Requirements for Preparation of Income-Tax Returns for AY 2020-21

The return of income for assessment year 2020-21, relevant to the financial year ended on 31st March, 2020, is required to be filed before the due date as mentioned below, which is the last day for the filing of the return of income for the above mentioned assessment year:-

CategoryDue Date
Limited Company or Assessee whose accountsNov 30, 2020
All Other AssesseesNov 30, 2020

Data Required

Bank Accounts

The Bank Pass Books/Statements in respect of all your accounts after verifying that they cover the entire period for which the return is to be prepared. If there are any missing statements, a duplicate of them is required. The accounts should be written upto date. Short narration’s in the Bank Pass Books/ statements relating to debit and credit items suitably identifying the entries ease the process of return preparation. Paying-in-slip books and cheque book counterfoils for the entire period do not require to be furnished if the entries in the bank statements are explained.

A download of your bank statements in excel or .txt form is ideal.

Confirmations / Copy of accounts from third parties with whom loans, advances or deposits are placed should be obtained.

A Partner or a Director in a Company or have your individual business, should share a copy of their account as it appears in the business ledger with detailed narration’s for the debit and credit entries.

Certificates in Respect of the following Items:

  • Certificates of deduction of tax at source from all sources of income.
  • Certificate of salary earned by you from your employer and tax deducted at source.
  • Warrant Counterfoils / statements in respect of interest and dividend earned.

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Business Accounts:

If you have any business of your own and are maintaining your books of account then two copies of the Profit and Loss Account and the Balance Sheet should be furnished.

Change in Investments:

If there are any changes in investments, then particulars of the purchases and sales including broker’s notes are required. In particular, bonus shares received and rights-shares purchased during the year, should be fully narrated. In particular, where shares / mutual funds have been sold / realized during the financial year please inform the date on which these investments were made and the related purchase cost. The broker / investment manager will also be in a position to give the capital gain profit and loss statement in excel.

Other Items:

In respect of any exceptional receipts and payments such as gifts received or made, purchases and sales of capital assets, etc., full particulars supported by documentary evidence thereof are required.

All gifts received from unrelated persons and where the value of gifts received is in excess of Rs. 50,000/- then the same is taxable. Details of such gifts are required. Gifts at time of a wedding are exempt

Property:

Details of property income and expenditure on municipal taxes and property tax, needs to be shared to make claims for necessary deductions.

Insurance Premium payments receipts with details of policy amounts and nature of Policies, PPF receipts, Investments in ELSS scheme, Investments in other tax saving scheme, etc. should be shared.

Additional Information / Disclosures to be submitted in return

If Earning Above Rs 50 Lakh: Declaration of value of assets and liabilities by Individuals/HUF

Assets include both immovable assets and movable assets.

Immovable assets: Disclose cost of land and building.

Movable assets: cost of following assets needs to be disclosed –

  • Jewellery
  • Bullion
  • Vehicles/ Yachts/ Boats/ Aircraft
  • Cash in hand, Shares / Securities,
  • Insurance Policy,
  • Paintings / Artwork,
  • loans and advances.

Taxpayers also need to disclose all liabilities in relation to such assets.

If in possession of any investments abroad / being the beneficial owner of investments outside India

  • Name of Country where invested with ZIP Code
  • Nature of Entity
  • Name of Entity
  • Address of Entity
  • Details of Ownership – Direct Purchase, Beneficial Owner, etc
  • Date since Held
  • Total Investment at Cost
  • Income Accrued and Received

Details of pass through income of business trust or investment fund

Reporting of pass through income of business trust/investment fund.

  • Name of business trust/investment fund
  • PAN
  • Head of income
  • Amount of income
  • TDS on such amount, if any

Note : Section 115UA and Section 115UB, pass through status is provided in respect of income [other than income from business or profession] of business trust/investment fund. Income distributed by the business trust/investment fund is to be taxed in the hands of the unit holders.

Disclosure of Percentage of commercial receipts by a trust

Advancement of any other object of charitable purpose shall not be deemed as charitable if receipts from any commercial activity exceed 20% of total receipts. Accordingly, a new row is inserted in ITR 7 to disclose percentage of commercial receipts vis-à-vis total receipts in order to ensure that such condition (as provided in Section 2 (15)) is not violated.

Application of income by a trust

A separate row is provided in new ITR 7 requiring trust to confirm if it has filed Form 9A (in case application of Income of trust fall short of 85% ) and the date of filing of such form.

Disclosure of Audit information

In ITR forms (ITR 5, 6) there is a separate row for disclosure of following details if taxpayer is liable for audit under any Act [other than the Income Tax Act]:

  • Act and Section under which taxpayer is liable for audit
  • Date of furnishing of Audit Report.

GST Information

In case you are registered under GST then you need to state the turnover reported in the GST return.

Additional Information for “Residential Status”

The ITR form asks individuals not only to specify the residential status as resident, resident but not ordinarily resident or non-resident, but also to provide additional information with respect to residential status, such as:-

  • Number of days of stay in India,
  • Jurisdiction of his residence
  • Tax identification number in case he is a non-resident.

