ITR filing for AY 2024-25 – New Regime & Old Regime-How to file

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ITR-1, ITR-2 and ITR-4 have been enabled by the Income Tax department for taxpayers to file their Tax Returns for Asst Year 2024-25.

Income Tax Return Form of ITR-1, 2 and 4 are enabled to file through Online mode with prefilled data at the Income Tax e-filing portal, for Assessment Year 2024-25.

In the above, the new income tax regime has become the default option for taxpayers, in the Assessment Year 2024-25 (relating to the financial year ended March 31, 2024). Taxpayers who fail to specify their preference between the old and new regime will have their taxes processed under the New Regime.

However, taxpayers wishing to adhere to old taxation norms have been granted flexibility to change their preference, allowing them to switch between old and new regimes.

The frequency of such switches, however, is conditional on specific types of income.

Income from Salaries

Salaried individuals have the flexibility to switch between the new and old tax regimes multiple times within each financial year.

The new tax regime offers fewer tax deductions and exemptions compared to the old tax regime, which provides various deductions under Chapter VI A from taxable income.

Income from business or profession

Individuals with income from business or profession can only make a one-time choice.

For instance, if an individual with business income switches from the old to the new regime in FY2023, they will not be eligible to switch again.

Once an individual with business income opts out of the new tax regime, they cannot opt back in for the new tax regime in the future.

How to switch while filing ITR

The Central Board of Direct Taxes (CBDT) has introduced two new income tax return forms, ITR-1 (SAHAJ) and ITR-4 (SUGAM), for the Assessment Year 2024-25.

ITR Form 1 now includes the option to select the tax regime. For ITR 4 (individuals with business or professional income), taxpayers will need to file form 10-IEA to opt out of the new tax regime.

Previously, individuals had to fill out Form 10-IE to choose the new tax regime. However, Form 10-IE, which allowed individuals to opt into the new tax regime, has been discontinued.

This change aims to make the new tax regime the default setting, starting from the financial year 2023-24. Therefore, the new tax regime will automatically apply unless individuals take specific action to opt for the old regime.

Old tax regime

The old tax regime offers numerous tax exemptions and deductions for individuals. Commonly claimed exemptions and deductions include allowances such as House Rent Allowance (HRA) and Leave Travel Allowance (LTA), as well as deductions under Sections 80C, 80D, 80CCD(1b), 80CCD(2), and various others.

New tax regime

In the new tax regime, the exemptions and deductions available in the Old Regime are not applicable. If the taxable income (after all deductions) under the old regime is below Rs 5 lakh, no tax is levied. Conversely, under the New Regime, the entire income will be tax-free if the taxable income is under Rs 7 lakh.

Which form to choose:

ITR-1 is filed by individuals, including salaried class and senior citizens.

ITR-2 is filed by businesses and professionals who have opted for presumptive taxation and those individuals whose annual income doesn’t exceed Rs 50 lakh.

ITR-4 is for resident individuals, HUFs and firms (other than LLP) having total income up to Rs 50 lakh and having income from business and profession which is computed under Sections 44AD, 44ADA or 44AE and agricultural income up to Rs 5,000.

Source: https://www.incometax.gov.in/iec/foportal//latest-news#

Income Tax Advisory for Trusts / Institutions

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                                                                  ATTENTION TRUSTS/ INSTITUTIONS                         08-Mar-2024

Income of any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or subclause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10 (hereinafter referred to as trust or institution under the first regime) of the Income-tax Act, 1961 (hereinafter referred to as the Act) or any trust or institution registered under section 12AA or section 12AB of the Act (hereinafter referred to as trust or institution under the second regime) is exempt subject to fulfilment of certain conditions specified under various sections of the Act.

One of the conditions required to be fulfilled by the trust or institution in order to be eligible to claim exemption under the first regime, is laid down in clause (b) of the tenth proviso to clause (23C) of section 10 of the Act. This states that in case the total income of the trust or institution, as computed under the Act without giving effect to the provisions of exemption under the first regime, exceeds the maximum amount which is not chargeable to income-tax in any previous year, the trust or institution is required to get its accounts audited and furnish the audit report in the prescribed Form before the specified date.

A similar condition is in place for trust or institution under the second regime in subclause (ii) of clause (b) of sub-section (1 ) of section 12A of the Act.

