30 Changes in New ITR Forms for AY 2022-23

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itr forms

– Authored by Taxmann’s Editorial Team

The CBDT has notified the Income-tax Return (ITR) Forms (‘New ITR Forms’) for the Assessment Year 2022-23 vide Notification No. 21/2022, dated 30-03-2022 & Notification No. 23/2022, dated 01-04-2022.

The new ITR forms do not tinker with the applicability of ITR forms to different taxpayers. No new condition has been added to squeeze the applicability of simple ITR forms (ITR 1 and ITR 4) to existing small taxpayers. The new ITR forms seek additional disclosures of the date of purchase and sale of land and building. An individual has to choose the suitable option in support of his selection of a residential status, i.e., an individual has to choose one out of four options if he is an ordinarily resident in India. Many changes in the ITR forms are consequential to the amendments made by the Finance Act 2021 and Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.

We have done a thorough analysis of new ITR Forms (ITR 1 to 6) and highlighted all key changes and new requirements in current ITR forms viz-a-viz last year ITR Forms. These changes are explained below:

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Table of Contents

  1. Form to be used by a taxpayer to file the Income-tax return for the assessment year 2022-23
  2. Schedule FA requires reporting of foreign assets held and foreign income earned during the calendar ending 31st December
  3. Additional disclosures are required in the Schedule of Capital Gains
  4. Deduction in respect of capital gains charged under Section 45(4) which is attributable to assets, remained with firm
  5. Dividend income taxable as per section 2(22)(e) to be reported separately
  6. Disclosures in respect of Significant Economic Presence
  7. Reporting of interest accrued on Provident Fund to which no exemption is available
  8. Adjustment of unabsorbed depreciation (pertaining to additional depreciation) from WDV of the block of assets as on 01-4-2020
  9. A New Schedule has been inserted for reporting of tax deferred on ESOP
  10. Limiting the rate of surcharge on dividend income
  11. Relief under Section 89A from taxation in income from retirement benefit account maintained in a notified country
  12. Exclusion of ‘Dividend income’ from Schedule BP
  13. Disclosure of interest income taxable at a concessional rate of 4% under Section 194LC
  14. Disclosure of income of FII and specified fund chargeable under section 115AD
  15. Separate disclosure of Income from Units located in IFSC in Schedule AMT
  16. Separate disclosure of Income from Units located in IFSC in Schedule MAT
  17. Schedule 80GGA has been inserted for the partners deriving only profit from firm
  18. Consequential changes in Schedule 80-IA and 80-IB due to sun-set clause on the eligibility to claim the deduction
  19. Total secondary adjustments made to be disclosed
  20. Disclosure of interest paid to Deposit-taking NBFCs or Systemically Important Non-deposit Taking NBFCs
  21. Additional disclosure required of income exempt under certain clauses of Section 10
  22. Separate disclosure is required of interest and dividend incomes taxable under Section 115AC
  23. Removal of reference of Section 153A and 153C for the return filed in response to a notice
  24. Nature of employment for pensioners is further categorised
  25. Disclosure for alternative tax regime opted under Section 115BAC
  26. Disclosure for alternative tax regime opted under Section 115BA/115BAA/115BAB
  27. Disclosure for alternative tax regime opted under Section 115BAD
  28. Additional information sought from the assessee not opting for the presumptive tax scheme
  29. Mandatory to choose the suitable option in support of residential status in India
  30. New Schedule IF inserted to seek the disclosure of investment made in unincorporated entity

1. Form to be used by a taxpayer to file the Income-tax return for the assessment year 2022-23

Nature of income ITR 1* ITR 2 ITR 3 ITR 4 *
Salary Income
Income from salary/pension (for ordinarily resident person)
Income from salary/pension (for not ordinarily resident and non-resident person)
Any individual who is a Director in any company
If payment of tax in respect of ESOPs allotted by an eligible start-up has been deferred
Income from House Property
Income or loss from one house property (excluding brought forward losses and losses to be carried forward)
Individual has brought forward loss or losses to be carried forward under the head House Property
Income or loss from more than one house property
Income from Business or Profession
Income from business or profession
Income from presumptive business or profession covered under section 44AD, 44ADA and 44AE (for person resident in India)
Income from presumptive business or profession covered under section 44AD, 44ADA and 44AE (for not ordinarily resident and non-resident person)
Interest, salary, bonus, commission or share of profit received by a partner from a partnership firm
Capital Gains
Taxpayer has held unlisted equity shares at any time during the previous year
Capital gains/loss on sale of investments/property
Income from Other Sources
Family Pension (for ordinarily resident person)
Family Pension (for not ordinarily resident and non-resident person)
Income from other sources (other than income chargeable to tax at special rates including winnings from lottery and race horses or losses under this head)
Income from other sources (including income chargeable to tax at special rates including winnings from lottery and race horses or losses under this head)
Dividend income exceeding Rs. 10 lakhs taxable under Section 115BBDA
Unexplained income (i.e., cash credit, unexplained investment, etc.) taxable at 60% under Section 115BBE
Person claiming deduction under Section 57 from income taxable under the head ‘Other Sources’ (other than deduction allowed from family pension)
Deductions
Person claiming deduction under Section 80QQB or 80RRB in respect of royalty from patent or books
Person claiming deduction under section 10AA or Part-C of Chapter VI-A
Total Income
Agricultural income exceeding Rs. 5,000
Total income exceeding Rs. 50 lakhs
Assessee has any brought forward losses or losses to be carried forward under any head of income
Computation of Tax liability
If an individual is taxable in respect of an income but TDS in respect of such income has been deducted in hands of any other person (i.e., clubbing of income, Portuguese Civil Code, etc.)
Claiming relief of tax under sections 90, 90A or 91
Others
Assessee has:

