Income Tax Return Filing | ITR-2 and ITR-3 forms notified for FY23-24 — check list of changes

The Central Board of Direct Taxes (CBDT) has officially released the income tax return (ITR) forms — ITR-2 and ITR-3, for the financial year 2023-24 (assessment year 2024-25). The release encompasses changes and implications for various entities, including individuals and Hindu Undivided Families (HUFs).

The ITR-2 and ITR-3 forms are applicable for filing income tax returns (ITRs) related to earnings in the preceding year, spanning from April 1, 2023, to March 31, 2024.

Taxpayers can file their returns by the deadline of July 31, 2024.

This is designed for both individuals and HUFs, whether resident or non-resident, with specific income sources.

These sources include:

Salary or pension

Income or loss from one or more house properties

Income or loss under the head 'capital gains'

Income under the head 'other sources' (including income chargeable at special rates)

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, on the other hand, 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.

Importantly, ITR-3 is not applicable to individuals or HUFs without business or professional income.

The updated forms include various new fields for disclosures, such as Legal Entity Identifier (LEI) number, an acknowledgement number of the audit report, UDIN, and details of the capital gains accounts scheme, etc.

Individuals or HUFs subjected to a tax audit can now verify their ITR using the electronic verification code (EVC), a departure from the earlier method that exclusively relied on digital signature certificates (DSCs).

Addressing these changes, Naveen Wadhwa, Vice President, Research and Advisory, Taxmann, said, "The new ITR forms require taxpayers to provide more detailed information to claim various deductions. This move by the CBDT is a step towards ensuring greater accountability and transparency in tax compliance."

The CBDT had previously unveiled ITR forms 1 and 4 for the assessment year 2024-25 in December.

It is worth noting that ITR forms are crucial tools for taxpayers to comply with income tax regulations and report their financial activities accurately.