The Income Tax Department has unveiled the Income Tax Return (ITR) Forms for the Financial Year 2023-24, applicable for the Assessment Year 2024-25. While the applicability of the ITR forms to different taxpayers remains unchanged in the updated versions, notable adjustments have been made to solicit additional details from taxpayers. Moreover, several modifications in the ITR forms are aligned with the amendments implemented by the Finance Act 2023.
A comprehensive analysis of the new ITR Forms has been conducted, focusing on identifying key changes and introducing new requirements compared to the previous year's ITR Forms.
1. The new tax regime is the default tax regime; taxpayers must choose to opt-out to go with the old regime
As per amendments introduced by the Finance Act 2023 in Section 115BAC, the New Tax Regime becomes the default tax regime starting this year. This applies to individuals, HUFs, AOPs, BOIs, and AJPs by default. However, those who prefer the old tax regime must explicitly choose to opt-out.
Section 115BAC(6) provides eligible assesses with the option to opt out of the new tax scheme. To exercise this choice:
- Individuals with income (excluding income from a business or profession) must specify their preferred tax regime in the income tax return filed for the relevant assessment year under Section 139(1).
- Individuals with income from a business or profession can also opt out of the new tax regime and revert to the old tax regime. To exercise this choice, they must submit Form No. 10-IEA on or before the due date for filing the income tax return under Section 139(1).
Simply put, if assessee is filing ITR 2, will need only to specify preferred tax regime in the income tax return. However, if assessee is filing ITR 3, will need to fill out Form 10-IEA to opt out of the new tax regime.
(Changes in Forms: ITR 1,2,3,4,5)
2. Addition of "Receipt in Cash" column to accommodate increased turnover limit
The Finance Act of 2023 has raised the turnover threshold limit for eligibility under the presumptive taxation scheme from INR 2 crores to INR 3 crores, provided that cash receipts do not exceed 5% of the total turnover or gross receipts from the previous year. Additionally, the definition of cash now includes cheques or bank drafts that are not marked as account payee.
Similarly, Section 44ADA has been amended to increase the threshold limit of gross receipts from INR 50 lakhs to INR 75 lakhs, with the condition that cash receipts do not exceed 5% of the total gross receipts from the previous year.
To implement these changes, the CBDT has updated the ITR forms to include a new column for "receipts in cash" under Schedule BP. This allows taxpayers to disclose their cash turnover or cash gross receipts accordingly.
(Changes in Forms ITR: 3,4,5)
3. Addition of a new section 80CCH by Finance Act 2023
The Finance Act of 2023 has introduced a new section, Section 80CCH. Under this section, individuals who enrolled in the Agnipath Scheme and subscribe to the Agniveer Corpus Fund on or after 1st November, 2022 are eligible for a tax deduction for the entire amount deposited in the Agniveer Corpus Fund.
(Changes in Forms ITR: 1,2,3,4)
4. Addition of a new clause (h) to Section 43B for disclosure of amount payable to MSME beyond the prescribed time limit as specified in Section 15 of MSMED Act 2006
The Finance Act of 2023 has included a fresh provision (clause h) in Section 43B, stipulating that any outstanding amount payable to a micro or small enterprise beyond the timeframe outlined in Section 15 of the Micro, Small and Medium Enterprises Development Act 2006 (MSME Act) will not qualify for deduction.
As a result, a new column has been added under Part A-OI (Other Information) to report the amount payable to micro or small enterprises that exceeds the designated time limit as per the MSMED Act.
(Changes in Forms ITR: 3,5,6)
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