    • Income from foreign sources
    • Foreign Assets including financial interest in any foreign entity
    • Signing authority in any account outside India
Income has to be apportioned in accordance with Section 5A
If the tax has been deducted on cash withdrawal under Section 194N
* ITR-1 can be filed by an Individual only who is ordinarily resident in India. ITR-4 can be filed only by an Individual or HUF who is ordinarily resident in India and by a firm (other than LLP) resident in India.
Other Assessees
Status of Assessee  ITR 4 ITR 5 ITR 6 ITR 7
Firm (excluding LLPs) opting for presumptive taxation scheme of section 44AD, 44ADA or 44AE
Firm (including LLPs)
Association of Persons (AOPs)
Body of Individuals (BOI)
Local Authority
Artificial Juridical Person
Companies other than companies claiming exemption under Section 11
Persons including companies required to furnish return under:

§ Section 139(4A);

§ Section 139(4B);

§ Section 139(4C);

§ Section 139(4D);

Business Trust
Investment Fund as referred to in Section 115UB

 

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2. Schedule FA requires reporting of foreign assets held and foreign income earned during the calendar ending 31st December

[ITR 2, 3, 5 & 6]

Background

The ITR Forms (except ITR 1 and ITR 4) applicable for the Assessment Year 2022-23 require a resident taxpayer to disclose his foreign assets in Schedule FA. Reporting is required even if the taxpayer is a beneficial owner of such foreign asset or has a financial interest in a foreign entity. Disclosure in Schedule FA of various foreign assets such as Foreign Depository Account, Immovable Property, trusts created outside India, etc., is required. The reporting requirement is mandatory only for a taxpayer who is a resident in India. Schedule FA is not required to be filed up by a taxpayer who is ‘not ordinarily resident’ or is a ‘non-resident’.

Schedule FA in the old ITR Forms required the reporting of foreign assets only if the person had held them at any time during the ‘relevant accounting period’. The ‘accounting period’ is not defined in the Act. However, the instructions issued by the CBDT for filing of ITR Forms had provided the meaning of the term. For example, for AY 2021-22, the accounting period means from 1st January 2020 to 31st December 2020 in respect of foreign assets or accounts, etc., held in those jurisdictions where the calendar year is adopted as a basis for the closing of accounts and tax-filings.

The CBDT has clarified that a taxpayer shall be required to report foreign assets only if such assets have been held at any time during the “previous year” (of India) as also during the ‘relevant accounting period’ (on the foreign tax jurisdiction).

For example, in the example cited above, Mr. A has acquired a flat in USA in January 2021 and sold it in March 2021. For the previous year 2021-22, the relevant accounting period will be 01-01-2021 to 31-12-2021. The transaction of purchase of flat falls in the relevant Accounting Period. Thus, Mr A is required to report such Foreign Asset in ITR though the same is not held in the previous year 2021-22.

Change in New ITR Form

The new ITR Forms have replaced the expression “accounting period” with “calendar year ending as on 31st December 2021”. This change implies that the assessee shall furnish the details of all foreign assets held between 01-01-2021 and 31-12-2021 in return to be filed for the assessment year 2022-23. Irrespective of the fiscal year followed in the foreign country (like, Australia follows July to June, Costa Rica follows October to September, etc.), the reporting is to be made if the specified foreign assets are held on 31-12-2021. This change removes all scope of misunderstanding or miscalculating the reporting period.

Example 1

Relevant previous year 01-04-2021 to 31-03-2022
Relevant calendar year 01-01-2021 to 31-12-2021
Date of purchase of shares of Google LLC January 2021
Is the assessee required to furnish the details regarding the foreign assets acquired? Yes

The assessee is required to furnish the details of Google LLC’s share in ITR applicable for Assessment Year 2022-23 even if he has not held the foreign asset in the relevant previous year.

