Key changes in ITR forms for FY23-24: From cash turnover to detailed deduction requirements

The Central Board of Direct Taxes (CBDT) has recently released the Income Tax Return (ITR) forms for the financial year 2023-24. Set to come into effect from April 1, 2024, the new ITR forms, numbered 1 to 6, have been designed to ensure a more transparent and comprehensive reporting mechanism.

Yeeshu Sehgal, Head of Tax Market at AKM Global, highlighted a pivotal change for taxpayers filing ITR 1. They are now required to indicate their choice of tax regime directly in the return of income.

"This shift stems from the new tax regime becoming the default option," Sehgal told CNBC-TV18.com.

Notably, this form is designated for resident individuals with a total income of up to ₹50 lakh, encompassing income from salaries, one house property, and other sources.

ITR-4, also known as SUGAM, is available for individuals, HUFs and firms (other than LLP) being a resident having a total income of up to ₹50 lakh and having income from business and profession which is computed under sections 44AD, 44ADA or 44AE under Income Tax Act.

Taxpayers opting for ITR 4 will now need to file Form 10-IEA to opt out of the new tax regime. Form 10-IEA was introduced to allow taxpayers to opt for the old regime if they wish to do so.

"This additional step adds a layer of flexibility for those who wish to choose an alternative taxation approach," Sehgal said.

Another notable inclusion in both ITR 1 and 4 is a new column for reporting the amount eligible for deduction under section 80CCH of the Income-tax Act.

This specifically pertains to deductions allowed for individuals enrolled in the Agnipath Scheme and subscribing to the Agniveer Corpus Fund post-November 1, 2022.

For ITR 4 filers, a significant modification involves the introduction of a "receipts in cash" column.

"This is aimed at disclosing cash turnover or cash gross receipts. The turnover threshold limit for opting for the presumptive taxation scheme under Section 44AD has been raised from ₹2 crores to ₹3 crore, provided cash receipts do not exceed 5% of the total turnover or gross receipts," Sehgal said.

Similarly, Section 44ADA was amended to enhance the threshold limit of gross receipts from ₹50 lakh to ₹75 lakh, if the receipts in cash do not exceed 5% of the total gross receipts for the previous year.

ITR 6, designed for companies, now mandates additional details, including the Legal Entity Identifier (LEI), MSME registration number, reasons for tax audit under section 44AB, disclosure of winnings from online games taxable under section 115BBJ, and virtual digital assets.

Companies filing ITR 6 are now required to provide acknowledgement numbers and Unique Document Identification Number (UDIN) for audit reports under section 44AB (tax audit report) and section 92E (transfer pricing report).

Companies seeking a refund of ₹50 crore or more must provide the Legal Entity Identifier (LEI) as part of their filing requirements.

Additional clauses have been introduced in ITR 6 for sums payable to micro or small enterprises.

"These clauses require companies to furnish details of sums payable beyond the specified time limit under the MSME Act. Such payments will not be allowable as a deduction under section 43B of the Income-tax Act, aiming to promote timely payments to MSMEs," Sehgal said.