ITR AY 23-24: Filers Need To Know These Important Changes

Taxpayers should be aware of the changes introduced in the Income Tax Return (ITR) filing process for AY2023-24. The deadline for filing ITR for the assessment year 2023-24 is July 31, 2023.

Says Dev Ashish, a SEBI registered investment advisor, "Choosing the correct form to file returns is crucial since using the wrong one could lead to issues later. For instance, if you have capital gains, you should file ITR-2. However, if you use ITR1 despite having capital gains to report, the I-T Department might ask you to correct and refile."

Mistakes while filing ITR could lead to potential financial losses. Keeping track of changes helps avoid errors and fulfil tax obligations.

Reporting income from crypto and other virtual digital assets and providing Donation Reference Number for claiming an 80G deduction are some of the crucial things taxpayers should note while filing ITR.

Opting Out Of New Tax Regime

Opting out of the New Tax Regime is now possible. Individuals with business or professional income must submit Form 10-IE by July 31, 2023, to switch from the new tax regime to the old one.

Those with only salaried income need not fill out Form 10-IE but can choose the 115BAC option while filing ITR 1 or ITR 2 to opt for the new one. The date of submission of Form 10-IE and the acknowledgement number will have to be entered in the ITR.

"In case you don't have any business income and are required to file ITR 1/ ITR 2, there is no need to file Form 10-IE to opt for the new tax regime under Section 115BAC of the Income Tax Act, 1961. The option to exercise the benefit under Section 115BAC, in case you have business income, can be claimed while filing the respective ITR form (ITR 1/ ITR 2)," Income Tax Department says.

If such individuals want to return to the old tax regime, they can file form 10-IE. Once the switch back to the old regime is done, current rules restrict returning to the new regime.

Linking PAN With Aadhaar

Linking PAN with Aadhaar is mandatory for all PAN holders (except exempt category) before June 30, 2023. Failure to link PAN with Aadhaar will render PAN inoperative and lead to consequences under the Income-tax Act, 1961.

If PAN becomes inoperative, you will not be able to furnish, intimate or quote your PAN and would be liable to all the consequences under the Act for such failure.

As per the I-T website, implications include, "Refund of any amount of tax or part thereof, due under the provisions of the Act shall not be made. Interest shall not be payable on such Refund for the period, beginning with the date specified under sub-rule (4) and ending with the date on which it becomes operative."

Income From VDAs Have To Be Reported

Income from the transfer of virtual digital assets (VDAs) must be reported in ITR-2/ ITR-3 and will be taxed at a rate of 30 per cent plus surcharge and cess. VDAs include crypto assets and NFTs. Deductions for expenses, except for acquisition costs, are not allowed. ITR forms now have a separate section for reporting VDA income, requiring details such as acquisition and transfer dates, category of income, and acquisition cost and consideration given.

Donation Reference Number To Be Provided For 80G Deduction

To claim deductions under Section 80G, taxpayers need the donation receipt and certificate (Form 10BE) from this year. Section 80G of the Income Tax Act, 1961, allows taxpayers to save tax by claiming deductions on donations to eligible charitable institutions.

The current year's ITR form requires disclosure of the Donation Reference Number (ARN) for donations eligible for a 50 per cent deduction. You should obtain the ARN from the donation certificate issued by the donee institution in Form 10BE and include it with your ITR.

Turnover From Intraday Trading

The intraday trading profit or loss is treated as business income, not capital gains. The new ITR forms, including ITR-6, have a specific section for reporting intraday trading activities, requiring details of turnover and income transferred to the Profit and Loss account.