Example 2

Relevant previous 01-04-2021 to 31-03-2022
Relevant calendar year 01-01-2021 to 31-12-2021
Date of purchase of shares of Google LLC January 2022
Is the assessee required to furnish the details regarding the foreign assets acquired? No

The shares of Google LLC were acquired within the previous year but after the end of the relevant calendar year. Thus, the assessee is not required to furnish the details of Google LLC’s share in ITR applicable for Assessment Year 2022-23. The disclosure requirement for such investment shall arise in the Assessment Year 2023-24 only.

 

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3. Additional disclosures are required in the Schedule of Capital Gains

[ITR 2, 3, 5 & 6]

New ITR Forms require the following additional disclosures in the Schedule CG (Capital Gains):

  • Date of purchase and sale of land/building

It will be mandatory to furnish the date of purchase and date of sale of land or building if the income arising from the transfer is taxable under the head of ‘Capital Gains’. This additional disclosure would help the tax authorities to verify the eligibility of the assessee and the allowability of exemption under Section 54, 54EC and 54F of the Income-tax Act, 1961 (‘the Act’).

  • Country and Zip Code if the property is situated in a foreign country

It was mandatory to furnish in the ITR forms the details of the buyers and the address of the property transferred. The new ITR Forms now require the Country Code and ZIP Code as well if the property is situated outside India.

  • Disclosure of FMV of capital assets and consideration received in a slump sale transaction

The Finance Act 2021 has amended Section 50B to provide that in case of a slump sale, the Fair Market Value (FMV) of undertaking or division transferred shall be deemed as the full value of the consideration received or accruing as a result of the transfer of such capital asset. The CBDT was empowered to prescribe the method for determining the FMV of such undertaking or division.

In exercise of such power, CBDT has inserted a new Rule 11UAE. It provides that the higher of the following on the date of slump sale shall be deemed as Full value of consideration: 

  • Fair Market Value of the capital assets transferred by way of slump sale; or
  • Fair Market Value of the consideration received or accruing due to transfer by way of slump sale.

The new ITR forms require reporting of the FMVs calculated as per Rule 11UAE.

(Read More: FMV of Undertaking or Division for Slump Sale on Taxmann.com/Practice)

  • Year-wise details of the cost of improvement to land/building

The assessee is required to give year-wise details of the cost of improvement (if any) incurred on the land/building transferred during the relevant year. The new ITR forms seek the following additional details from the taxpayers:

  • Cost of improvement;
  • Year of improvement; and
  • Cost of improvement with indexation.

These details are required to be given year-wise if the assessee has incurred the cost of improvement in different financial years.

(Read More: Cost of improvement for computation of capital gains on Taxmann.com/Practice)

  • Separate disclosure of cost of acquisition and indexed cost of acquisition

In the previous ITR forms, the assessee was required to disclose only the indexed cost of acquisition of property transferred. The new ITR Forms require the assessee to mention both the ‘cost of acquisition’ and the ‘indexed cost of acquisition’.

(Read More: Computation of capital gains in case of immovable property on Taxmann.com/Practice)

4. Deduction in respect of capital gains charged under Section 45(4) which is attributable to assets, remained with firm

[ITR 5]

Background

The Finance Act 2021 has made the partnership firm liable to pay tax on the business income or the capital gains arising from the transfer of assets to the partner on dissolution or reconstitution of the firm. The computation of income from such distribution shall be made as per Section 9B and Section 45(4). Section 48(iii) allows an additional deduction for the capital gains charged to tax under section 45(4), which is attributable to the capital asset remaining with the firm. The CBDT has inserted Rule 8AB to prescribe the manner in which such attributable amount is to be computed.

Change in New ITR Form

The new ITR 5 has amended Schedule CG (Capital Gains) to disclose the deduction allowable under Section 48(iii) in respect of the capital gains charged to tax under section 45(4), which is attributable to the capital asset remaining with the firm.

(Read More: Computation of deduction under Section 48(iii) on Taxmann.com/Practice)

5. Dividend income taxable as per section 2(22)(e) to be reported separately

[ITR 2, 3, 5 & 6]

Background

Any payment by way of loan or advance, by a closely held company, to a shareholder who is the beneficial owner of 10% or more equity capital of the company, or to a concern in which the shareholder has a substantial interest is deemed to be a dividend to the extent it is covered by the accumulated profits, excluding capitalised profits.

Until last year, there was no separate disclosure of dividend income taxable under Section 2(22)(e). Total amount of dividend received by a taxpayer during the financial year is clubbed and reported in Schedule OS (Other Sources).

Change in New ITR Form

The new ITR forms seek separate reporting of dividend income taxable under Section 2(22)(e).