Rule 16CC and 17B of the Income-tax Rules, 1962 (hereinafter referred to as the Rules) prescribe the form of audit report for trust or institution under the first and second regime respectively. They provide that the report of audit of the accounts of a trust or institution, shall be furnished in –

(a) Form No. l0B where,

(i) the total income of trust or institution, exceeds rupees five crores during the previous year; or

(ii) such trust or institution has received any foreign contribution during the previous year; or

(iii)such trust or institution has applied any part of its income outside India during the previous year;

(b) Form No. 10BB in other cases.

The new forms, Form No. l0B/ Form No. l0BB, were notified vide Notification No. 7 of 2023 dated 21st February, 2023. The above prescription was put in place w.e.f. 01.04.2023, vide the Income-tax (Third Amendment) Rules, 2023, and is therefore, effective for assessment year 2023-24 and subsequent assessment years. The due date for furnishing such audit reports for the A.Y. 2023-24 was 31st October, 2023.

It has come to the attention of the Board that in a number of cases trusts/ institutions have furnished audit report in Form No. l0B, where Form No. 10BB was required to be furnished for the A.Y. 2023-24. Similarly, in a number of cases trusts/ institutions have furnished audit report in Form No. 10BB, where Form No. l0B was required to be furnished for the A.Y. 2023-24. As noted above, non-furnishing of audit report in the prescribed form would result in denial of exemption in such cases as it is one of the conditions which is required to be satisfied for claim of exemption.

In view of the above, the Central Board of Direct Taxes, in exercise of its powers under section 119 of the Act has allowed those trusts/ institutions which have furnished audit report on or before 31st October, 2023 in Form No. l0B where Form No. 10BB was applicable and vice-versa, to furnish the audit report under clause (b) of the tenth proviso to clause (23C) of section 10 and sub-clause (ii) of clause (b) of sub-section (1) of section l2A of the Income-tax Act, 1961, in the applicable Form No. l0B/ 10BB for the assessment year 2023-24, on or before 31st March, 2024. Please refer to CBDT Circular 2/2024 dated: 05th March 2024. Please furnish audit report in correct prescribed form for AY 2023-24 on or before 31st March 2024 to claim exemption.

Source: Central Board of Direct Taxes Circular

Mandatory requirement of Unlisted Companies to have shares in Demat Form

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Company Law
The Ministry of Corporate Affairs, has made it mandatory for private limited companies also to issue their securities in dematerialized form starting from 30 September 2024 and to facilitate conversion of all their existing securities in dematerialized form

Background:

Till now, only public limited companies were required to issue these securities in dematerialized form and private limited companies were exempted and hence could issue their securities in the form of a physical document.

Previously, the Ministry of Corporate Affairs (MCA) mandated that public companies must maintain and transact their shares in Demat form starting from October 2nd, 2018

Effective from October 27, 2023, the MCA has introduced significant changes in the regulations governing the dematerialization of securities for private limited companies.

The Companies (Prospectus and Allotment of Securities) Second Amendment Rules, 2023 now apply to private limited companies, excluding small companies.

These rules come into effect on September 30th, 2024.

As per the new amendment every private company which has not been classified as small company shall mandatorily convert their existing physical securities into demat form within 18 months of end of F.Y. 2023. (i.e. 30/09/2024)

Small company, as per Section 2(85) of the Companies Act,2013, means a company, other than a public company,
  • having a paid-up share capital of which does not exceed 4 crore rupees or such higher amount as may be prescribed; and
  • Turnover of which as per profit and loss account for the immediately preceding financial year does not exceed 40 crore rupees or such higher amount as may be prescribed:
    Exceptions:
  • A holding company or a subsidiary company;
  • A company registered under section 8; or
  • A company or body corporate governed by any special Act.
Consequences of non-dematerialization of physical security into demat on or before 30/09/2024:
  1. After the due date, the company shall not be able to undertake a) Issue any securities b) buyback of securities c) issue bonus shares d) Offer for right issue of securities
  2.  After the due date, Security holders shall not be able to transfer the securities of the company or subscribe further issue of securities.
  3. Penalty would be levied on the Company under the provisions of section 450 of the Companies act, 2013 as no specific penalty has been provided for the said non­compliance under the act.

* The penalty to be levied under Section-450 of the Companies Act, 2013 is as mentioned hereunder: “Fine which may extend to Rs. 10,000 and in case of continuous contravention, a further fine of which may extend to Rs. 1,000 per day after the first during which the contravention continues.”

