The Income-tax Department has notified the ITR forms applicable for the assessment year 2019-2020. Many changes have been made in the new ITR forms. The following are some key modifications in new ITR forms for income chargeable to tax under the head “Profits and gains from business or profession”:
1. No separate reporting of interest paid to partners by firms:
Until last year, a partnership firm had to disclose both the amount of interest paid to the partners and to others in Schedule P&L. The new ITR form does not require separate reporting. Now the partnership firm can show the total amount of interest paid during the previous year in this schedule.
2. Schedule P&L has been expanded to seek more information:
In new ITR forms new Parts have been inserted instead of Part A P&L:
- Manufacturing Account
- Trading Account
- Profit & Loss Account
Therefore, if an assessee is involved in manufacturing activities then he will have to arrive at the cost of goods sold through the manufacturing account, gross profit through trading account and net profit through profit and loss account. Since manufacturing account is not meant for service providers and traders, they can start directly from a trading account.
3. Separate reporting is required for income generated from partial agricultural and partial business operations:
Income from agricultural activities is free from tax as per Section 10. The total income will be divided into agricultural income and business income as per Rules 7, 7A, 7B and 8 of the income tax rules, 1962 if a person earns income from partial agricultural and partial business activities
In new ITR forms, a person has to separately report income from business activities under schedule BP (Business Profits) and income from agricultural activities in schedule EI (Exemption Income) if they are having income from above activities
4. Reporting of name and address of the debtor in case of bad debts:
If a person claims debts of more than Rs 1 lakh should report PAN of such debtor (if available) in ITR forms. Name and address of the debtor are required to be provided in case PAN of such debtors isn’t available in the new ITR forms.
5. Reporting of turnover and profit from speculative activities under profit & loss account:
In new ITR forms, a separate schedule has been inserted in Schedule P&L for persons earning income from speculative activities. Following information has to be furnished in that schedule:
- Turnover from speculative activities
- Gross profit
- Net income from speculative activities
Since losses from speculative business can be put only against speculative income and you can carry forward unabsorbed losses only for 4 years in case of 8 years in case of losses from the non-speculative business, separate disclosures are required on speculative income and losses.
Under ITR-6 turnover and income from intra-day transactions must be reported under the trading account.
6. Reporting of GSTIN & GST turnover:
A new Schedule that requires GSTIN of the assessee and turnover as per GST return filed by him was incorporated in the ITR forms released last year. But this information was required only when a taxpayer had opted for presumptive taxation scheme and filing return in form ITR-4. This schedule is now included in ITR Forms 3, 5 and 6.
7. Reporting of business transactions with registered and unregistered suppliers under GST removed:
A new schedule was inserted in ITR 6 last year, which required every company, which was not required to get its accounts audited under Section 44AB, to provide the details in respect of transactions entered into during the year with a registered or unregistered supplier under GST. This reporting requirement has been removed in new ITR-6.
A new schedule that was inserted in ITR 6 last year needed every company (not required to get its accounts audited under Section 44AB) to provide the details of transactions entered during the year with a registered/unregistered supplier under GST. In new ITR-6, this reporting requirement has been removed
8. Reporting of disallowance under section 14A:
Separate reporting in Schedule-OI (Other Information) is needed for disallowance made under Section 14A under new ITR forms.
9. Set-off of losses against income from life insurance business:
Business income from life insurance business is taxable at a rate of 12.5%.
Because in the old ITR forms, income from the life insurance business was directly transferred from Schedule BP (Business Profit) to Schedule SI (Special Income), an assessee was not eligible to adjust inter-head losses and could bring forward losses against such income. Now under new ITR forms and income from life insurance business will go through Schedule CYLA and Schedule BFLA for any adjustment of inter-head losses and brought forward losses respectively.
10. Report audit requirement under other Acts separately:
The details about the liability of assessee for audit under any Act other than the Income-tax Act was inserted in the new ITR form.