details of losses to be carried forward to future years) and Schedule UD (details of unabsorbed depreciation) to adjust for specific business losses and unabsorbed depreciation, which shall be surrendered or adjusted to tax WDV of block of assets if the taxpayer opts for concessional personal income tax regime and, hence, no longer available for claim. (iii)FA 2020 also provided that only interest expense shall be allowed as a deduction against the dividend income of the taxpayer. Further, a separate provision was introduced under the ITL, being Section 80M, to provide that a taxpayer domestic company shall be entitled to claim deduction of dividend income received by it from other domestic companies, foreign companies or business trust, to the extent that such income does not exceed the amount of dividend distributed by the taxpayer domestic company on or before the due date. A similar concessional tax scheme has been introduced for co-operative societies as well by FA 2020 with a similar one-time relief provided for adjustment to the tax WDV of the block of assets. Consequently, same amendment as above has been carried out in Schedule DPM, Schedule CFL and Schedule UD under ITR-5 which is, inter alia, applicable to co-operative societies. (iv)These amendments were applicable for dividends distributed for and from 1 April 2020. (v)Pursuant to the above amendments, the following changes have been effected in the ITR forms for tax year 2020-21: (a)Reference to exemption provisions of Section 10(34) and Section 10(35), which granted exemption from tax on dividend income to shareholders and unitholders, stands deleted from Schedule OS which deals with other income. Earlier, only dividend income which was not exempt under the aforesaid section was to be reported in the Schedule. However, now, all of the dividend income is to be reported (ITR 2, 3, 5, 6). (b)Reference to Section 115BBDA stands deleted from Schedule OS, Schedule SI, wherein information in relation to income chargeable to

6. tax at special rates under the ITL is required to be provided by the taxpayer. Schedule EI, wherein information in relation to exempt incomes is to be provided by the taxpayer (dividend income from domestic company not exceeding INR0.1m). (ITR 2, 3, 5, 6, 7). 2.4. Concessional rate of withholding tax (WHT) on interest incurred on foreign currency borrowings procured through an IFSC (ITR 2,3,5,6,7): Under the provisions of the ITL, where interest is payable to a non-resident by a domestic company on monies borrowed by the company in foreign currency in the form of loan agreement, infrastructure bonds, rupee denominated bonds and other notified bonds, then as per Section 194LC of the ITL, a WHT rate @ 5% is to be carried on such interest payment by the domestic company. FA 2020, in order to provide an impetus to IFSC, provided for a preferential WHT rate @ 4% on interest payable on bonds, issued on or after 1 April 2020, listed only on a recognized stock exchange located in IFSC. Pursuant to the above amendment, the Schedule OS is amended to provide for separate disclosure of interest income subject to WHT rates of 5%/4% as above i.e. as two separate line items. (c)Separate line item introduced in the Schedule OS for dividend income distributed by a business trust to its unitholders. (ITR 2,3,5,6,7) (d)Separate line item introduced in the deductions available against Other Sources Income in Schedule OS towards interest expenditure claimed as a deduction against dividend income. (ITR 2,3,5,6,7) (e)Schedule DDT, wherein the Taxpayer, being dividend distributing domestic company was required to furnish details of tax on distributed profits and payment thereof stands deleted. The Schedule required Taxpayer to furnish various information, such as date of dividend declaration/ distribution, amount of dividend declared/ distributed/paid, provisions of ITL under which dividend is declared, tax payable on such dividend, etc. (ITR 6) 2.5. Increase in threshold limit from INR50M to INR100M for tax audit cases for person carrying on business for receipt and payments in cash not exceeding in aggregate 5% (ITR 3,5,6): The ITL currently provide relief from tax audit to taxpayer carrying on business and having total sales, turnover or gross receipts up to INR50M subject to cash receipts and payments not exceeding 5% of total receipts and payments respectively. Finance Act, 2021 increased the threshold limit of INR50M to INR100M for and from AY 2021-22 (i.e tax year 2020-21). Consequently, the ITR Form in Part-A of General Schedule replaces the limit of INR50M to INR100M in tax audit details. (f) Reference to section 80M of ITL which provides for deduction of certain inter-corporate dividends, as explained above, included in Schedule VI-A wherein deduction claims are to be recorded by Taxpayers (ITR 6) 2.6. Disclosure on tax deferred on perquisite income arising from allotment/ transfer of ESOPs (ITR 2 and 3): As explained above under the heading “Changes in Rule 12 – Applicability of simplified ITRs curtailed”, FA 2020 provided for deferment of tax on perquisite value of ESOPs computed at the time of exercise of ESOPs by taxpayer of an eligible start-up (employer). Pursuant to the amendment, Schedule Part B – TTI related to “Computation of tax liability on total income” is amended to provide for following disclosure: (g)Reference to dividend income, which was subject to DDT tax has been deleted from Schedule PTI wherein details of pass through income received/ accrued from business trust and investment fund are required to be reported (ITR 2,3,5,6,7) (h)In ITR Forms 1 and 4, a specific instruction has been included in the line item wherein Taxpayer is required to report “Income from Other Sources” to provide that in case of dividend income, quarterly break up is required to be mentioned for allowing applicable relief from interest on deferral of payment of advance tax instalment. However, the notified ITR Form does not reflect any space for filing in such information and hence, there may be certain changes in the electronic file for allowing Taxpayers to furnish such information. (i) Tax on income without including income being perquisite value of ESOPs received from the employer (being an eligible start- up); and (ii) Tax deferred - relatable to income of taxpayer w.r.t perquisite value of ESOPs received from the employer (being an eligible start- up).

