ITR filing: Know the changes in income tax return forms for FY24

ITR filing: Know the changes in income tax return forms for FY24

July 31 - the due date to file income tax returns for the financial year 2023-24 (assessment year 2024-25) - is just round the corner.

If you haven't done so already, you need to start preparing for completing the exercise soon. And, identifying the right ITR form most suitable for you is one of the first few steps you need to take.

In the new ITR forms released earlier this year, the income tax (I-T) department sought additional details around tax deductions such as donations to political parties, disabled dependents’ PAN and Aadhaar if you are availing of deductions under section 80DD, information on high-value policies and so on.

Here are the key changes across forms that you need to be aware of before you commence your return-filing process.

More disclosures around exemption

The objective is to keep incorrect tax deductions in check. Last year, the I-T department sent out a host of notices to individual taxpayers, in effect, asking them to justify the tax breaks claimed.

For instance, now, you will have to  make additional disclosures around donations made to political parties.

You will have to share the details of donations made under section 80GGC to political parties. For instance,  apart from the contribution amount, which can be claimed as 100 percent tax deduction, you will have to disclose the break-up in the form of mode of payment, specific transaction number linked to bank transfer and so on.

In fact, ensure that you carefully preserve the documentary proofs for all the tax-saver investments made, if queries arise.

Day traders, too, need to mention the details of cess and turnover if the assets are bought and sold on the same day.

Bank accounts and life insurance policies

For those who have received annual bonuses under life insurance policies, there is now a dedicated column in ITR-2 and ITR-3, where they need to declare the details of bonus payments received during the financial year.

Additionally, you also need to declare whether any money received from a high-premium life insurance policy is chargeable to tax. If that is the case, then the excess needs to be mentioned under income from 'other sources', which is a separate schedule.

Maturity proceeds received from life insurance policies where annual premiums exceed 10 percent of the sum assured are taxable. In addition, as per Budget 2022 and Budget 2023 announcements, proceeds from unit linked insurance policies (Ulip) with annual premiums of over Rs 2.5 lakh as well as endowment policies with yearly premiums of more than Rs 5 lakh are taxable.

If you do not use the ITR-1, then chances are that you would have to disclose not just the bank accounts you currently hold but even those that you may have maintained at any point in time. You can, however, exclude the dormant bank accounts while filing ITR-2, 3 and 5.

Have disabled dependents? Forms seek additional details

While filing your returns for FY 2023-24, you will need to mention not only the amount claimed under Section 80DD but also share details including the exact disability, the specification of the dependent (your relation) and their PAN and Aadhaar. This deduction entails a benefit of Rs 75,000 or Rs 1.25 lakh.

The date of submitting Form 10-IA (certificate of the medical authority for certifying disabilities), the acknowledgement number and the UDID Number (unique identification number for people with disabilities), too, will be needed.

Employee Stock Options (ESOPs)

Employees of select start-ups are permitted a deferment of taxation with respect to employee stock options (ESOPs) or shares allotted to employees free of cost or at a concessional rate.

To claim these tax benefits on ESOP you would need not just the tax amount and the linked year but also the PAN of the eligible startup along with the Department for Promotion of Industry and Internal Trade (DPIIT) registration number.

Virtual assets and online winnings

You will have to furnish quarter-wise break-up of crypto investments, or virtual digital assets (VDA), that you may have made during the year, under ITR-1, 2, and 4.

To report the online game winnings, Schedule OS has been altered to enable disclosure of prize money through online games, chargeable under Section 115BBJ.

The backbone of this initiative has been the recently introduced Annual Information Statement (AIS), which carries all the information reported about an individual from the tax perspective. This is a dynamic statement that changes every time someone reports data about a taxpayer.

While in the past errors in AIS caused mismatch of data and hence processing of returns, the I-T department has launched a verification system to weed out misinformation early in the cycle, by helping individuals report errors through a feedback mechanism.