The Central Board of Direct Taxes (CBDT) has officially released the Income Tax Return (ITR) forms for the financial year 2023-24 (assessment year 2024-25). The new forms, ITR Forms 1 to 6, will come into effect from April 1, 2024, bringing with them a series of changes and enhanced disclosure requirements.
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Different ITR forms cater to specific purposes, and taxpayers are advised to carefully select the appropriate form to avoid complications.
Understanding the purpose of each ITR form
ITR-1 (SAHAJ)
This form is designated for resident individuals with a total income up to ₹50 lakh, encompassing income from salaries, one house property, and other sources.
According to experts, if the income of another person (spouse, minor child, etc.) has to be clubbed with the income of the assessee, return in ITR 1 can be filed only when such income falls in any of the mentioned categories.
However, if tax has been deducted in the name of such other person and the assessee wishes to claim its credit, then he/she cannot file a return in ITR 1.
ITR-2
Individuals and Hindu Undivided Families (HUFs) without income from business or profession, not eligible for ITR Form-1 (Sahaj), can use this form.
It is important to note that ITR-2 cannot be used by individuals or HUFs whose total income for the year includes business or professional income.
Additionally, individuals with income in the nature of interest, salary, bonus, commission, or remuneration from a partnership firm are not eligible to file ITR-2, as per income tax rules.
ITR-3
ITR-3 is specifically tailored for individuals or HUFs with income from business or profession.
This form must be used by those whose income under the head 'profits and gains of business or profession' include elements like interest, salary, bonus, commission, or remuneration from a partnership firm.
ITR-4 (SUGAM)
ITR-4, also known as SUGAM, is available for individuals, HUFs and firms (other than LLP) being a resident having a total income up to ₹50 lakh and having income from business and profession which is computed under sections 44AD, 44ADA or 44AE under Income Tax Act.
ITR-5
This form is applicable to entities other than individuals, HUFs, and companies, such as partnership firms and LLPs.
LLP or limited liability partnership is a partnership in which some or all partners have limited liabilities.
ITR-6
All companies registered under the Companies Act 2013 or the earlier Companies Act 1956 should file ITR 6 Form.
However, if the company's source of income comes from the property held for religious or charitable purposes are not required to file ITR 6 Form.
Changes incorporated to improve ease of filing
The changes in the ITRs aim to facilitate taxpayers and enhance the ease of filing, primarily driven by amendments in the Income-tax Act, 1961, introduced through the Finance Act, 2023.
Naveen Wadhwa, Vice President, Research and Advisory at Taxmann, emphasised that the CBDT introduces new fields in ITR forms annually to increase transparency in transactions and disclosures.
According to Wadhwa, the ITR forms for the assessment year 2024-25 include various new fields, such as the Legal Entity Identifier (LEI) number, acknowledgement number of the Audit Report and UDIN, and details of the Capital Gains Accounts Scheme.
"These additional fields require taxpayers to provide more detailed information when claiming various deductions. This will enhance accountability and transparency in tax compliance," he told CNBC-TV18.com.
First Published: Feb 5, 2024 3:47 PM IST
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