What are the key changes in New ITR Forms for AY 2023-24?

Introduction

The income tax filing process in India undergoes regular updates and revisions to align with evolving tax laws and streamline the compliance procedures. As the assessment year 2023-24 begins, the Income Tax Department has introduced significant changes to the Income Tax Return (ITR) forms. These changes aim to enhance transparency, simplify compliance, and ensure accurate reporting of income and deductions. It is crucial for taxpayers to understand these changes and adapt to the new requirements to fulfill their tax obligations effectively. In this article, we will explore the concept of ITR forms and delve into the key changes implemented in the new ITR forms for AY 2023-24.

What are ITR Forms?

Income Tax Return (ITR) forms are official documents that taxpayers use to report their income, claim deductions, and compute their tax liability for a particular financial year. These forms serve as a medium for individuals, Hindu Undivided Families (HUFs), partnership firms, and other entities to provide the necessary information to the Income Tax Department. The ITR forms vary based on the type of taxpayer and the nature of income earned. Each form corresponds to a specific category of taxpayers and facilitates the reporting of income from various sources such as salary, house property, capital gains, business or profession, and other income.

What are the key changes in New ITR Forms for AY 2023-24?

Let’s explore the key changes in the new ITR forms for the assessment year 2023-24

• ITR-1(Sahaj): ITR-1 Form, also known as Sahaj, is the most commonly used form for individual taxpayers with income from salary, house property, and other sources. The new ITR-1 form for AY 2023-24 incorporates several modifications:

1. Details of capital gains: Taxpayers must now provide detailed information regarding capital gains arising from the sale of assets such as property, stocks, or mutual funds. The form also requires disclosure of the cost of acquisition and improvement, along with the sale consideration.

2. Income from business or profession: Individuals with presumptive business income are no longer eligible to file ITR-1 form. They are now required to use ITR-4 (Sugam) for reporting their income from business or profession.

• ITR-2 : ITR-2 form is applicable to individuals and Hindu Undivided Families (HUFs) not eligible to file ITR-1 form. The updated ITR-2 form brings the following changes:

1. Detailed schedule for salary income: Taxpayers must provide a detailed break-up of salary income, including allowances exempt under various sections of the Income Tax Act.

2. New section for income from business or profession: Individuals with income from business or profession, other than those opting for presumptive taxation, are required to disclose their income under a separate schedule.

3. Reporting of foreign assets: The new ITR-2 form mandates the reporting of foreign assets, including details of foreign bank accounts, immovable property, and investments held outside India.

• ITR-3: ITR-3 is applicable to individuals and HUFs with income from business or profession. The key changes in the ITR-3 form for AY 2023-24 are as follows:

1. Separate schedules for partners’ information: Partners in a partnership firm must now provide detailed information, including their shares in the firm’s profit and loss, assets, and liabilities.

2. Reporting of capital gains: The new ITR-3 form includes separate schedules for reporting short-term and long-term capital gains.

3. Mandatory GST information: Taxpayers registered under the Goods and Services Tax (GST) must now provide their GST-related details in the ITR-3 form.

• ITR-4 (Sugam): ITR-4, also known as Sugam, is applicable to individuals, HUFs, and firms (other than Limited Liability Partnerships) with presumptive income. The updated ITR-4 for AY 2023-24 incorporates the following changes:

1. Reporting of bank accounts: Taxpayers must provide details of all bank accounts held during the financial year, including those closed or opened during the year.

2. Schedule for business or profession: The form now requires taxpayers to provide a detailed break-up of income from business or profession, including separate sections for receipts, payments, and expenses.

3. Additional information on international transactions: Taxpayers engaged in specified domestic transactions or international transactions are required to furnish additional details in the ITR-4 form.

Conclusion

In conclusion, the new ITR forms for AY 2023-24 bring significant changes aimed at improving transparency, simplifying compliance, and ensuring accurate reporting of income and deductions. Taxpayers should familiarize themselves with these changes and diligently provide the required information to avoid penalties and ensure a smooth income tax filing process. It is advisable to seek professional guidance or consult the official guidelines provided by the Income Tax Department for a better understanding of the new ITR forms and their implications on individual taxpayers and businesses.