(Read More: Deemed Dividend on Taxmann.com/Practice)

6. Disclosures in respect of Significant Economic Presence

[ITR 3, 5 & 6]

Background

Explanation 2A to Section 9(1)(i) provides that ‘Significant Economic Presence’ (SEP) of a non-resident in India shall constitute a business connection in India. For this purpose, ‘significant economic presence’ shall mean:

  • Any transaction in respect of any goods, services or property carried out by a non-resident with any person in India, including the provision of download of data or software in India if the aggregate of payments arising from such transaction or transactions during the previous year exceeds Rs. 2 crores; or
  • Systematic and continuous soliciting of business activities or engaging in interaction with 3 lakh users in India.

Change in New ITR Form

In the new ITR forms, the non-resident has to confirm if there is a Significant Economic Presence (SEP) in India or not. If there is a SEP in India, the above-mentioned details of transactions and users have to be provided in the ITR Form.

(Read More: Significant Economic Presence on Taxmann.com/Practice)

7. Reporting of interest accrued on Provident Fund to which no exemption is available

[ITR 2 & 3]

Background

The Finance Act 2021 has amended Sections 10(11) and 10(12) to provide that no exemption shall be allowed in respect of interest income accrued during the previous year in the recognised and statutory provident fund to the extent it relates to the amount or the aggregate of amounts of the contribution made by the employee exceeding Rs. 2,50,000 in any previous year on or after 01-04-2021.

The interest income accruing in respect of the employee’s contribution over Rs. 2,50,000 shall be taxable under the head of “income from other sources”. However, if such person has contributed to a fund in which there is no contribution by the employer, the limit of Rs. 2,50,000 shall be increased to Rs. 5,00,000. The method for the computation of such interest income has been prescribed in Rule 9D.

Change in New ITR Form

In the new ITR forms, the Schedule OS (Other Sources) has been amended to incorporate the reporting requirement of such interest income.

(Read More: Calculation of taxable portion of interest on PF contribution on Taxmann.com/Practice)

8. Adjustment of unabsorbed depreciation (pertaining to additional depreciation) from WDV of the block of assets as on 01-4-2020

[ITR 3 & 6]

Background

An assessee opting for Section 115BAC is not eligible to set off the unabsorbed depreciation attributable to additional depreciation. Such unabsorbed depreciation relating to additional depreciation which has not been given full effect shall be adjusted to the written down value (WDV) of the block of assets as on 01-04-2020 in the prescribed manner. Third proviso to Rule 5(1) provides that the WDV of the block of asset as on 01-04-2020 shall be increased by such depreciation not allowed to set off.

Change in New ITR Form

In the new ITR Forms, Schedule DPM, which deals with depreciation on Plant and Machinery, has been amended. It provides that the WDV of the block as on 01-04-2020 shall be increased by the amount of unabsorbed depreciation (pertaining to additional depreciation), which was not allowed to be adjusted on account of opting for Section 115BAC.

Similar changes have been made in Schedule DPM of ITR-5, if a co-operative society has opted for the alternative tax regime under Section 115BAD.

(Read More: Alternate tax regime for Individual or HUF and Alternate tax regime for Co-operative society on Taxmann.com/Practice)

9. A New Schedule has been inserted for reporting of tax deferred on ESOP

[ITR 2 & 3]

Background

An employee can defer the payment or deduction of tax in respect of shares allotted under ESOP (specified securities) by an eligible start-up referred under Section 80-IAC. The tax is paid or deducted in respect of such ESOPs within 14 days from the earliest of the following period:

  • After the expiry of 48 months from the end of assessment year relevant to the financial year in which ESOPs are allotted;
  • From the date the assessee ceases to be an employee of the organisation; or
  • From the date of sale of shares allotted under ESOP.

The Part B of Schedule TTI (Computation of tax liability on total income) in ITR Forms of AY 2021-22 shows the disclosure of the tax amount deferred in this respect.

Change in New ITR Form

The New ITR Forms have inserted a “Schedule: Tax Deferred on ESOP”. The Schedule seeks the following disclosures:

  • Amount of tax deferred in ITR filed for AY 2021-22;
  • Date of sale of specified securities and amount of tax attributable to such sale;
  • Date on which he ceased to be an employee of the organisation;
  • Amount of tax payable in current assessment year;
  • Balance amount of tax deferred to be carried forward to next assessment years.

As the outer limitation period of 48 months from the end of assessment year relevant to the financial year in which ESOPs are allotted is not yet over, the employee shall be liable to pay tax deferred in the assessment year 2021-22 in the previous year 2025-26.

The new Schedule has been inserted to keep track of the amount of tax deferred by the employee and the year it should be taxed. The tax payable in the current assessment year is exported in a new row introduced in Schedule Part B – TTI (Computation of tax liability on total income).

