Economy

CBDT grants relaxation on eligibility conditions of ITR-1 & ITR-4

The Central Board of Direct Taxes (CBDT) has granted relaxation in the eligibility conditions of the ITR-1 and ITR-4 forms for FY 2019-20 (AY 2020-21). The provisions that are rolled back by the CBDT through a press release are as follows: 

  1. A taxpayer who co-owns a house property is allowed to file ITR-1 and ITR-4 to report the income from the house property in the AY 2020-21 if he/she meets the other conditions.
  2. ITR-1 form for AY 2020-21 is valid for individuals who have deposited more than Rs 1 crore in bank accounts or have incurred Rs 1 lakh or Rs 2 lakh on electricity or foreign travel, respectively (conditions in the seventh proviso to section 139(1) of the Income Tax Act).

Also Read: New Income Tax notification about TDS on contractual and professional payments

The department had notified ITR-1 and ITR-4 forms for AY 2020-21 vide notification dated the 3rd of January 2020. The reason to notify these forms this early was to ensure that the e-filing utility for filing income tax returns will be available to the taxpayers by the 1st of April 2020. In the notified forms, eligibility conditions to use ITR-1 and ITR-4 form to file income tax returns by the taxpayers were modified as compared last year.

A person who is a co-owner of house property will not use ITR-1 and ITR-4 to report his income from house property. Similarly,  a person who is otherwise not required to file a return but is required to file a return due to the fulfilment of one or more conditions in the seventh proviso to section 139(1) of the Income Tax Act, 1961 was also not made eligible to file ITR-1 form.

The taxpayers raised the concerns to the department for the hardships they will likely have to face while filing complex ITR forms such as ITR-2 and ITR-3. The department examined these issues and has rolled back the eligibility conditions of ITR-1 and ITR-4 form by a press release dated the 9th of January 2020.

For any clarifications/feedback on the topic, please contact the writer at komal.chawla@cleartax.in

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