Summary: Failure to convert physical securities into demat form by the specified deadline carries significant repercussions for private companies. They risk being unable to issue securities, undertake buybacks, issue bonus shares, or offer right issues. Moreover, security holders may face restrictions on transferring securities or subscribing to further issues. Non-compliance also attracts penalties under Section 450 of the Companies Act, 2013, emphasizing the importance of adhering to the new mandate.

	

	





	

      

	

		
			

				Union Budget 2024 Highlights: Announcements by Finance Minister Nirmala Sitharaman			

		
		

    
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Summary of Direct and Indirect Tax Proposals: Budget 2024-25


 Summary of the direct and indirect tax proposals made in the Budget 2024-25 (Finance Bill 2024) presented by Smt Nirmala Sitharaman, Union Minister of Finance and Corporate Affairs:


Highlights of the Direct Tax Proposals of Finance Bill, 2024


No changes in Tax Rates


No changes have been proposed to the existing rates of direct and indirect taxes. The existing rates of income tax, gst, import duties, etc. have been retained.


To provide continuity, some tax benefits and exemptions have been extended by 1 year until 31st March 2025. These include:


    

  1. Tax benefits for startups;
    2. 

  2. Tax exemptions on certain income for International Financial Services Centers (IFSCs); and
    3. 

  3. Tax exemptions on investments made by sovereign wealth funds and pension funds.
    4. 



The Interim Budget 2024 maintains the status quo on tax rates and extends certain tax breaks by a year to provide stability and continuity in taxation. No new changes or reforms have been introduced to the tax structure or rates.


Withdrawal of Outstanding direct tax demands


The FM has announced to withdraw the outstanding demands of income tax. Here is a summary of the key points regarding the withdrawal of outstanding direct tax demands announced in the Interim Budget 2024:


i) In line with the government’s vision to improve ease of living and doing business, outstanding petty direct tax demands up to Rs 25,000 dating back to 1962 will be withdrawn for the period up to FY 2009.


ii) Similarly, outstanding demands up to Rs 10,000 will be withdrawn for the FY 2010-11 to 2014-15.


iii) These are non-verified, non-reconciled or disputed demands that continue to remain on the books, causing anxiety for taxpayers.


    

  1. Withdrawing these demands will help provide relief to honest taxpayers and enable refunds for subsequent years.
    2. 

  2. This is expected to benefit about 1 crore taxpayers who have such outstanding demands.
    3. 

  3. The move aims to improve tax payer services and reduce harassment of taxpayers over small disputed sums dating back decades.
    4. 



In short, the Interim Budget 2024 has announced the withdrawal of old, petty direct tax demands up to Rs 25,000 till FY 2009-10 and Rs 10,000 between FY 2010-11 to 2014-15 to provide relief to taxpayers.


Highlights of the Indirect Tax Proposals of Finance Bill 2024


The FM has proposed in Budget 2024 to retain the same tax rates in respect of GST, import duty, etc. indirect taxes as are applicable at present, i.e. existing GST and import duty rates shall continue in FY 2024-25 as well.


BUDGET HIGHLIGHTS 2024-25, Ministry of Finance 

	

	





	

      

	

		
			

				New ITR forms: What’s new in ITR-1 and ITR-4 for AY 2024-25?			

		
		

    
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Income Tax
CBDT has released the new ITR forms – ITR-1 and ITR-4 – for FY 2023-24 early this year. These forms are applicable for filing income tax return before July 31, 2024, unless extended.


New ITR forms AY 2024-25: Taxpayers will now be required to provide information regarding cash receipts and all their bank accounts within the country according to the latest Income Tax Return (ITR) Forms for the Assessment Year 2024-25, as notified by the Central Board of Direct Taxes.


CBDT has released the new ITR forms – ITR-1 and ITR-4 for FY 2023-24 early this year.


These forms are applicable for filing income tax return for AY 2024-24 with the last date of July 31, 2024, unless extended.


One noteworthy feature of the new ITR forms is that The Finance Act, 2023 has modified Section 115 BAC, establishing it as primary tax regime for individuals, HUFs, AOPs, BOIs, and AJPs. Under this amendment, if an assessee prefers not to adhere to the new tax regime, they must expressly opt out and select the Old Regime for their taxation.


The ITR 1, also known as Sahaj, can be filed by individuals with an income up to Rs.50 lakhs. This includes income from salary, one house property, other sources such as interest, dividends, etc and agricultural income up to Rs.5,000.



Taxpayers will need to provide details of all their bank accounts operational in the previous year along with the type of account.