(Read More: Taxability of Perquisites arising from ESOPs on Taxmann.com/Practice)

10. Limiting the rate of surcharge on dividend income

[ITR 2, 3 & 5]

Background

The Finance Act 2020 abolished the Dividend Distribution Tax and moved to the traditional system of taxation wherein companies or mutual funds do not pay DDT on dividends and the shareholders or unit-holders are liable to pay tax on such income. As the dividend income is taxable in the hands of the investors, the Finance Act 2020 and Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 removed the enhanced surcharge on the dividend income.

Thus, in case of Individual, HUF, AOP, BOI, or AJP (including FPI and Specified Category-III AIFs), the surcharge on tax on dividend income shall be levied at the rate of 10% if it exceeds Rs. 50 lakh but does not exceed Rs. 1 crore and at the rate of 15% when it exceeds Rs. 1 crore.

Change in New ITR Form

The consequential changes have been made in Schedule Part B – TTI (Computation of tax liability on total income) to limit the rate of surcharge on dividend income taxable under Section 115AD and other dividend income.

(Read More: Taxability of Dividend Income on Taxmann.com/Practice)

11. Relief under Section 89A from taxation in income from retirement benefit account maintained in a notified country

[ITR 1, 2, 3 & 4]

Where a non-resident becomes a resident in India, the amount of income in his foreign retirement benefits account is chargeable to tax in India on an accrual basis. However, some countries tax such an amount at the time of receipt. Due to a mismatch in the year of taxability of such income in retirement funds, the taxpayers (generally non-residents who have permanently returned to India) face difficulties in availing of the foreign tax credit in respect of tax paid outside India on such income.

Section 89A, inserted with effect from the assessment year 2022-23, removed the aforesaid difficulty by providing that the income of a specified person from the specified account shall be taxed in such manner and for such year as may be prescribed by rules. The Board has not notified any rules yet. However, the new ITR Forms have amended Schedule S (Details of Income from Salary) to disclose:

  • Income from retirement benefits account maintained in a notified country under Section 89A.
  • Income from retirement benefit account maintained in a country other than notified country under Section 89A.

The eligible taxpayer is allowed to claim a deduction of ‘Income claimed for relief from taxation on the application of Section 89A’. It is not clear yet how such a deduction shall be computed?

A similar disclosure has to be made in the Schedule OS (Income from Other Sources) in respect of the family pension.

12. Exclusion of ‘Dividend income’ from Schedule BP

[ITR 3, 5 & 6]

Background

Schedule BP (Computation of income from business or profession) provides for the exclusion of certain incomes/receipts, which are credited to the profit and loss account but are taxable under other heads of income. This list includes income/receipt taxable under:

  • House Property
  • Capital Gains
  • Other Sources
  • Section 115BBF (income from patent)
  • Section 115BBG (income from transfer of carbon credits)

Change in New ITR Form

The new ITR Forms add “dividend” in the list to exclude it from the Schedule BP if it is credited to the Profit and Loss account. This explicit exclusion of dividend income from Schedule BP is in line with Section 56(2)(i), which provides that the dividend income is taxable under the head of “income from other sources”. It should be noted that where the dividend is received in respect of shares or securities held as stock-in-trade, various courts have held that it should be treated as the income arising in the course of business, though for the purpose of chargeability, it is included under the head of “income from other Sources”.

13. Disclosure of interest income taxable at a concessional rate of 4% under Section 194LC

[ITR-6]

Background

Section 194LC provides a specified company or a business trust to deduct tax at a concessional rate of 5% from interest paid to the non-residents. The tax is deducted at the concessional rate if the borrowing is made before 01-07-2023. The Finance Act 2020 has reduced the rate of TDS to 4% in respect of interest payment to a non-resident against borrowings in foreign currency through issues of long-term bonds and Rupee Denominated Bonds, which are listed on a recognised stock exchange in any IFSC.

Change in New ITR Form

The new ITR form makes the consequential changes in Schedule OS (Other Sources). A new row has been inserted in the Schedule to disclose the interest referred to in Section 194LC, which is taxable at the rate of 4%.

(Read More: TDS from Interest paid on Foreign Borrowings on Taxmann.com/Practice)

14. Disclosure of income of FII and specified fund chargeable under section 115AD

[ITR-6]

Background

Section 115AD contains a special regime for taxation of Foreign Institutional Investor (FII) and Specified Fund.

It provides that the dividend or interest income earned by the FPIs is chargeable to tax at a concessional rate of 20%. Where interest income is received or receivable in respect of investment made by an FPI in Rupee-Denominated Bond of an Indian company, Government Securities or municipal debt securities as referred to in Section 194LD, the tax shall be charged at the reduced rate of 5%.

In the case of a specified fund, the dividend or interest income earned by the specified fund is chargeable to tax at a concessional rate of 10%.

