The Income Tax Department has rolled out total 7 Income Tax Return Forms to be filed by different types of taxpayers whose total income exceeds the threshold limit. The Income Tax Act, 1961 has prescribed the applicability of all 7 forms, such as ITR Form-1 is applicable on Salaried Individuals and so on.
In this blog, we will discuss the applicability of ITR Form-5 and other key points to remember while filing ITR-5.
Generally, ITR Forms are complicated in nature and that is why all the taxpayers are suggested to seek assistance of tax professionals. First and most difficult task in filing ITR is to choose the most appropriate ITR Form.
As far as ITR-5 is concerned, it can be filed by Firm, LLP, Body of Individuals, Association of Persons, Artificial Judicial Person referred to in Section 2(31)(vii), Representative Assessee as per section 160(1)(iii) or (iv), Local Authority defined under section 2(31)(vi), Co-Operative Society or Society Registered under the Societies Registration Act, 1860, Estate of Deceased Person, Estate of an Insolvent, Business Trust defined Under Section 139(4E) and Investment Funds defined Under Section 139(4F) of the Income tax Act, 1961.
Individual, Company, HUF or any person who is eligible to file ITR Form 7 cannot file ITR-5.
What Is ITR 5 Form?
ITR 5 means Income Tax Return Form 5 that is required to be filed by prescribed persons.
Who can use the ITR 5 form?
Income Tax Return-5 Form (ITR-5), can be used by A firm, Limited Liability Partnership (LLP), Association of Persons (AOP), Body of Individuals (BOI), Artificial Juridical Person (AJP) referred to in clause (vii) of section 2(31), Local authority referred to in clause (vi) of section 2(31), Representative assesses referred to in section 160(1)(iii) or (iv), Cooperative Society, Society registered under Societies Registration Act, 1860 or under any other law of any State, Trust other than trusts eligible to file Form ITR-7, Estate of a deceased person, Estate of an insolvent, Business trust referred to in section 139(4E) and investments fund referred to in section 139(4F).
However, a person who is required to file the return of income under section 139(4A) or 139(4B) or 139(4D) shall not use this form.
Who cannot use the ITR 5 form?
Income Tax Return-5 Form, cannot be filed by Individual, Hindu Undivided Family (HUF), Company, and Person filing Form ITR-7.
Key points to remember while filing the ITR-5 form
- Income Tax Return-5 Form can be filed by a partnership firm having a business or professional income and maintains full books of accounts.
- The return of income of Charitable Trusts must be filed using ITR 5 or ITR-7.
- In case the Trust is required to file an income tax return due to taxable income being in excess of the basic exemption limit, then ITR-5 can be filed.
In case the Trust is required to file income tax return mandatorily under Sections 139(4A) or139(4B) or 139(4C) or 139(4D) or 139(4E) or139(4F) of the Income Tax Act, then ITR-7 must be filed.
Changes in ITR-5 form for F.Y 2020-21/ A.Y 2021-22
Dividend Income to be taxable in the Hands of Shareholders from A.Y. 2021-22
Earlier, Dividend Income given by Companies to Shareholders was taxable in the hands Companies only however, from A.Y. 2021-22 it shall be taxable in the hands of recipients i.e. Shareholders. Simultaneous changes have been incorporated in the ITR Form 5.
Assessee has to disclose the Marginal Relief Separately in ITR Form-5
The Income Tax Act, 1961 allows the Marginal Relief to the taxpayer in order to ensure that amount of net tax payable (including surcharge) is not more that the amount of income, which is in excess of threshold limit on which surcharge, is applicable.
From A.Y. 2021-22, an assessee who is required to file ITR Form 5 is mandatorily required to give separate disclosure of details of surcharge calculated before marginal relief and of the surcharge calculated after marginal relief. Corresponding changes have been made in the ITR Form-5.
No Option to Carry Forward the Losses Under New Tax Regime
From A.Y. 2021-22, Taxpayers who are Individuals, HUF or Co-operative societies have 2 options of Income Tax Regime as per Section 115BAC. According to existing Taxation system they can avail the exemptions and deductions. However, if they opt for new tax regime then they are not allowed to claim exemptions and deductions and thus they cannot set off the carry forwarded losses through exemptions and deductions.
DI Schedule to be deleted from A.Y. 2021-22
As we aware of the fact that on outburst pandemic Covid19, India went into lockdown in March 2020. To save their taxes most of the taxpayers in India make investments, payments and expenditure in March only but in 2020 India went into lockdown & many taxpayers were worried about their investments so in order to give some extra time, government extended last date for making such investment, payments and expenditure from 31st March 2020 to 31st July 2020. However, in return forms a new schedule was introduced i.e. Schedule DI, which would contain detail investments, payments and expenditure incurred during the period 1 April 2020 until 31 July 2020.
Since, because of unique situations of 2020 Schedule DI was introduced which is not required further therefore From A.Y. 2021-22, the Schedule DI has been deleted from all the ITR Forms.
Date of Cash Donation to be mention in the ITR-5
According to Section 80GGA of the Income Tax Act, 1961, when an assessee donates cash and such assessee is not earning income from Business or Profession, in such case he is eligible to claim deduction in respect of cash donation but only up-to Rs. 2,000/-. From A.Y. 2021-22, the assessee has to furnish the date of cash donation in the ITR Form -5 in order to avail such deduction.
Additional Question Related to Transfer Pricing in ITR Form-5
From A.Y. 2021-22, ITR Form-5 shall have an addition question that “Whether the assessee is liable to obtain a Transfer Pricing Report under Section 92E of the IT Act, 1961 and if yes then whether the assessee has complied with the provisions of Section 92E or not”. Thereafter, the assessee has to furnish the date of filing of Transfer pricing report also.
This question has been inserted with an aim to ensure the fulfillment of compliance of Section 92E.
Nature of Business Code to be Furnished Under Section 80P of the IT Act
When the assessee who is require to file ITR-5 is claiming deduction under Section 80P of the IT Act, 1961 then the assessee is required to furnish various details related thereto such as Income and amount of deduction.
From A.Y. 2021-22, additional information that is the nature of business code is required to be furnished.
No option to carry forward of TDS if deducted under newly introduced section 194N of the IT Act, which is otherwise available as per the provisions of section 199 read with rule 37BA
We hope all of your doubts related to ITR 5 means, how to file ITR 5 and other topics related to ITR 5 Filing are answered. In case of any query, contact your Trustworthy Advisors Manthan Experts.File ITR Now!
Income Tax Return – 2 Form (ITR-2)