Key Changes Notified in ITR Filing Forms for FY23-24

The Central Board of Direct Taxes ( CBDT ) has officially released the Income Tax Return ( ITR ) forms for the financial year 2023-24 ( assessment year 2024-25 ). The new forms, ITR Forms 1 to 6, will come into effect from April 1, 2024, bringing with them a series of changes and enhanced disclosure requirements.

Understanding the purpose of each ITR form

ITR-1

This form is designated for resident individuals with a total income up to ₹50 lakh, encompassing income from salaries, one house property, and other sources.

According to experts, if the income of another person ( spouse, minor child, etc. ) has to be clubbed with the income of the assessee, return in ITR 1 can be filed only when such income falls in any of the mentioned categories.

However, if tax has been deducted in the name of such other person and the assessee wishes to claim its credit, then he/she cannot file a return in ITR 1.

ITR-2

Individuals and Hindu Undivided Families ( HUFs ) without income from business or profession, not eligible for ITR Form-1 ( Sahaj ), can use this form.

It is important to note that ITR-2 cannot be used by individuals or HUFs whose total income for the year includes business or professional income.

Additionally, individuals with income in the nature of interest, salary, bonus, commission, or remuneration from a partnership firm are not eligible to file ITR-2, as per income tax rules.

ITR-3

ITR-3 is specifically tailored for individuals or HUFs with income from business or profession.

This form must be used by those whose income under the head 'profits and gains of business or profession' include elements like interest, salary, bonus, commission, or remuneration from a partnership firm.

ITR-4

ITR-4, also known as SUGAM, is available for individuals, HUFs and firms ( other than LLP ) being a resident having a total income up to ₹50 lakh and having income from business and profession which is computed under sections 44AD, 44ADA or 44AE under Income Tax Act.

ITR-5

This form is applicable to entities other than individuals, HUFs, and companies, such as partnership firms and LLPs.

LLP or limited liability partnership is a partnership in which some or all partners have limited liabilities.

What is ITR-U?

ITR-U or Updated Income Tax Return, is a Return that allows taxpayers to update their ITRs through correcting errors or omissions within two years from the end of 31st Dec 2023. For example, if you filed an ITR for AY 2023-24 and missed the revised/ belated return filing window, you may record an ITR-U after end of the assessment year, 31 March 2024 but within two years from there, 31 March 2026.

Who can file ITR U

Any person who had made error or omitted to record any of the income details in following returns can file an updated return:

Original return of income,

Revised return, 

Belated return.

Who is not eligible to file ITR-U?

ITR-U cannot be filed in following cases:

Updated return is already been filed

For claiming refund.

For filing nil ITR

When updated return results in lower Income tax liability

Learn More….. Live Online Masterclass on ITR U (Income Tax Updated Return)

Income Tax Return Filing 2024: Three key changes to note in ITR Form 1 and Form 4

When are ITR forms notified?

The department usually notifies the ITR form before the start of the subsequent assessment year, i.e. in February or March. This unexpected early release not only marks a departure from the established timeline but also implies that taxpayers will have a more extended period to familiarize themselves with the changes, gather necessary documentation, and file their returns with greater precision

Key changes in the new ITR Form 1, Form 4

1) An assesse filing ITR 1 is only required to indicate his choice of tax regime in the return of income. An assesse filing ITR 4 will be required to file Form 10-IEA to opt out of the new tax regime.

2) A new column has been added to claim deduction under section 80CCH in new ITR Forms 1 and 4

The Finance Act 2023 added a new Section 80CCH, which states that individuals enrolled in the Agnipath Scheme and subscribing to the Agniveer Corpus Fund or after 01-11-2022 will be eligible for a tax deduction for the total amount deposited in the Agniveer Corpus Fund.

3) The "Receipts in Cash" column has been added to ITR-4 to claim an enhanced turnover limit

The Finance Act, 2023 has enhanced the turnover threshold limit from ₹2 crore to ₹3 crore for opting for the presumptive taxation scheme under Section 44AD if the receipts in cash do not exceed 5% of the total turnover or gross receipts for the previous year.

Key Changes Introduced in New ITR Forms

Disclosure of Income from Retirement Benefit Accounts in ITR Forms – [ ITR 2, 3 and 4 ]

The updated Income Tax Return ( ITR ) forms now include a new disclosure requirement related to “Income from retirement benefit accounts.” Taxpayers are now obligated to disclose any taxable income on which relief under section 89A of the Income Tax Act was claimed in any of the earlier years. Let’s explore this new disclosure in more detail:

• Income from Retirement Benefit Accounts: The ITR forms now feature a dedicated section that requires taxpayers to disclose their income derived from retirement benefit accounts. This includes income from pension funds, annuities, or other retirement benefit schemes.
• Relief under Section 89A: Taxpayers are further required to disclose any taxable income on which relief under Section 89A of the Income Tax Act was claimed in any of the previous years. Section 89A relieves individuals who have received arrears or any other additional income in a particular financial year, ensuring that the tax liability is calculated appropriately.