Change in New ITR Form

The new ITR forms have been amended to incorporate the above changes introduced by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 and the Finance Act, 2021 in Schedule OS (Other Sources).

(Read More: Taxation of FPIs and Specified Funds under Section 115AD on Taxmann.com/Practice)

15. Separate disclosure of Income from Units located in IFSC in Schedule AMT

[ITR 3 & 5]

Background

Alternative Minimum Tax (AMT) is payable by a non-company assessee whose regular tax on total income is less than 18.5% of ‘Adjusted total income’. However, if an assessee is a unit in an International Financial Services Center (IFSC) deriving income solely in convertible foreign exchange, the alternative minimum tax rate shall be 9% instead of 18.5%.

Change in New ITR Form

The new ITR forms in ‘Schedule AMT’ have sought separate disclosure of computation of adjusted total income under Section 115JC in respect of:

  • Units located in IFSC; and
  • Other Units.

Now, the income from units located in IFSC shall be reported separately in the Schedule AMT for computing the adjusted total income and tax payable thereon.

(Read More: Alternative Minimum Tax on Taxmann.com/Practice)

16. Separate disclosure of Income from Units located in IFSC in Schedule MAT

[ITR 6]

Background

Minimum Alternate Tax (MAT) is payable by companies whose tax on total income is less than 15% of ‘book profit’. However, if the company is a unit in an International Financial Services Center (IFSC) deriving income solely in convertible foreign exchange, the alternative minimum tax rate shall be 9% instead of 15%.

Change in New ITR Form

The new ITR forms in ‘Schedule MAT’ have sought separate disclosure of computation of adjusted total income under Section 115JB in respect of:

  • Units located in IFSC; and
  • Other Units.

Now, the income from units located in IFSC shall be reported separately in the Schedule MAT for computing the book profit and tax payable thereon.

(Read More: Minimum Alternative Tax on Taxmann.com/Practice)

17. Schedule 80GGA has been inserted for the partners deriving only profit from firm

[ITR 3]

Background

Section 80GGA of the Act allows deduction in respect of amount contributed to specified association or institutions. This deduction is allowed to an assessee who is not having any income taxable under the head “profits and gains of business or profession”.

Change in New ITR Form

A Schedule 80GGA (Details of donations for scientific research or rural development) has been inserted in ITR-3. This Schedule is applicable in the case of a partner of a firm deriving only profit from the firm. The following disclosures are required in this Schedule if partner of a firm seeks to claim deduction under Section 80GGA, and he is not earning any business or professional income except the share of profit from the firm:

  • Relevant clause under which deduction is claimed;
  • Name and address of Donee;
  • PAN of Donee;
  • Amount of donation (In cash and other mode); and
  • Eligible amount of donation.

 

18. Consequential changes in Schedule 80-IA and 80-IB due to sun-set clause on the eligibility to claim the deduction

[ITR 3, 5 & 6]

Any assessee deriving profit from the eligible business can claim a deduction under Section 80-IA or Section 80-IB. Due to the sun-set date, the deduction under this section is not available for certain businesses, like, telecommunication services, revival of power generating plant, cross-country natural gas distribution network, multiplex theatres, convention centre, etc.

Schedule 80-IA and 80-IB have been amended to remove the rows allowing deduction under the above obsolete provisions.

19. Total secondary adjustments made to be disclosed

[ITR 3, 5 & 6]

Background

Section 92CE provides that the assessee shall be required to carry out secondary adjustment where primary adjustment to transfer price has been made. If due to primary adjustment, there is an increase in total income or reduction in the loss of the assessee, the excess money shall be deemed to be an advance made to associated enterprise and the interest on such advance, shall be computed.

Section 92CE(2A) also provides that where the excess money has not been repatriated in time, then the assessee will have an option to pay additional income tax at the rate of 18% plus surcharge on such excess money or part thereof. The old ITR Forms require the details of such tax on secondary adjustment.

Change in New ITR Form

In the new ITR forms, the Schedule TPSA provides that the assessee needs to indicate the total adjustments made in respect of all the assessment years.

20. Disclosure of interest paid to Deposit-taking NBFCs or Systemically Important Non-deposit Taking NBFCs

[ITR 3, 5 & 6]

Background

Section 43B specifies that certain expenditures are allowed as deduction only on actual payment, even if the assessee follows the mercantile system of accounting. However, these expenditures are allowed as deduction in the year of accrual if the payment thereof is made either in the previous year itself or in the subsequent year on or before the due date specified for the filing of return of income.

The Finance Act, 2019 has amended Section 43B to include in its scope any sum payable by the assessee as interest on any loan or advances from a Deposit-taking NBFCs or Systemically Important Non-deposit Taking NBFCs.

