New ITR Norms: All You Need to Know

Updated on: 18 Jan 2024 // 4 min read // Home Loans
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Filing an ITR (Income Tax Return) is equally essential. Many people have no idea of what an ITR is and how to avail its benefits. There are several assumptions regarding ITR for example that you do not need to fill it if you have invested your taxable income in different avenues like employee PPF, FDs, mutual funds, and other tax saving tools. While this is not the case, if you fall into the category of taxpayers, even if you have reduced the taxable amount to zero, still it is mandatory for you to file Income Tax return.

There are numerous benefits of filing ITR. The form is an elaboration of Form 16 and discusses income from all the sources. Form 16 is obtained only from one employer but if you have any other source of income which is not that kind of service from where you can get Form 16, for instance, if you work as a tuition teacher after your office hours, how will you justify that income? ITR comes to your aid in such conditions. Otherwise too, filling the form every yearhas several advantages like:

1. Easy Approval of Loans

Nowadays, when you apply for a loan, organisations ask for a copy of tax return. Be it a Personal Loan, a car loan or an application for a Home Loan; the bank will ask you to present latest salary slips, TDS, Form 16 and ITR for last two years. It is easy to judge the significance of filing this form, from the fact that in case of rejection for a loan if you present a copy of ITR, things may work well.

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2. Claim Returns

Paying tax to government is your duty as a responsible citizen of the country. However, if there are many people dependent on you, or you save tax using other means; there is a provision of claiming a certain amount of tax including house rent allowance, medical expenses, and so on. You can avail this benefit only if you file ITR.

3. Carry Forward Losses

If you faced a considerable loss in the current financial year, filing ITR can help adjust the capital gain of coming years with the loss of this year.

4. Visa Processing

When applying for a visa, with a desire to work in another country, if you present ITR, it is believed that you are going there for some good.

5. High Value in Life Cover

Without an ITR, verifying your annual income, insurance of high value is now impossible.

6. Benefits for the Self-Employed

For filing a government tender or running your business, ITR comes handy for several financial matters. Even for a New Home Loan Interest Rates can go drastically low as the form proves credibility as well as accountability. The government has announced specific changes in the form of ITR. Those who have been filing it should know the updates and those who will be submitting it for the first time should read the below-mentioned points to make filing an ITR a smooth journey:

The new one-page long form called “Sahaj” (means easy) for filing ITR justifies its name. The Sahaj form aims at understanding your salary structure, the tax you pay, sources of income and such details. Any Indian resident having an income of up to 50 Lakhs from sources like agriculture, job, property, and others are eligible to file ITR-1. You need to put in the details of your salary or allowances for which there is no exemption of tax along with the pre-requisites and deductions. It is the easiest to fill, tax form ever. There are variants of the form as well. Like ITR-2 is supposed to be filled by NRIs and ITR-3 for people who are in partnership in any business, it also applies to NRI citizens. ITR-4 is for the people falling under section 44AD, 44ADA or 44AE, of taxation scheme. Earlier, for people who were partners in business, ITR-2 was supposed to be submitted, but now onwards they will fill ITR-3. In the new form, the column of ‘Gender’ has been removed. And there is a new column for CGST, SGST, IGST, and UTGST. After GST came into play, this is the first revision of the form. You need to mention all the transactions of the financial year in which you paid or received GST.

There used to be a penalty earlier for not filing the ITR, but under Finance Act 2017 and section 234F, only a late fee is applicable now onwards. The new form also addresses income from unlisted shares as a valuation report of the capital gains needs to be obtained from a certified CA. The new ITR form requires you to fill in the details of separate capital gains separately, that too with the date of actual transfer. This detailing was missing in the previous forms. Different methods have been adopted to cross-check every entry you make in the new ITR form. The government is more than prepared to ensure transparency in all the financial transactions