The Income Tax Return (ITR) filing season is on and many taxpayers are still wondering if the Income Tax Department has introduced any changes in the forms considering new investment options and how they must be taxed under the new tax regime.
Taxpayers should familiarize themselves with the modifications made to the ITR forms this year, as there have been a few adjustments in comparison to the forms used last year, and this knowledge is essential prior to commencing the filing process.
Let’s take a closer look at the significant changes incorporated in the latest ITR forms, some of which are:
Reporting income derived from cryptocurrencies, non-fungible tokens (NFTs), and other virtual digital assets (VDAs) is now mandatory
Effective from 1st April 2022, the Income Tax Act has implemented specific provisions to tax incomes related to the VDAs. Additionally, the Tax Deducted at Source (TDS) under section 194S is applicable to payments received for crypto transactions.
To accommodate these changes, the ITR forms have been revised and now require the taxpayer to disclose income from VDAs. The taxpayer must indicate whether the VDA income should be classified as business income or capital gains, reporting it under the relevant income head accordingly.
If you have earned any income from cryptocurrencies in the financial year 2022-23, it is advisable to have the necessary details readily available while filing your return. These details include the date of acquisition, date of transfer, cost of acquisition, and sale proceeds.
Taxpayers should also cross-check their Form 26AS and AIS to ensure that the income from VDAs, on which tax has been deducted under section 194S, has been correctly included in the ITR form.
When making a donation that qualifies for a Section 80G deduction, it is now necessary to disclose the Donation Reference Number (ARN)
Philanthropy takes centre stage! A fresh column has been introduced to reveal the Donation Reference Number (referred to as ARN in the ITR forms) for donations made to entities that qualify for a 50 per cent deduction, within the specified qualifying limits.
This means that simply having a donation receipt may no longer be sufficient for claiming the deduction. The ARN is a unique reference number and can be found on Form 10BE or the receipt issued by the recipient organization.
Hence, if your donation is eligible for the aforementioned deduction, it is essential to ensure that your Form 10BE or donation receipt accurately displays the ARN.
Intraday trading disclosure
In the latest ITR forms, there is now a specific requirement to provide separate disclosure of intraday trading details in Part A - Trading Account. This includes reporting the turnover from intraday trading and disclosing income derived from intraday activities as additional information.
Changes regarding TCS
Under specific circumstances, taxpayers may encounter Tax Collected at Source (TCS) deductions. For instance, banks collect TCS when making remittances under the Liberalised Remittance Scheme. Taxpayers have the opportunity to claim this TCS as a credit or set off against their income tax liability when filing their ITR.
In certain exceptional scenarios, taxpayers may also be eligible to claim TCS credit pertaining to another person, which can be utilized to offset their own tax liability. The latest ITR form now includes an option for taxpayers to claim such TCS credit related to another person, addressing these unique situations.
Income from foreign retirement accounts is now taxable
Starting from April 01, 2021, resident individuals have the option to defer tax on income earned from foreign retirement benefits accounts. This deferral allows individuals to postpone the tax payment from the year of accrual to the year of withdrawal from the account, as per the provisions of Section 89A relief. However, if the taxpayer later becomes a non-resident, the income on which relief was previously claimed under Section 89A will become taxable for the taxpayer.
Previously, the ITR forms only necessitated the disclosure of income from the withdrawal of retirement benefits accounts. However, for FY 2022-23, the ITR forms now also mandate the disclosure of income that was eligible for relief under Section 89A in prior years but has become taxable in the current year. This includes situations where the income becomes taxable due to factors such as the individual's transition to non-resident status.
Old vs new tax regime
Forms ITR-3 and ITR-4 now feature a new questionnaire aimed at identifying whether taxpayers have chosen to opt out of the New Tax Regime in previous years.
Other changes
The ITR forms for the assessment year 2023-24 have incorporated several additional changes. These include the inclusion of supplementary disclosures regarding advances in the Balance Sheet within ITR-3. Furthermore, taxpayers who are foreign institutional investors (FIIs) or foreign portfolio investors (FPIs) registered with SEBI are now obligated to disclose their SEBI registration number in the ITR forms.