The updated income tax return forms also include a special section for deductions for Agniveers, the youth serving in the armed forces under the Agnipath scheme, as per Section 80CCH.



Individuals, Hindu undivided families (HUFs), and firms, excluding limited liability partnerships (LLPs), with a total income up to Rs.50 lakhs and income from business and profession, can file ITR 4, also known as Sugam.



In the previous year, the forms were notified in February. Previously, there was a separate column for cryptocurrency.  However, in the new ITR, a new disclosure has been added to specify “receipts in cash’ in the New ITR 4 Form.



Here are some cases in which the assessee cannot file ITR 1 –


    

  • Any individual having an income of more than INR 50 lakhs.
    • 

  • An individual holding a directorial position in a company or having unlisted equity shares during the financial year.
    • 

  • Non-residents and Resident but not ordinarily resident (RNOR).
    • 

  • Individuals with income from more than one house property
    • 

  • Income from lottery, horse races, and legal gambling.
    • 

  • Short-term and long-term capital gains
    • 

  • Agricultural income is more than 5000.
    • 

  • Income from business and profession
    • 

  • Any resident having assets outside India
    • 

  • Individuals claiming Foreign Tax Credit under sections 90, 90A and 91.
    • 

  • Deferred Income Tax on ESOP.
    • 



Here are some cases in which the assessee cannot file ITR 4 –


    

  • If the turnover of the business exceeds Rs. 2 crores (3 crores for FY- 2023-24), the taxpayer will have to file ITR-3
    • 

  • If your total income is more than INR 50 lakhs
    • 

  • Have income from more than one house property and own a foreign asset
    • 

  • Signing authority in any foreign account
    • 

  • Having a foreign income source
    • 

  • Have directorship in a company
    • 

  • Non-resident or RNOR status
    • 

  • Having unlisted equity shares
    • 

  • If the ESOP payment is deferred to ESOP
    • 

  • In case you have any brought forward losses.
    • 






	

	





	

      

	

		
			

				Know about: “Discard Income Tax Return option.”			

		
		

    
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The income tax department has introduced a new functionality on its website- ‘Discard ITR’.


This new feature will allow taxpayers to discard their previously filed but unverified Income Tax Returns (ITR). 











Starting from Assessment Year 2023-24, this new ‘Discard ITR’ functionality, provides users with the ability to discard original, belated, or revised ITR, expanding the scope for revision beyond just errors or omissions.










–  Opting to discard the ITR is equivalent to non-filing of the return.





– Following the discard, a new ITR can be submitted. 





However, if the fresh ITR is filed after the due date, it will incur late fees and other associated consequences.





– Once the discard option is exercised, it cannot be reversed. 





Hence, use this option cautiously.





– The discard feature is available until the ITR filing deadline, i.e., until December 31 following the end of the financial year. 





Hence, timely action is advised.




The tax department has released FAQs to address common queries on Discard ITR Option. Here is all you need to know about the new functionality on the income tax website that allows taxpayers to discard their unverified Income Tax Returns (ITR).


1)Taxpayers can avail of the option of “Discard” for the ITRs being filed u/s 139(1) /139(4) / 139(5) if they do not want to verify it.


2)However, if the “ITR filed u/s 139(1)” is discarded and the subsequent return is filed after the due date u/s 139(1), it would attract implications of belated return like 234F, etc., 


3) To access the ‘Discard’ option, users can follow the specified pathway on the income tax website. On the income tax portal, users can find the Discard option www.incometax.gov.in → Login → e-File → Income Tax Return → e-Verify ITR → “Discard”


4) Users can avail of this option only if the ITR status is “unverified” / “Pending for verification”. 


5) Users can utilize the discard option repeatedly as long as the ITR status remains unverified or pending verification.


6) The feature is available for AY24 onwards. Once an ITR is discarded.


7) This option will be available only till the time limit specified for filing ITR u/s 139(1)/139(4) /139(5) (i.e., 31st December of respective AY as of now).


8) Once an ITR is discarded, it cannot be reinstated, making the action irreversible and essentially disclaiming the filing of the ITR.


Meanwhile, a record number of over 7.85 crore Income Tax Returns were filed till October 31 this year, said the Central Board of Direct Taxes (CBDT). According to the official release, October 31 was the due date for filing ITRs (other than ITR-7) for taxpayers not having any international or specified domestic transactions.


