ITR-2 (Income Tax Return) is now made available by the CBDT (Central Board of Direct Tax) for the purpose of e filing on portal.

ITR-2 is for Individuals and HUFs not having income from profits and gains of business or profession.

ITR-1 (For Salary) and ITR-4 (For Presumptive Income

Last date of filing of ITR-2 for the Assessment Year 2018-19 is 31st July 2018

Key Changes in ITR -2 for the Assessment Year 2018-19

  1. Individual or an HUF, who is a partner in a firm, shall be required to file his ITR in Form ITR 3 only

Up to last year, an individual or an HUF who is a partner in a firm can use ITR 2 to file its return provided he does not have any income from proprietorship business. In case partner also earns income from his own proprietor business or profession, then return had to be filed in Form ITR 3. The ITR 2, as applicable up to Assessment Year 2017-18, had a Schedule IF which requires the assessee to provide the information about the partnership firm.

Now for the Assessment Year 2018-19, an individual or an HUF, who is a partner in a firm, shall be required to file his ITR in Form ITR 3 only.

  1. Capital Gains in case of transfer of unquoted shares

The Finance Act, 2017 introduced a new Section 50CA with effect from Assessment Year 2018-19. This new provision provides that if unlisted shares are transferred at a price which is less than its FMV, the sales consideration shall be deemed to be the price as calculated by a Merchant Banker or a CA on the valuation date.

It would now be mandatory for the investors to obtain the valuation report in case of sale of unquoted shares. To ensure that investors correctly report the capital gains from unlisted shares, the new ITR Forms require the FIIs and other assessees to provide the following information in respect of unlisted shares:

  1. Actual Sale Consideration
  2. FMV (calculated as per prescribed manner)
  3. Deemed full value of consideration (Higher of 1 and 2)
  1. Reporting of sum taxable as Gift

The Finance Act, 2017 had extended the scope of this provision by introducing a new clause, i.e., Section 56(2) (x) which covers all taxpayers within its ambit. Consequently, new columns have been inserted in all ITR forms except ITR 1 and ITR 4 under ‘Schedule OS’ to report any income as specified in Section 56(2) (x).

  1. Information relating to capital gains exemption to be furnished in detail

The new ITR Forms introduce specific columns to report each capital gain exemption separately. Details of each capital gains exemption under Sections 54, 54B, 54EC, 54EE, 54F, 54GB and 115F shall be reported in its applicable column now. Further, a taxpayer availing these capital gains exemptions is required to mention the date of transfer of original capital asset which was missing in earlier ITR Forms.

  1. Disallowance of expenses in case of TDS default

The provisions of Section 40(a)(ia) disallow 30% of certain expenditures if tax is not deducted in respect of those expenditures in accordance with Chapter XVII-B or if tax is deducted but not deposited on or before the due date for filing of return of income.

The Finance Act, 2017 introduced the similar disallowance provision in case of income from other sources if tax is not deducted or not deposited in accordance with Chapter XVII-B. A new column has been inserted in the ITR Forms to report such disallowances.

  1. Taxability on remission of trading liability in case of ‘Income from other source’.

As per section 41(1), if a business entity recovers any amount in respect of an allowance or deduction by way of remission or cessation thereof, the amount so received shall be deemed to be the business income and chargeable to tax. There is a similar provision in respect of an expense which had been claimed as deduction against an income chargeable to tax under the head ‘Income from other sources’.

The new ITR forms require separate reporting of such remission or cessation, which is taxable as per Section 59, in Schedule OS.

  1. Details of foreign bank account of non-residents

The new ITR forms allow non-residents to furnish details of any one foreign Bank Account for the purpose of payment of income-tax refund.

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