The Income Tax Return ( ITR ) forms for the Financial Year 2023-24 has undergone significant revisions, affecting taxpayers across various categories. These changes require attention and understanding. This article provides a detailed analysis of the updates in ITR Forms.
1. Adjustment of Unabsorbed Depreciation – WDV Value
Changes in ITR Forms 3, 5, and 6 relate to the adjustment of unabsorbed depreciation attributable to additional depreciation, impacting the written down value (WDV) of assets.
An individual choosing Section 115BAA/115BAC of the Income Tax Act is not entitled to offset the unabsorbed depreciation linked to additional depreciation. Any such unabsorbed depreciation related to additional depreciation that hasn’t been fully utilized must be aligned with the written down value (WDV) of the asset block as of April 1, 2023, as per specified guidelines.
In the revised ITR Forms No. 3, 5, and 6, Schedule DPM focusing on Plant and Machinery depreciation has been modified.
This modification states that the WDV of the asset block as of April 1, 2023, should be increased by the unabsorbed depreciation amount (related to additional depreciation) that couldn’t be adjusted due to the selection of Section 115BAA/115BAC of the Income Tax Act.
2. Cash Receipts Reporting
The Finance Act, 2023 has raised the turnover threshold for opting into the presumptive taxation scheme under Section 44AD from INR 2 crores to INR 3 crores, provided that cash receipts do not exceed 5% of the total turnover or gross receipts for the previous year. Similarly, Section 44ADA saw an amendment that increased the gross receipts threshold from INR 50 lakhs to INR 75 lakhs, with the same 5% cash receipts condition.
Furthermore, a new column for reporting cash receipts has been included in Schedule BP under “Profits and gains from business and profession” to facilitate claiming the enhanced turnover limit in Form ITR 3, 4, and 5.
3. Capital Gains Accounts Scheme (CGAS) Reporting
The Capital Gain schedule (Schedule-CG) within the ITR forms is designed to capture details of capital gains earned by taxpayers. This schedule mandates information related to the capital asset sold, buyer particulars, and expenditure specifics for claiming exemptions.
In the recently updated ITR-2 form, Schedule-CG has been revised to collect more comprehensive data regarding deposits made in the Capital Gains Accounts scheme ( CGAS ). Apart from reporting the deposited amount in CGAS, the updated schedule now necessitates additional information including the deposit date, account number, and IFS Code associated with CGAS deposits.
4. Details of Legal Entity Identifier (LEI)
The Legal Entity Identifier ( LEI ) is a 20-character alphanumeric code utilized for uniquely identifying parties involved in global financial transactions. Its implementation aims to enhance the accuracy and reliability of financial data reporting systems, thereby improving risk management practices. According to RBI regulations, entities (excluding individuals) conducting single payment transactions of INR 50 crores or more are required to include LEI details for both the remitter and beneficiary.
This requirement is applicable to transactions processed through NEFT and RTGS payment systems. Entities seeking LEIs can find detailed information and procedures on the official LEIL website (https://www.ccilindia-lei.co.in/). To comply with RBI guidelines, disclosure of the Legal Entity Identifier (LEI) is now mandatory for refunds exceeding INR 50 crores in Form ITR 5 and 6, and LEI details must be updated on the Income Tax Portal accordingly.
5. Dividend Income Reporting
The Finance Act of 2023 has modified Section 115A by adding a proviso to Section 115A(1)(a)(A), stipulating that dividend income received from a unit in an International Financial Service Centre (IFSC) as specified in Section 80LA(1A) will be taxed at a reduced rate of 10%, down from 20%.
The new ITR Forms (2, 3, 5, and 6) have updated “Schedule OS – Income from Other Sources” to reflect this amendment.
6. Filing Deadlines
In ITR Forms 3, 5, and 6, a new column has been added to capture information about the deadline for submitting the income tax return. Taxpayers must select the applicable due date from provided options, namely, July 31st, October 31st, or November 30th.