Source: Discard Return – FAQs
	

	





	

      

	

		
			

				Updated Income Tax Return (ITR U) – Check out this option			

		
		

    
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Filing an Updated Income Tax Return (ITR-U) under section 139(8A)





ITR-U refers to the Updated Return form used for filing an amended or revised income tax return in India. It is a provision provided by the Income Tax Department to enable taxpayers to correct any errors, rectify omissions, or make changes to their original tax return filing. The “U” in ITR-U stands for “Updated.”










ITR-U is primarily used when individuals or entities realize that they have made mistakes in reporting their income, claiming deductions, providing incorrect details, or omitting important information in their initial tax return. By filing an updated return using ITR-U, taxpayers can rectify these errors and ensure that their tax records reflect their financial situation accurately.





The filing of ITR-U falls under Section 139(8A) of the Income Tax Act, which allows taxpayers to revise their returns within a specific time-frame. It is important to note that ITR-U is different from the regular income tax return forms (such as ITR-1, ITR-2, etc.) used for filing the original tax return.





Filing ITR-U involves providing accurate details of the original return, specifying the changes or amendments being made, and submitting the revised return electronically through the Income Tax Department’s official website or other authorized platforms. It is crucial to ensure that the updated return is filed within the prescribed deadline to avoid penalties and legal consequences.





Who can file ITR-U?





  • Return previously not filed





In the case of a return previously not filed, taxpayers can file an Updated Return to report their income and fulfill their tax obligations.





  •     Income not reported correctly





In situations where income was not reported correctly, taxpayers can file an Updated Return to rectify the error and provide accurate income details.





  • Wrong heads of income chosen





When wrong heads of income are chosen, taxpayers can use ITR-U to correct the classification and allocate income under the appropriate heads.





  • Reduction of carried forward loss





In situations involving the reduction of carried forward loss, taxpayers can file an Updated Return to adjust and reduce the carried forward loss accordingly.





  •     Reduction of unabsorbed depreciation





When there is a need for the reduction of unabsorbed depreciation, taxpayers can file an Updated Return to adjust and reduce the unabsorbed depreciation.





  •     Reduction of tax credit under Sections 115JB/115JC





In situations involving the reduction of tax credit under Sections 115JB/115JC, taxpayers can file an Updated Return to reduce the tax credit accordingly.





  •     Wrong rate of tax





When an incorrect rate of tax has been applied, taxpayers can use ITR-U to correct the rate and ensure accurate calculation of their tax liability.




Following conditions are to be satisfied to file return u/s 139(8A): 


– It should not result in a return of loss.
– It should not reduce Income Tax Liability as compared to last filed valid return.
– It should not result in increase of Refund.
– Search should not have been initiated under section 132.
– Requisition should not have been made under section 132A.
– Survey should not have been conducted section 133A or.
– Any proceeding of assessment, reassessment, re-computation or revision should not be pending or completed for that relevant year.




Who Cannot File Form ITR-U?





    Return of loss





If the updated return results in a return of loss, it cannot be filed using Form ITR-U. The form is designed for rectifying errors or making changes to the original return, not for reporting a loss.





    Reduction of income tax liability





If filing an updated return reduces the income tax liability that was declared in the earlier filed return, Form ITR-U cannot be used. The purpose of the form is not to revise the tax liability to a lower amount.





    Increase in refund





If filing an updated return leads to an increase in the refund amount compared to the return filed earlier, Form ITR-U is not applicable. The form is not intended for increasing the refund amount.





    Search or requisition





If a search has been initiated under section 132 or books of accounts or any other documents have been requisitioned under section 132A, filing Form ITR-U is not allowed.





    Survey conducted





If a survey has been conducted under section 133A, Form ITR-U cannot be used for filing an updated return.





    Pending or completed proceedings





If any assessment, reassessment, re-computation, or revision proceedings are pending or have been completed for the relevant assessment year, Form ITR-U cannot be filed.





    Information under various acts





Suppose the Assessing Officer has information against the person under the Prevention of Money Laundering Act, Black Money (Undisclosed Foreign Income and Asset) and Imposition of Tax Act. In that case, Benami Property Transactions Act, or Smugglers and Foreign Exchange Manipulators Act, and the same has been communicated to the assessee, Form ITR-U is ineligible.





    Information under DTAA agreements





If information for the relevant assessment year has been received under an agreement referred to in section 90 or section 90A, and the same has been communicated to the taxpayer before the date of furnishing the return, Form ITR-U cannot be used.





    Other notified persons





There may be specific categories of individuals or entities who are notified as ineligible to file Form ITR-U as per notifications issued by the tax authorities.





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