In India, every person whose income exceeds the threshold limit is legally bound to file Income Tax Return. There are total 7 ITR Forms that are applicable on different persons depending upon various factors such as type of person, total income, sources of income and so on.
The Companies registered under Companies Act are required to file ITR-6. The Companies who are having Income from property that is kept for any Charitable or Religious purposes can claim exemption under Section 11 and such Companies are required to file ITR-7 instead of ITR-6.
In this blog, we will discuss the about changes ITR-6 applicable for AY 2021 – 22 and other key points to remember while filing ITR-6.
What Is ITR 6 Form?
ITR 6 means Income Tax Return Form 6 that is required to be filed by companies.
Who can use the Income Tax Return-6 form (ITR-6)?
Income Tax Return-6 (ITR 6 form) form can be used by a Company only.
Who cannot use the Income Tax Return-6 form (ITR-6)?
ITR 6 form cannot be filed by a company, which is required to file a return in Form ITR-7. It includes a section 8 or section 25 companies which is formed for not-for-profit purpose.
Key points to remember while filing Income Tax Return form 6 (ITR-6)
- ITR-6 can be filed by any company – Domestic or a foreign company.
- The Charitable Company incorporated under section 25 of Companies Act, 1956, or under section 8 of Companies Act, 2013 shall use ITR 7.
Changes in Income Tax Return form 6 (ITR-6) for F.Y 2020-21/ A.Y 2021-22
Threshold limit for Tax Audit has Increased to Rs. 10 Crore from 5 Crore, subject to certain conditions
In case of business, threshold limit of turnover for Tax Audit Under Section 44AB of the IT Act is 1 Crore. For previous assessment year i.e. A.Y. 2020 – 21, threshold limit of turnover for Tax Audit was 5 Crore instead of 1 Crore if following conditions are fulfilled: –
- All Cash receipts during the relevant previous year must not exceed 5% of the total receipts.
- All cash payments during the relevant previous year must not exceed 5% of the total payments.
Now for the A.Y. 2021 – 22, the threshold limit of turnover of 5 Crore for applicability of Tax Audit has been increased to 10 Crore. It means that in case of business where cash receipts & payments doesn’t exceed 5% of total receipts & payments respectively, then turnover for applicability of tax audit should be more than 10 Crore, in any other case turnover should be more than 1 Crore.
The corresponding changes have already been made in the ITR Form-6.
Section 80M – New deduction on Dividend for Domestic Companies
The Finance Ministry rolled out the new Section 80M in the Income Tax Act, 1961 by the Finance Act, 2020. This provision provides a special deduction to domestic companies for the total amount received as dividend from other domestic companies, foreign companies or any business trust. However, this deduction is available only when the domestic company receiving the dividend further distributes it to its shareholders.
The IT Department has correspondingly modified the ITR Form-6 to enable the companies to claim the said deduction in Schedule VI-A.
Dividend Income to be taxable in the hands of Shareholders from A.Y. 2021-22
The Dividend, which used to be taxable in the hands of Company declaring such dividend, now shall be taxable in the hands of shareholders from A.Y. 2021-22. The parallel changes have been incorporated under ITR Form-6.
Thus, the taxpayer shall disclose the Dividend Income earned in the relevant F.Y. in the Schedule OS.
Additional Question related to Section 92E of the Income tax Act, 1961
The I-T Department has inserted an additional question in the ITR Form-6 that whether the assessee is liable to obtain a Transfer pricing Report as per Section 92E of the Income Tax Act, 1961 and if yes, then the assessee is required to provide the date of filing of such report.
Increase in Safe Harbour Limit as per Section 50C of the Income tax Act, 1961
The Section 50C of the Income Tax Act, 1961 states the method of determination of full value of consideration in case of transfer of any land or building or both.
From A.Y. 2021-22, when Stamp Duty Value (SDV) adopted by the government is more than the actual consideration on transfer of any land or building or both is transferred then the Stamp Duty Value shall be considered as the full value of consideration.
We hope all of your doubts related to what ITR 6 means, how to fill ITR 6 and other topics related to ITR 6 Filing are answered. In case of any query, contact your Trustworthy Advisors Manthan Experts.