Key Changes in New ITR Forms With Respect To Deductions and Exemptions Available Under Income-tax Act

1. Details of agricultural land to be furnished if agricultural income exceeds Rs. 5 Lakhs: 

Section 10(1) of the Income-tax Act, 1961 exempts the agricultural income from income-tax. Agricultural income exempt from tax is reported in Schedule EI (Exempt Income).

The new ITR forms seek the following additional details if net agricultural income earned during the year exceeds Rs. 5 lakhs:

1. 1. Name of the district (with PIN code) where agricultural land is located
   2. Measurement of agricultural land in Acres
   3. Whether the land is owned or held on lease
   4. Whether the land is irrigated or rain-fed

2. Deduction under section 80PA in case of Producer Companies: 

A new deduction has been allowed under Section 80PA with effect from Assessment Year 2019-20 to promote the marketing and processing of agricultural produce by producer companies. As per section 80PA, 100% deduction of profit is allowed to the producer companies that have a turnover up to Rs. 100 crores during the previous year. Although the new ITR-6 provides for a field in its Part A Gen to mention whether the company is a producer company or not, yet it does not provide any field to claim this deduction, which seems to be an unintentional omission. The CBDT may rectify this mistake in the return filing utility.

3. New Schedule for Claiming deduction under section 80GGA: 

Section 80GGA provides a deduction of donations made towards scientific research/rural development. The deduction is allowed to all assessments other than those who are earning business income. Previous forms required the assessee to mention only donation amount under relevant columns of Schedule VI-A. Now a separate Schedule has been inserted in new ITR forms to claim deduction under section 80GGA. The new schedule seeks detailed information on donations made for scientific or rural development.

An assessee claiming the deduction is required to furnish the following information:

1. 1. The relevant clause under which deduction is claimed
   2. Name and address of the donee
   3. PAN of the donee
   4. Amount of donation made in Cash and in other modes  

4. Reporting of donation made in the case to curtail deduction under section 80G: 

Section 80G allows a deduction for donations made to certain notified funds, charitable institutions, or other institutions/ funds set up by the Government of India. The Finance Act, 2017 had reduced the limit of a cash donation from Rs. 10,000 to Rs. 2,000. Thus, with effect from Assessment Year 2018-19, no deduction is allowed for cash donation made in excess of Rs. 2,000. The new ITR forms have incorporated new columns to specify the amount of donation made in cash and in other modes. Cash donation made in excess of Rs. 2,000 shall not be allowed as a deduction from gross total income.

5. Deduction under section 10AA is allowed from the total income of the assessee: 

Section 10AA provides deduction from the total income of an assessee in respect of profits and gains arising from Unit operating in SEZ, subject to fulfillment of certain conditions. In various cases, courts have taken a view that the deduction under Section 10AA is allowed from the total income of the assessee and not from the total income from the eligible undertaking. In order to remove this ambiguity, the Finance Act, 2017 clarified that the deduction shall be allowed from the total income of the assessee. Now, relevant changes have been incorporated in the new ITR forms wherein the deduction under section 10AA is allowed from the total income of the assessee after claiming deduction under Chapter VI-A.  

Also Read:

• Key Changes in New ITR Forms Applicable for Income Taxable under Presumptive Taxation Scheme 

• Key Changes in New ITR Forms Applicable For Income Chargeable to Tax as PGBP

• 5 Major Changes in ITR Forms for Individuals

• Key Changes in New ITR Forms Applicable for Startups