Change in New ITR Form

The new ITR Forms have inserted a new row in Part A-OI “Other Information” requiring the assessee to disclose the amount of interest on any loan or advances from a Deposit-taking NBFCs or Systemically Important Non-deposit Taking NBFCs which was disallowed in the earlier year, but it is allowable during the previous year.

(Read More: Deductions Allowed on Payment Basis on Taxmann.com/Practice)

21. Additional disclosure required of income exempt under certain clauses of Section 10

[ITR 5 & 6]

Earlier, no separate disclosure was required for income exempt under Sections 10(23FB), 10(23FBA), 10(23FC), 10(23FCA), 10(23FE), 10(23FF), 10(4D).

The New ITR Form requires disclosure of the following income in Schedule EI (Details of Exempt Income):

  • Section 10(23FB): Exemption to Venture Capital Fund or Venture Capital Company
  • Section 10(23FBA): Exemption to Investment Fund and Unit Holder
  • Section 10(23FC)/10(23FCA): Exemption to Business Trust
  • Section 10(23FE): Exemption to wholly owned subsidiary of ADIA or Sovereign wealth fund or pension fund
  • Section 10(23FF): Capital gains from transfer of shares of a company resident in India on account of relocation of offshore funds
  • Section 10(4D): Exemption to Specified Fund.

(Read More: Income exempt from tax on Taxmann.com/Practice)

22. Separate disclosure is required of interest and dividend incomes taxable under Section 115AC

[ITR 3, 5 & 6]

Schedule SI (Special Income) seeks details of the income chargeable to tax at special rates. Earlier, this Schedule required the combined disclosure of total income taxable Section 115AC (Income of a non-resident from bonds or GDR purchased in foreign currency).

Now, the new ITR Forms have amended ‘Schedule SI’ to seek separate disclosure of the following income taxable under Section 115AC:

  • Income by way of interest received by a non-resident from bonds purchased in foreign currency; and
  • Income by way of dividend received by a non-resident from GDRs purchased in foreign currency.

Further, a residuary clause has been provided in Schedule SI to report any other income taxable at a special rate.

(Read More: Tax on income of non-resident from GDRs or FCCB/FCEBs on Taxmann.com/Practice)

23. Removal of reference of Section 153A and 153C for the return filed in response to a notice

[ITRs 1 to 6]

Background

As per the old provisions, where the search is initiated under Section 132 or books of account, other documents, or any assets are requisitioned under Section 132A, an assessment was made in the case of the assessee, or any other person, under Sections 153A, and 153C. The Finance Act, 2021 had introduced a sun-set clause and accordingly, the provisions of Section 153A/153C were made inapplicable from 01-04-2021.

Where the search is initiated or requisition is made on or after 01-04-2021, the assessments, reassessments or re-computation is made under Section 147, and the notice for the same is issued under Section 148. Hence, the assessee shall now file his return in such cases in response to notice under section 148 in new ITR forms.

Change in New ITR Form

The new ITR Forms remove the check-boxes of Sections 153A and 153C from the field of filing status of return income.

(Read More: Income Escaping Assessment on Taxmann.com/Practice)

24. Nature of employment for pensioners is further categorised  

[ITR 1, 2, 3 & 4]

In the old ITR forms, in the dropdown of ‘Nature of Employment’, an individual receiving pension had to choose the option of ‘Pensioners’. In new ITR forms, the following options have been incorporated for pensioners:

  • Pensioners – CG,
  • Pensioners – SC,
  • Pensioners – PSU and
  • Pensioners – Others.

25. Disclosure for alternative tax regime opted under Section 115BAC

[ITR 3 & 4]

The following disclosures are required in ITR 3 and ITR 4 in respect of the alternative tax regime of Section 115BAC:

  • Whether the assessee has opted for an alternative tax regime under Section 115BAC and filed Form 10-IE in AY 2021-22;
  • For the AY 2022-23, the assessee has to choose from the following options:
  • Opting in now
  • Not opting
  • Continue to opt
  • Opt out

(Read More: Alternate tax regime for Individual or HUF on Taxmann.com/Practice)

26. Disclosure for alternative tax regime opted under Section 115BA/115BAA/115BAB

[ITR 6]

The following disclosures are required in ITR 6 in respect of the alternative tax regime of Section 115BA/115BAA/115BAB:

  • Where the domestic company has opted for the alternative tax regime, it has to furnish the AY in which said option is exercised for the first time and the date of filing of the relevant form (10-IB/ 10-IC/ 10-ID) with acknowledgement number;
  • Where the domestic company is choosing to opt for alternative tax regime this year, it has to furnish the date of filing of the relevant form (10-IB/ 10-IC/ 10-ID) with acknowledgement number.