7. Online Gaming Winnings
The Finance Act of 2023 introduced a new provision, Section 115BBJ, to levy tax on earnings from online games starting from Assessment Year 2024-25. Additionally, a corresponding Section 194BA was introduced effective from April 1, 2023, for deducting tax on net earnings from online games.
In result, all earnings from online games from April 1, 2023 onwards will be subject to a 30% tax rate under Section 115BBJ of the Income Tax Act and will be subject to TDS under Section 194BA of the IT Act.
To report such income in ITR Forms No. 2, 3, 5, and 6, Schedule OS ( Income from other sources ) has been updated to include the reporting of income from online gaming.
8. Political Party Contributions – Section 80GGC
Section 80GGC provides a provision for claiming deductions on contributions made to a political party or electoral trust. The updated ITR forms now feature a newly inserted – Schedule 80GGC, mandating comprehensive disclosure of political party contributions, including the following details:
1. Date of Contribution
2. Contribution Amount ( with a breakdown specifying contributions made in cash and other modes )
3. Eligible Contribution Amount
4. Transaction Reference Number for UPI transfer or Cheque Number/IMPS/NEFT/RTGS
5. IFS Code of the Bank
9. Reasons of Tax Audit u/s 44AB and EVC
Audited companies filing Form ITR 3, 5, and 6 are now required to provide additional information about the reasons that led to tax audits. This modification is aimed at improving transparency and accountability in tax reporting.
Form ITR 3 has been updated with an amendment to Rule 12, permitting individuals and HUFs subject to tax audits under Section 44AB to validate their income tax returns using an electronic verification code ( EVC ). Previously, they were limited to verifying returns solely through digital signatures.
10. Reporting of sums received by a unitholder from the Business Trust
To prevent the potential double non-taxation of specific amounts distributed by business trusts to their unitholders, the Finance Act of 2023 introduced clause (xii) into Section 56(2).
To account for the income received by unitholders under Section 56(2)(xii), the ITR forms have been updated to incorporate a new column within Schedule-OS.
11. Schedule 80DD
In prior versions of the ITR forms, taxpayers had to specify the deduction amount claimed under Section 80DD of the Income Tax Act in Schedule VI-A.
The updated ITR forms ( specifically ITR 2 and 3 ) now feature a new section titled ‘Schedule 80DD,’ where taxpayers need to provide particulars regarding deductions related to the upkeep, including medical care, of a dependent with a disability.
12. Schedule 80IAC – Start-up Deduction Details
The newly introduced Schedule 80IAC of the Income Tax Act in Income Tax Form – ITR-5 requests specific information regarding deductions availed by companies under Section 80-IAC. This includes details such as the startup’s incorporation date, business nature, certificate number issued by the Inter-Ministerial Board of Certification, the initial assessment year for claiming deduction, and the amount of deduction claimed for the current assessment year.
13. Offshore Banking unit or IFSC (Schedule 80LA)
In the ITR-5 form, a newly added Schedule 80LA now requires companies to provide specific details including the Type of Entity, Type of income generated by the unit, Authority responsible for granting registration, Date of registration, Registration number, First Assessment Year (AY) for which deduction is claimed, and the Amount of deduction claimed for the current Assessment Year (AY).
Conclusion
The recent updates and changes in the Income Tax Return ( ITR ) Forms for the fiscal year 2023-24 are all about making tax filing easier and more transparent for everyone. These changes cover a lot of important areas, like how we handle depreciation on assets, reporting contributions to political parties, and even taxing winnings from online games.
But it’s not just about numbers and forms. These updates also show that the government cares about startups and small businesses. They want to make sure that everyone pays their fair share of taxes while also getting the benefits they deserve.
So, whether you’re a startup claiming deductions or an individual reporting income from online gaming, these changes are listed here to help you navigate the tax system with clarity and confidence.
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