7. 3. Key changes in ITR 3 – applicable to individuals and HUFs having income from profits and gains of business or profession Comments 3.1. Amendment to pass through income details in Schedule PTI: Schedule PTI, which contains the details of pass through income received/accrued from investment fund and business trust has been amended by the Notification to provide that only short-term capital gains accrued on transfer of equity shares, unit of equity- oriented fund or unit of business trust subject to 15% tax under provisions of the ITL, shall be disclosed as part of the Schedule and other short term capital gains cannot be disclosed. Swift notification of ITR Forms by CBDT, just before the commencement of the tax filing season for relevant tax year of 2020-21 reflects the commitment of the Government to improve service to taxpayers and provide the taxpayer with sufficient time for filing respective ITRs. The new ITR Forms majorly cover modifications which are consequential to the various amendments made in the provisions of the ITL. While notifying new ITR forms for tax year 2020-21, the CBDT has not expanded the reporting requirement to a great extent. This is a welcome move by the CBDT. Infact certain reporting requirements have been eliminated or mellowed down, such as detailed computation of profits and gains arising from life insurance business and the requirement to provide bifurcation of normal losses and pass through losses carry forward have been deleted. Further, the ITR Forms have been fine tuned to remove the reporting requirements consequent to redundant provisions. 4. Key changes in ITR 6 – applicable to corporate taxpayers: 4.1. Adjustment to business losses carried forward and unabsorbed depreciation carried forward pursuant to opting in for concessional corporate tax regime: The Taxation Laws (Amendment) Act 2019 provided for concessional tax regime for specified domestic companies, wherein the corporate tax rate (CTR) stood reduced to 22% subject to meeting stipulated conditions and surrendering of benefit of certain allowances. One of allowances to be surrendered by taxpayer is with respect to additional depreciation. The ITL also provides that unabsorbed depreciation allowance related to such additional depreciation shall be deemed to be given full effect to and no further deduction shall be allowed with respect to the same, for taxpayers opting in for 22% CTR. A one- time window was provided for taxpayers opting for 22% CTR in the previous tax year 2019-20, wherein such unabsorbed depreciation brought forward as on 1 April 2019 was allowed to be adjusted to the tax WDV of the block of assets as on 1 April 2019 in the manner prescribed. The ITR Forms of previous tax year 2019-20 provided for a separate line item for such adjustment to WDV of block of assets in the Schedule DPM (Depreciation on plant and machinery). As the same is redundant for tax year 2020-21, since the adjustment was entitled to taxpayers opting for 22% CTR in previous tax year 2019-20 only, the ITR Forms notified for tax year 2020-21, delete the said line item in Schedule DPM. Considering that there is no major additional reporting obligation imposed on the taxpayer, it will provide ease to the taxpayers for furnishing the tax returns for tax year 2020-21 in the continuing unprecedented times caused due to COVID-19 pandemic. It may be imperative to note that there are certain amendments made in the ITR Forms which may require the support of instructions, clarifications or e-utility of the CBDT, such as in ITR-1 Sahaj, taxpayers are required to provide quarterly breakup of dividend income which is reported under the head of “Income from Other Sources”. The notified ITR-1 merely mentions this requirement as an instruction, but no separate disclosure requirement has been explicitly made in the form for such quarter wise break up. The present Notification specifies that the amendments made vide the Notification shall be effective from 1 April 2021.

