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THE NEW ITR FORM OF AY 2023-2024 REQUIRES DETAILS OF VIRTUAL DIGITAL ASSETS, SHARE TRADING

There are no changes in ITR-1 used by salaried persons and only a few changes in other formats. The notified ITR forms are effective from 1st April.

The CBDT earlier this month notified the income tax return forms for the assessment year 2023-24.

The Central Board of Direct Taxes notified the income tax return forms for the assessment year 2023-24 earlier this month. These forms are to be used for filing returns of income earned in FY23 ending March 31.

CBDT said in a statement, “To facilitate the taxpayers and facilitate filing, no significant changes have been made in the ITR form as compared to last year's ITR form. "The amendments to the Income Tax Act, 1961 have made only the minimum changes necessary."

There was no mention of a “common ITR form” proposed by the CBDT in November to replace six of the seven ITR forms, for which inputs were sought from stakeholders and the general public.

Tax practitioners and experts said that the notification of the form before the end of FY23 will help file returns from the beginning of the AY itself.

Well in time

Intimation of ITR in advance is indeed a healthy financial practice. It helps taxpayers to plan ahead, without making too many changes, which is a big relief for both taxpayers and professionals.

This year, the government has notified ITRs much earlier than March and this will give taxpayers enough time to prepare for the corrections.

Some changes have been made taking into account the provisions introduced in the Finance Act last year.

From April 1, 2022, the tax applies to profits from transactions in virtual digital assets. Further, from July 1, transactions in assets such as cryptocurrencies and non-fungible tokens above Rs 10,000 are subject to a 1 per cent withholding tax deduction.

These changes have been incorporated in ITR, which has a separate VDA schedule for disclosure of income from virtual digital assets in ITR2/ITR3/ITR5/ITR6.

As per the new schedule, information related to VDA transactions must be filled in.

For the purpose of determining the tax consequences, taxpayers must provide the date of acquisition and transfer, the income under which the tax is to be levied, the cost of acquisition, the consideration received and the income from the transfer of the VDA.

In the case of a gift, the amount on which tax has been paid in terms of 56(2)(x) if any, and in any other case, the cost to the previous owner must be entered.

Those trading in equity markets may be required to make additional disclosures.

"Now, where share trading business is carried on, the entire trading should also be split into intra-day trading and delivery-based trading and reported accordingly in ITR3/ITR5/ITR6,"

Tax Regime

In addition, the form has been revised to include additional questions related to the choice of the new tax regime.

The form requires the taxpayer to report whether the filer has opted for the new method in the last assessment year and also the assessment year he has opted for. In addition, a question has been asked whether taxpayers have opted out of the new regime in any of the previous years and whether taxpayers are expected to mention 10IE details for both opt-outs. 

Regards

Santosh Patil

Founder

Alliance Tax Experts

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