Key Changes in the Income Tax Return Forms for Assessment Year 2024-2025

Introduction

With the tax return filing season for financial year 2023-24 all set to begin, it is good to understand the various changes made in the tax return forms. The Assessment Year 2024-2025 brings with it several significant changes in the Income Tax Return (ITR) forms.

These modifications are aimed at simplifying the tax filing process and ensuring better compliance.

In this blog post, we will explore the crucial updates introduced in the ITR forms for the upcoming assessment year.

Changes in Income tax return forms for AY 2024-25

1. The new tax regime is the default tax regime; taxpayers must opt out to use the old regime

[ITR 1, 2, 3, 4, and 5]

The Finance Act 2023 has made the new tax regime under Section 115BAC the default for individuals, HUFs, AOPs, BOIs, and AJPs. Taxpayers who prefer the old regime must explicitly opt out of the new one in their tax return. Those with business income need to file Form 10-IEA by the due date if they wish to switch to the old regime.

2. Disclosure of the sum payable to MSME beyond the prescribed time limit

[ITR 3, 5, and 6]

The Finance Act 2023 added a new clause (h) in Section 43B, stating that any sum payable to a micro or small enterprise beyond the time limit specified in the MSME Act will not be allowed as a deduction. New ITR forms require the disclosure of such sums.

3. Assessee recognized as MSME and Disclosure of the sum payable to MSME beyond the prescribed time limit

[ITR 5 and 6]

The new ITR-5 mandates that an assessee should furnish information regarding its recognition status as a Micro, Small, and Medium Enterprise (MSME). It is also required to provide the registration number allotted as per the Micro, Small and Medium Enterprises Development Act, 2006. Additionally, the Finance Act 2023 added a new clause (h) in Section 43B, stating that any sum payable to a micro or small enterprise beyond the time limit specified in the MSME Act will not be allowed as a deduction. New ITR forms require the disclosure of such sums.

4. Reporting of all banks held at any time

[ITR 2, 3, and 5]

Taxpayers must now disclose all bank accounts held at any time, except dormant accounts, in the new ITR forms.

5. Details of Legal Entity Identifier (LEI)

[ITR 2, 3, 5, and 6]

The LEI is a 20-character code used to uniquely identify parties in financial transactions globally. The RBI mandates that any single payment transaction of INR 50 crores and above must include LEI information for both the sender and receiver. The new ITR forms now require taxpayers to provide their LEI details if they seek a refund of INR 50 crores or more.

6. Furnishing of due date for filing of return

[ITR 3, 5, and 6]

A new column in ITR forms now asks taxpayers to select the applicable due date for filing their return. The options available are July 31st, October 31st, or November 30th.

7. Individuals/HUFs liable for audit can verify ITR using EVC

[ITR 3]

Rule 12 has been updated to allow individuals and HUFs required to undergo tax audits under Section 44AB to verify their income tax returns using an electronic verification code (EVC), instead of only through a digital signature.

8. Furnishing of the reason for tax audit under Section 44AB

[ITR 3, 5, and 6]

New ITR-3 forms ask for additional details from taxpayers subject to audit under Section 44AB. These include the reasons for the audit, such as exceeding sales/turnover limits or not opting for presumptive taxation under Sections 44AD/44ADA/44AE.

9. Furnishing of acknowledgment number of the Audit Report and UDIN

[ITR 3, 5, and 6]

Taxpayers must provide the acknowledgment number and Unique Document Identification Number (UDIN) when reporting audits conducted under Section 44AB, including those under Section 92E.

10. “Receipts in Cash” column added to claim enhanced turnover limit

[ITR 3, 4, and 5]

The Finance Act 2023 increased the turnover limit for presumptive taxation under Section 44AD from INR 2 crores to INR 3 crores, provided cash receipts do not exceed 5% of total turnover. Similarly, Section 44ADA's limit was raised to INR 75 lakhs from INR 50 lakhs under the same condition. The new ITR forms include a column for "receipts in cash" to reflect these changes.

11. Disclosure of information pertaining to the Capital Gains Accounts Scheme

[ITR 2, 3, 5, and 6]

Schedule-CG in ITR forms now requires more detailed information about sums deposited in the Capital Gains Accounts Scheme (CGAS), including the date of deposit, account number, and IFS code.

12. New Schedule 80GGC seeks details of contributions made to political parties

[ITR 2, 3, 5, and 6]

The new ITR forms now include Schedule 80GGC, which requires detailed information on contributions to political parties or electoral trusts, including the date of contribution, amount, transaction reference number, and bank details.

13. Schedule 80U inserted for claiming deduction if the assessee is a person with a disability

[ITR 3]

A new Schedule 80U has been added for claiming deductions under Section 80U for individuals with disabilities. It requires details such as the nature of the disability, date of filing Form 10-IA, and UDID number if available.

14. New Schedule 80DD seeks details towards maintenance & medical treatment of a person with a disability

[ITR 2 and 3]

The new ITR forms include Schedule 80DD for claiming deductions under Section 80DD for medical expenses or insurance premiums for family members with disabilities. It asks for information such as the nature of the disability, the type of dependent, and their PAN or Aadhaar number.

15. Reporting of dividend income derived from a unit located in IFSC

[ITR 2, 3, 5, and 6]

Section 115A has been amended to tax dividend income received from units in an IFSC at a reduced rate of 10%. The new ITR forms include this change in Schedule OS.

16. Schedule-OS includes an additional column for the declaration of bonus payments received under life insurance policies

[ITR 2 and 3]

Amendments in the Finance Act 2023 require the reporting of income from high-premium life insurance policies under Section 56(2). The ITR forms have been updated to include this in Schedule OS.

17. Reporting of sums received by a unitholder from the business trust

[ITR 2, 3, and 5]

Section 56(2)(xii) now includes the requirement for reporting sums received from business trusts by unitholders to avoid dual non-taxation. This change is reflected in the new ITR forms under Schedule OS.

18. Adjustment of unabsorbed depreciation from WDV of the block of assets as on 01-04-2023

[ITR 3 and 5]

Taxpayers opting for the Section 115BAC regime must adjust unabsorbed additional depreciation into the written down value (WDV) of assets as of April 1, 2023. Schedule DPM in the new ITR forms has been amended to reflect this change.

19. New Schedule 80-IAC seeks details in respect of eligible startup

[ITR 5 and 6]

The new ITR-5 includes Schedule 80-IAC, requiring startups to provide details such as the date of incorporation, nature of business, certificate number, first assessment year claiming the deduction, and the amount claimed.

20. New Schedule 80LA seeking details towards offshore banking unit or IFSC

[ITR 5 and 6]

A new Schedule 80LA in ITR-5 seeks details about deductions for offshore banking units or IFSCs, including the type of entity, type of income, registration details, and amount of deduction claimed.

21. New ‘Schedule 115TD’ inserted for reporting tax payable on accreted income

[ITR 5 and 6]

The new ITR forms include Schedule 115TD for reporting tax on accreted income for entities losing charitable status. This schedule requires details on the computation of accreted income and tax payable.

22. New field for opting concessional regime under Section 115BAE

[ITR 5]

A new field in ITR-5 allows resident cooperative societies engaged in manufacturing to opt for the concessional tax regime under Section 115BAE. The form requires the date of filing Form 10-IFA and its acknowledgment number.

Conclusion

The modifications in the income tax return forms for assessment year 2024-2025 reflect the Government's commitment to simplifying tax compliance and enhancing transparency.

By understanding these changes and preparing accordingly, taxpayers can ensure a smooth and hassle-free filing experience. It is advisable to consult with a tax professional to navigate these updates effectively and make the most of the new provisions.

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