Reporting Requirements for Crypto/VDA in the New Income Tax Forms [ ITR 2, 3, 5, 6, and 7 ]

The updated income tax forms now include specific provisions for reporting profits from Virtual Digital Assets (VDA) or cryptocurrency. To ensure accurate reporting, the tax authorities have introduced a separate schedule known as “Schedule – VDA.” Let’s delve into the details of this reporting requirement:

• Schedule – VDA: Taxpayers who have earned profits from Virtual Digital Assets ( VDA ) or cryptocurrency must report such income under the newly introduced “Schedule – VDA” in the income tax forms. This schedule provides a designated space to disclose the details of VDA-related income.
• Capital Gains Schedule: If the VDA income is treated as capital gains, taxpayers must provide a quarterly breakup of their gains under the Capital Gains Schedule. This breakdown allows the tax authorities to assess capital gains accurately and determine applicable tax liabilities.
• Transaction Reporting: Every transaction involving Virtual Digital Assets ( VDA ) must be reported in the income tax forms. Taxpayers are required to disclose the details of each VDA transaction, including the corresponding sale and purchase dates. This level of transaction reporting ensures transparency and enables the tax authorities to monitor VDA-related activities.

Reporting Requirements for Intraday Trading in the New Income Tax Forms [ ITR 3 and 5 ]

With the introduction of the updated income tax forms, there is a specific provision that requires taxpayers to disclose their turnover and income from intraday trading. This reporting requirement is outlined under the newly introduced section called “Trading Account.” Let’s explore this new disclosure in detail:

• Turnover and Income Reporting:
  • Taxpayers engaged in intraday trading must report their turnover and income. The turnover refers to the total value of securities bought and sold during intraday trading transactions within a specified period.
• Section – Trading Account:
  • The income tax forms now feature a “Trading Account” section to facilitate reporting turnover and income from intraday trading. Taxpayers must provide details about their intraday trading activities within this section.

Reporting Advances in the Balance Sheet: Changes in ITR Forms – [ ITR 3 ]

The updated Income Tax Return ( ITR ) forms have brought about a slight change in the reporting of balance sheets. Specifically, advances received from individuals specified in Section 40A(2)(b) of the Income Tax Act and others must now be reported under the “Advances” heading in the Source of Funds section. Let’s delve deeper into this reporting requirement:

Balance Sheet Reporting:

The balance sheet section of the ITR forms requires taxpayers to provide a comprehensive overview of their financial position, including assets, liabilities, and capital. It plays a crucial role in determining the taxpayer’s financial health and assists the tax authorities in evaluating their tax liabilities accurately.

Advances from Specified Individuals:

Under the revised ITR forms, any advances received from individuals specified in Section 40A(2)(b) of the Income Tax Act must be reported separately. Section 40A(2)(b) of the Act refers to specified persons, such as relatives or related parties, who are subject to certain restrictions and regulations regarding financial transactions.

Other Changes Introduced in New ITR Forms

In addition to the previously mentioned updates, the revised Income Tax Return ( ITR ) forms for the Assessment Year 2023-24 introduce several other changes. These changes enhance tax filings’ accuracy, transparency, and compliance.

Deposit in Current Account – [ ITR 1 ]

A notable change is that the ITR-1 form no longer allows the filing of returns if it is being done solely due to depositing more than Rs. 1 crore in the current account. This change ensures that the appropriate ITR form is used for reporting income and facilitates more accurate tax assessments.

Schedule HP for Companies – [ ITR 6 ]

The checkbox for “self-occupied” has been omitted under Schedule HP ( House Property ) for companies. This omission implies that companies can no longer indicate whether a property is self-occupied or let out in the ITR forms.

Exclusion of Dividend Income – [ ITR-6 ]

The Schedule OS ( Income from Other Sources ) no longer includes dividend income tax under Section 115BBD. This exclusion streamlines the reporting process by removing the need to report dividend income subject to specific tax provisions separately.

Reference to Section 153C – [ ITR 1 to 7 ]

The ITR forms now reference Section 153C for returns filed in response to a notice. This reference ensures that taxpayers know the applicable legal provisions and assists the tax authorities in processing and evaluating such returns.

Donation Reference Number – [ ITR 2, 3, 5, and 6 ]

If a donation is eligible for deduction under Section 80G, the ITR forms now require taxpayers to mention the ARN ( Donation Reference Number ). This additional disclosure facilitates verifying donations claimed for Section 80G deduction.

Consequential Changes for Section 80-IB Deduction – [ ITR 2, 3, 5, and 6 ]

The ITR forms incorporate significant changes due to the sunset date for Section 80-IB deduction. These changes relate to the deduction available to industrial undertakings in Jammu & Kashmir or Ladakh. Taxpayers are required to comply with the updated reporting requirements for claiming this deduction.

Transfer of TCS Credit – [ ITR 2, 3, 5, 6, and 7 ]

The revised ITR forms now include provisions for reporting the transfer of Tax Collected at Source ( TCS ) credit to another person. This reporting ensures proper documentation and tracking of TCS credits transferred between taxpayers.

Disclosure of Section 89A Relief – [ ITR 2, 3 and 4 ]

Taxpayers are now required to disclose any income on which relief under Section 89A was claimed in the previous year. This disclosure enhances the accuracy and completeness of income reporting, ensuring that the relief claimed is appropriately accounted for.

Additional Disclosure for Change in Partnership – [ ITR 5 ]

In case of a change in partnership, firms must make a further disclosure in the ITR forms. This disclosure ensures that any changes in the partnership are duly reported and recorded for tax purposes.

Disclosure of Advances in the Balance Sheet – [ ITR 3 ]

The revised ITR forms introduce a specific disclosure requirement for advances in the balance sheet. Taxpayers must now disclose advances received from individuals specified in Section 40A(2)(b) of the Income Tax Act and others under the designated “Advances” section. This disclosure promotes transparency and accurate reporting of financial transactions.

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