Changes to the ITR for AY 2023-24
In order to accommodate the amendments made to the Income Tax Act 1961, a few changes have been made to the income tax return ( ITR) form to be filed for the Assessment Year 2023-24.
1.Virtual digital assets
Assessees now have to report income from Virtual Digital Assets (VDAs) including from crypto currencies, and Non-Fungible Tokens since from 1 April 2022, certain provisions have been introduced in the Income tax Act to tax such incomes.
“TDS under section 194S has also been made applicable to payments received for crypto transactions. The ITR forms have accordingly been amended to include disclosures relating to such income. The taxpayer is also required to indicate whether the income from VDA is to be categorised as business income or capital gains and accordingly disclose the same under the relevant head of income,” said Anil Lamba, CA and Director of Lamcon Finance & Management Services Pvt.
Every transaction of VDA must be reported along with the dates of sale and purchase.
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2. Donations
If you made donations eligible for Section 80G deduction during FY 2022–23, you are now required to mention the Donation Reference Number (DRN) in the ITR form.
“A new requirement has been introduced to disclose Donation Reference Number (ARN) in case donation is eligible for deduction under Section 80G. The ARN is a unique reference number and is available on Form 10BE/receipt issued by the donee entity. ITR form now makes it mandatory for taxpayers to mention the Donation Reference Number (referred to as ARN in the ITR forms) where donation is made to entities where a 50% deduction is allowed subject to the qualifying limit,” said Lamba.
3. TCS
There are additional updates in the ITR forms. For instance, taxpayers can now claim Tax Collected at Source (TCS) as a credit or set-off against their income tax liability. There is also a provision to claim credit for TCS related to another person in specific cases, said Swati Jain, CA & Strategic Business Advisor, Arihant Capital.
For instance, tax is to be collected by the bank on making remittances under the Liberalised Remittance Scheme. The taxpayer is eligible to claim such TCS as a credit/set-off against his income tax in his ITR.
4. Indian residents now have the option to defer tax on income earned from foreign retirement benefits accounts until withdrawal
From 1 April 2021, individuals who are Indian residents have the option to defer tax in respect of income earned on foreign retirement benefits account from the year of accrual to the year of withdrawal from the account [Section 89A relief]. However, in case the taxpayer becomes a non-resident subsequently, income on which relief was claimed under section 89A in earlier years would be taxable in the hands of the taxpayer.
The ITR forms earlier required disclosure of income in the year of withdrawal from the retirement benefits account; the ITR forms for FY 22-23 now also require disclosure of income on which relief under Section 89A was claimed in any earlier years and which has become taxable during the year (for example on account of the individual becoming a non-resident).
5. Foreign Institutional investor disclosure
Certain other changes have also been introduced in the ITR forms for AY 2023-24 such as additional disclosure relating to advances in the Balance Sheet in ITR-3, and a requirement to disclose the SEBI registration number where the taxpayer is a Foreign Institutional Investor (FII) or Foreign Portfolio Investor (FPI) registered with SEBI, explained Lamba.
6.Intraday Trading Disclosure
As per the new income tax forms, turnover and income from intraday trading must be reported under the newly introduced section ‘Trading Account’.
7. Old vs New tax regime: A new questionnaire in ITR 3 and ITR 4 has been added to determine if the taxpayer has opted out of the New Tax Regime in previous years. If an individual chooses the new tax regime, they cannot change it every year, unlike salaried individuals. ITR-4 is a tax form for those with a business or profession who opted for the presumptive taxation scheme. It cannot be used by individuals who are directors, have unlisted equity shares, deferred income tax on ESOPs or agricultural income over Rs 5,000, or by non-residents.
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8. Balance Sheet Reporting:
There has been a slight change in balance sheet reporting. According to the new ITR forms, advances received from individuals specified in Sec 40A(2)(b) of the Income Tax Act and others must be reported under the ‘Advances’ heading in Source of Funds, according to ClearTax.
According to CA Manish Mishra, Virtual CFO there are other key changes in the new Income Tax Return (ITR) forms for Assessment Year (AY) 2023-24 are as follows:
ITR-1 (Sahaj):
Detailed disclosure of capital gains from the sale of assets such as property, stocks, or mutual funds.
Individuals with presumptive business income cannot file ITR-1 and must use ITR-4 (Sugam) instead.
ITR-2:
Detailed schedule for salary income, including allowances exempt under various sections of the Income Tax Act.
Separate section for income from business or profession (excluding those opting for presumptive taxation).
Mandatory reporting of foreign assets, including foreign bank accounts, immovable property, and investments held outside India.
ITR-3:
Detailed schedules for partners’ information in a partnership firm, including profit and loss shares, assets, and liabilities.
Separate schedules for reporting short-term and long-term capital gains.
Mandatory GST-related information for taxpayers registered under the Goods and Services Tax (GST).
ITR-4 (Sugam):
Reporting of all bank accounts held during the financial year, including closed or opened accounts.
Detailed breakdown of income from business or profession, including separate sections for receipts, payments, and expenses.
Additional information required for taxpayers engaged in specified domestic transactions or international transactions.
These changes aim to enhance transparency, simplify compliance, and ensure accurate reporting of income and deductions. It is important for taxpayers to understand and comply with these changes to fulfil their tax obligations effectively.
