Key Changes in ITR-1 for AY 2021-22

The Central Board of Direct Taxes (CBDT) was issued Notification No. 21/2021, dated 31-03-2021and notify the changes in ITR Forms for the Assessment Year 2021-22.

First understand what is ITR-1?

ITR-1 (Sahaj), A simpler forms and filed by the small and medium individual taxpayer having income up to Rs 50 lakh and who receives income from salary, one house property or other sources like interest income etc.

In this Pandemic time there is no such significant changes done.

Changes in ITR-1 from AY 2021-22 are as follows:

ITR-1 shall not be available to an individual taxpayer whose tax has been deducted on cash withdrawal under Section 194N.

Under section 194N of the Income Tax Act, tax is required to be deducted by any bank, banking institution, cooperative bank or post office if the amount of cash withdrawn by individual person from one or more account during the year exceeds Rs 20 lakh in case of certain non-filers of return and Rs 1 crore in other cases.

Rule 12 of the Income tax rules has been amended and Consequential changes have been made to ITR-1.

ITR-1 shall not be available to an individual taxpayer in case of deferment of tax on ESOPs, Deferment the payment or deduction of tax on ESOPs allotted by an eligible start-up referred under Section 80-IAC has allowed in the Finance Act, 2020

Under section 80-IAC (applicable for eligible start-ups) of the Income Tax Act, Tax is required to be deducted or paid of such ESOP’s within 14 days from the following period:

After expiry of 48 months from the end of AY relevant to the financial year in which ESOPs are allotted;
From the date of sale of shares allotted under ESOP ; or
From the date the assessee ceases to be an employee of the organization.

Rule 12 of the Income tax rules has been amended and Consequential changes have been made to ITR-1.

ITR-1 changes due to change in taxability in Dividend Income.

The Finance Act 2020 Finance Minister abolished the Section 115-O – Dividend Distribution Tax (DDT) and Shift the burden of tax on the shareholders by withdrawing the Section 10(34) and accordingly section 115BBDA has no relevance as entire dividend is taxable in the hands of shareholders from 1st April 2020.

From 1st April 2020 Companies deducted TDS @ 10% under section 194 of Income tax Act if dividend payout is more than Rs.5000.

Now Dividend Income comes in Schedule SI (Special Income) of ITR-1 and taxable with special rate. Corresponding changes have been made to Schedule SI.