“Directors” of the Companies to disclose more Information

If you are Director of a company, then you will be required to specify your DIN (Director Identification Number) in ITR whichever is applicable. Along with this you will also be required to provide information –

  • Name of company,
  • PAN

Full Disclosure of “Interest Income”

Taxpayers will be required to specify the full bifurcation details of the interest income. Income from other sources head in ITR has been updated to provide details of the source from where interest. Interest income to be bifurcated into –=

  • Saving Bank
  • Deposits (all kinds of)
  • Income tax refund
  • In the nature of Pass Through Income u/s 115UA & 115UB
  • Others

“Salary Income” to Sync with Form 16

In ITR this year providing details of your salary income will be easier as the details required are in sync with the information available in Form-16.=

Now, an individual has to mention his gross salary and then the amount of exempt allowances, perquisites and profit in lieu of salary shall be deducted or added to arrive at the taxable figure of salary income.

Further, the new ITR forms seek separate reporting of all deductions allowable under

Section 16, namely:

  • Standard deduction
  • Entertainment allowance
  • Professional tax.

The new ITR forms seek TAN (Tax Deduction and Collection Account Number) of the employer instead of PAN. Further, furnishing of TAN is mandatory in case tax is deducted at source by employer on the salary income.

Disclosure of Investment in “Shares held in unlisted Companies”

If you are holding shares in an unlisted company then, you are required to disclose the details of your holdings in ITR. The details required are extensive –

  • Name of the company,
  • PAN of the company,
  • Number and cost of acquisition at the beginning of the year,
  • Number of shares, face value, issue price (or purchase price) and date of purchase of shares acquired during the year,
  • Number and sale consideration of shares transferred during the year,
  • Number and cost of acquisition of shares held at the end of Previous Year.

Disclosure regarding “Buyer of Property”

If you have sold a property, then while filing ITR, you will be required to

provide complete details of the buyer to whom you have sold the property need to be reported such as:

  • Name of buyer
  • PAN of the buyer
  • Address of property
  • In case of more than one buyer, percentage share and amount of each buyer

Additional Disclosures regarding Income from “Business & Profession”

  • Insertion of Manufacturing Account and Trading Account in addition to Profit and Loss Account. Statement of Profit and Loss has been bifurcated into Manufacturing account, Trading Account and Profit and Loss Account. Certain additional details need to be furnished in the Manufacturing Account such as details of direct wages, direct expenses and factory overheads. Thus, if assessee is engaged in manufacturing activities then he shall be required to arrive at cost of goods sold through manufacturing account, gross profit through trading account and net profit through profit and loss account. Manufacturing account is not meant for service providers and traders. Hence, they can start directly from trading account
  • In case where regular books of accounts are not maintained – Details of gross receipts as. bifurcated between receipts through specified banking modes and any other mode to be reported.
  • Any person claiming bad debts of the amount of more than Rs. 1 lakh, in respect of a debtor, is required to report PAN of such debtor (if available) in ITR forms. However, no information about these debtors were required to be furnished in old ITR forms if PAN is not available. In new ITR forms, name and address of the debtor shall be required to be furnished in case PAN of such debtors isn’t available.
  • New ITR inserted a new clause asking for the details regarding the liability of assessee for audit under any Act other than the Income-tax Act, wherein assessee is required to mention the relevant Act and section under which audit is required and date of furnishing of audit report for the same.

Income from “Other Sources” needs to be explained

It is mandatory for an assessee to specify the “nature of income taxable” under the head income from other sources.

Enhanced Reporting of “Agriculture Income”

Enhanced reporting in exempt income schedule, if net agricultural income exceeds Rs.5 Lakhs, following details need to be reported separately for each agricultural land :

  • Name of district along with pin code where agricultural land is situated
  • Measurement in acres
  • Whether the land is owned or leased and whether it is irrigated or rain fed

Disclose “Mode of Donation” for deduction u/s. 80G

Break-up of monetary donations made in cash and other mode- Monetary donations made by taxpayer and eligible for deduction under section 80G of the Income Tax Laws (ITL) need to be bifurcated between donation made in cash or in any other mode (like cheque or electronic mode). Cash donation made in excess of Rs. 2,000 shall not be allowed as deduction from gross total income.

Disclose little more for Foreign Assets

Enhanced reporting in relation to foreign assets located outside India- Instead of information about foreign bank accounts held, the new ITR forms require details of following assets held by resident taxpayers at any time during the previous year in Schedule FA dealing with foreign assets and income from any source outside India

  • Details of Foreign Depository accounts
  • Details of Foreign Custodial accounts
  • Details of Foreign Equity and Debt interest
  • Details of Foreign Cash Value Insurance Contract or Annuity Contract

Under each asset category, there is further reporting requirement such as details of

  • Country name and code,
  • Name and address of institution,
  • Account number,
  • Date of opening the account,
  • Peak balance during the tax year,
  • Closing balance,
  • Amount of interest/ amount paid/ credit.

Disclosure of Insurance Maturity

In case of insurance contract, cash/ surrender value of contract needs to be reported.

Aadhar & PAN Linking

In case you have not shared your Aadhar number in the previous year please do so. We need to link the same with your PAN on the Income Tax Portal. This is compulsory without which your return cannot be filed.

We need to ensure that your PAN is linked to your bank account. Failure to do so will result in refund not being issued by the Income Tax Department / credited to your bank account.

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