8. Annexure 1 Applicability of ITR forms to various category of taxpayers Form Category of taxpayers Applicability/ sources of income covered ITR-1 Individuals (resident and ordinarily resident) Who can file ITR-1 • (Sahaj) Has income from salaries or family pension, or • Income from one house property, or • Income from other sources Who cannot file ITR-1 • Who has an asset or signing authority in any account outside India or earns income from any source outside India, or • Who has claimed double taxation avoidance agreement (DTAA) relief and/or unilateral double tax relief, or • Has agricultural income above INR5,000, or • Has total income above INR5M, or • Has dividend income exceeding INR1M attracting super rich dividend tax levy, or • Has unexplained credits or investment taxable at 60% under the provisions of the ITL, or • Has capital gains or business income, or • Income from more than one house property or has brought forward loss or loss to be carried forward under the house property head, or • Income from lotteries or horse races or loss under the other sources head, or • Who has claimed deduction of expenses under income from other sources head. However, person who has claimed deduction under other sources head against family pension income can file ITR-1, or • Who is director in any company, or • Who held any unlisted equity share at any time during the tax year, or • Who is assessable for income on which tax has been deducted in another taxpayer’s name, or • In whose case a 2% withholding tax has been deducted on cash withdrawals exceeding INR 10M (reduced to INR 2M in certain case) made during a tax year, or • In whose case tax deduction/payment has been deferred in respect perquisite income accrued due to ESOPs allotted/ transferred by employer, being an eligible start-up. • ITR-2 Individuals and HUFs Has income from salaries, or • Income from house property, or • Capital gains, or • Income from other sources • ITR-3 Individuals and HUFs Has income from business or profession ITR-4 Sugam Individuals and HUFs who are resident and ordinarily resident, firms [other than limited liability When to file ITR-4 Sugam

9. Form Category of taxpayers Applicability/ sources of income covered • partnerships (LLPs)] which are resident In case of profits and gains from business and profession to which presumptive tax provisions apply (except in following cases) Who cannot file ITR-4 Sugam • Who has an asset or signing authority in any account outside India or has income from any source outside India, or • Who is a director in any company • Who held any unlisted equity share at any time during the tax year • Has total income above INR 5M, or • Income from more than one house property or • Has brought forward loss or loss to be carried forward under any head of income, or • Who is assessable for income on which tax has been deducted in another taxpayer’s name, or • Who has claimed DTAA relief and/or unilateral double tax relief, or • Has agricultural income above INR 5,000 or • Has dividend income exceeding INR 1M attracting super rich dividend tax levy, or • Has unexplained credits or investment taxable at 60% under the provisions of the ITL, or • In whose case tax deduction/payment has been deferred in respect perquisite income accrued due to ESOPs allotted/ transferred by employer, being an eligible start-up. • ITR-5 For firms/ LLPs/Association of Persons (AOPs)/ business trusts/investment funds Income from house property • Capital gains • Profits and gains from business and profession • Income from other sources • ITR-6 Companies other than those filing ITR-7 Income from house property • Capital gains • Profits and gains from business and profession • Income from other sources • ITR-7 Persons to furnish return of income in circumstances specifically provided for under the ITL viz., charitable trusts and other institutions, political parties, etc. Income from house property • Capital gains • Profits and gains from business and profession • Income from other sources

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