(Read More: Alternate tax regime under Section 115BAA and Section 115BAB on Taxmann.com/Practice)

27. Disclosure for alternative tax regime opted under Section 115BAD

[ITR 5]

The following disclosures are required in ITR 5 in respect of the alternative tax regime of Section 115BAD:

  • Where a co-operative society has opted for an alternative tax regime, it has to furnish the AY in which said option is exercised for the first time and the date of filing of form 10-IF with acknowledgement number;
  • Where a co-operative society is choosing to opt for an alternative tax regime this year, it has to furnish the date of filing of the form 10-IF with acknowledgement number.

(Read More: Alternate tax regime for Co-operative society on Taxmann.com/Practice)

28. Additional information sought from the assessee not opting for the presumptive tax scheme

[ITR 3, 5 & 6]

Background

The audit under Section 44AB is mandatory if the total sales, turnover or gross receipt from the business during the previous year exceeds Rs. 1 crore. However, if the cash receipt and cash payment do not exceed 5%, the audit shall be mandatory if the turnover of the business assessee exceeds Rs. 10 crores during the financial year. For the purpose of computing the limit of 5%, payment or receipt by cheque drawn on a bank or by a bank draft, which is not an account payee, shall be deemed to be the payment or receipt in cash only. The old ITR Forms required the assessee to furnish the response regarding cash receipts and payments only, and it did not consider the receipt or payment through non-account payee cheque or DD.

Change in New ITR Form

The following additional disclosures are required regarding Audit Information:

  • Whether total sales, turnover or gross receipt is between Rs. 1 crore and Rs. 10 crores. If not, is it below Rs. 1 crore or exceeds Rs. 10 crores?
  • The new ITR forms require aggregation of receipts and payment in cash and non-account payee cheque or DD while computing the limit of 5% as mentioned above.

(Read More: Compulsory Audit of Accounts on Taxmann.com/Practice)

29. Mandatory to choose the suitable option in support of residential status in India

[ITR 2 & 3]

Determining the residential status of an individual in India is quite a tedious exercise. The new ITR forms give a suitable description of different clauses due to which the residential status is determined. These options are self-explanatory. The assessee has to choose the relevant option in support of his selection of a residential status. The following options are available for selection:

  • Resident and Ordinarily Resident
  • You were in India for 182 days or more during the previous year [Section 6(1)(a)];
  • You were in India for 60 days or more during the previous year, and have been in India for 365 days or more within the 4 preceding years [section (6)(1)(c)] [where Explanation 1 to section 6 is not applicable];
  • You are a citizen of India, who left India, for the purpose of employment, as a member of the crew of an Indian ship and were in India for 182 days or more during the previous year and 365 days or more within the preceding 4 years [Explanation 1(a) of section (6)(1)(c)];
  • You are a citizen of India or a person of Indian origin and have come on a visit to India during the previous year and were in India for:
    • 182 days or more during the previous year and 365 days or more within the preceding 4 years; or
    • 120 days or more during the previous year and 365 days or more within the preceding 4 years if the total income, other than income from foreign sources, exceeds Rs. 15 lakh.

[Explanation 1(b) of section (6)(1)(c)]

  • Resident but not Ordinarily Resident
  • You have been a non-resident in India in 9 out of 10 preceding years [section 6(6)(a)];
  • You have been in India for 729 days or less during the 7 preceding years [section 6(6)(a)];
  • You are a citizen of India or person of Indian origin, who comes on a visit to India, having total income, other than the income from foreign sources, exceeding Rs. 15 lakh and have been in India for 120 days or more but less than 182 days during the previous year [section 6(6)(c)];
  • You are a citizen of India having total income, other than the income from foreign sources, exceeding Rs. 15 lakh during the previous year and not liable to tax in any other country or territory by reason of your domicile or residence or any other criteria of similar nature [section 6(6)(d) read with section 6(1A)].

 

  • Non-Resident

If individual declares that he is a non-resident in India during the previous year, he has to disclose the following information (same as in old ITR Forms):

  • Jurisdiction(s) of residence during the previous year and Taxpayer Identification Number;
  • If he is a Citizen of India or a Person of Indian Origin (POI), he has to specify:
  • Total period of stay in India during the previous year (in days); and
  • Total period of stay in India during the 4 preceding years (in days).

(Read More: Residential Status of Individual on Taxmann.com/Practice)

30. New Schedule IF inserted to seek the disclosure of investment made in unincorporated entity

[ITR 6]

The new ITR Form 6 inserted a new Schedule IF (Information regarding investment in unincorporated entities) that requires the companies to disclose the following information in respect of the investment made in the unincorporated entity:

  • Name of the entity;
  • Type of the entity;
  • PAN of the entity;
  • Whether the entity is liable for the audit?;
  • Whether section 92E is applicable to the entity?;
  • Share in the profit of the entity;
  • Amount of share in the profit; and
  • Capital balance on 31stMarch in the entity.

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

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