Are you the taxpayers who file income tax every year? Yes, then it becomes essential for you to understand changes in new ITR forms. The Central Board of Direct Taxes has revised income tax return forms such as ITR 2,3 and 5 for the assessment year 2024- 2025, and the last date for filing an income tax return is 31 July 2024.
Let’s understand the changes in the new ITR forms in detail.
1. Disclose all bank accounts
It becomes compulsory for the taxpayer to disclose all bank accounts with the type of accounts.
2. Individual/HUF liable for audit can verify ITR through electronic verification code
Previously, individuals/HUF could verify the return only through a digital signature. But now, Rule 12 has been amended, which means that Individual/HUF liable for audits under section 44AB, can verify the return through an electronic verification code(EVC).
3. The new tax regime is the default tax regime; taxpayers have a choice to opt out of going with the old regime.
Earlier, the Old Tax regime was the default option but starting this FY 23-24, the New Tax Regime is the default regime. But when a taxpayer does not want to file income tax according to the new tax regime, then he/she can explicitly opt out of it and choose to file income tax under the old tax regime. For selecting this option, a taxpayer should have income (other than income from a business or profession).
If a business person or professional person has to file income tax with an old tax regime, then Form No 10-IEA needs to be filed before the due date under Section 139(1), i.e. due date of applicable tax return.
4. Tax audit under section 44AB for additional reason
An assess needs to provide additional details for the audit under section 44AB such as:
- Sales, gross receipts, or turnover exceeding the limits should specified under Section 44AB
- Taxpayers are categorized under Section 44AD/44ADA/44AE/44BB but do not offer income on a presumptive basis.
- Others.
5. Adding acknowledgement number in the Audit Report and UDIN
When furnishing details for audits under Section 44AB, which encompasses audits under Section 92E, companies are required to add the acknowledgment number in the audit report and the UDIN.
6. Receipts made in cash to be considered for turnover limit u/s 44AD & 44ADA
The Finance Act 2023 has increased the turnover limit from INR 2 crores to INR 3 crores for the presumptive taxation scheme under Section 44AD if the cash sales are 5% or less of gross receipts or total turnover of the previous year. Similarly, section 44ADA enhances the threshold limit of gross receipts from Rs 50 lakhs to Rs 75 lakhs, if the cash sales are 5% of gross receipts or total turnover of the previous year.
To provide the effects of this amendment, CBDT added the section on “receipt in cash” to disclose the cash amount.
7. 80GGC new schedule seek details of contribution made to political parties
When you pay any amount to political parties or electronic trust the deduction is allowed in section 80GGC. Also, the details required in the form such as follows:
- Date of contribution
- Contribution amount ( breakdown of contribution in cash or other modes)
- Eligible contribution amount
- IFS code of bank
- Cheque number need or transaction reference number for UPI transfer
In the new ITR forms, it is essential to disclose additional information beyond the amount eligible for the deduction of section 80GGC.
8. Tax Deferred on ESOP seeks PAN and DPIIT Registration Number for the eligible startup
When an employer provides securities to an employee under ESOP scheme, it becomes taxable in the year of allotment. To provide transparency, the new ITR forms bring the amendment to ask for details such as the PAN of the employer and the DPIIT Registration Number.
9. New column added under section 80CCH
The Finance Act 2023 brought a new Section 80CCH, which says that individuals enrolled in the Agnipath Scheme on or after 01-11-2022 will be eligible for a deduction amount deposited in the Agniveer corpus fund. Also, New ITR forms are amended where a new column is added to furnish the amount details for deduction under 80CCH section.
10. 80U section is inserted for claiming deduction if a person is disable
The introduction of the 80U section is for individuals who are suffering from a disability or severe disability. There is a deduction of Rs 75,000 to Rs 1,25,000 allowed under the provision for an individual suffering from disability or severe disability.
The previous ITR forms assess claimed deduction under Section 80U in Schedule VI-A. However, in the new ITR-3, a new schedule 80U has been inserted, where deduction details need to be inserted to get the claim.
The Schedule 80U ask for the following details:
- Nature of disability
- Date of filing Form 10-IA
- Acknowledgment number of the Form 10-IA
- UDID number
11. Dividend income reported that derived from a unit located in IFSC
The Finance Act, 2023 has amended the provisions Section 115A by inserting a provision Section 115A(1)(a)(A) to provide dividend income received from a unit in an IFSC, as referred to in Section 80LA(1A) shall be taxed at a reduced tax rate of 10% instead of 20%. For this purpose Schedule OS has been amended in new ITR forms.
12. New schedule 80-IAC seeks detail of eligible startup
Deduction under section 80-IAC is available for the eligibility of the startup for 3 consecutive assessment years out of 10 years. New ITR-5 has been scheduled, which asks for details for the deduction such as follows:
- Startup date of incorporation.
- Nature of business
- Inter-Ministerial Board of Certification provide certificate number
- First Assessment year in which deduction was claimed
- Amount of deduction claimed for current Assessment year.
Conclusion
The Central Board of Direct Taxes updates to the ITR forms for the assessment year 2024-2025 bring significant changes that enhances transparency, simplify compliance, and disclose the financial information of taxpayers. Also, the new tax regime is introduced, but taxpayers have the freedom to opt out of the newregime.
Additionally, the introduction of various new schedules took place, and it became essential to disclose detailed information, such as bank account details, political party contribution details, ESOP details, and details related to various deductions under sections like 80CCH, 80U, 80GGC, and 80-IAC. All these new things will be implemented while filing income tax returns.