ITR Big Update: You Must Now Specify the Source of Cash in Your Income Tax Return

This time, the Income Tax Department has introduced the new ITR forms three months ahead of schedule, with the filing deadline set for July 31. In the updated forms, taxpayers need to disclose details about all active bank accounts.

The new ITR-1 now includes the option to choose the tax regime. For ITR-4, individuals must submit form 10-IEA to opt out of the new tax regime.

If you do not explicitly decline the option under section 115BAC (6) to opt out of the new tax regime in your ITR form, the new tax regime's rates and conditions will be applied.

As per the notification, these forms will be effective starting April 1, 2024. The early release of forms, well before the financial year ends, allows taxpayers and consultants to understand and prepare in advance. This ensures they are well-prepared when the ITR filing window opens for income earned during the financial year 2023-24.

Historically, the deadline for filing returns using ITR-1 or 4 is July 31. In previous years, these forms were typically released in April/May, and the filing software on the Income Tax portal was released in June. Any changes necessitated assesses to rush at the last moment. The advance release this time provides a more proactive approach for all stakeholders.

Minor Adjustments in ITR-1

In the realm of new ITR forms, there are no substantial changes; only a few minor adjustments have been made in the updated ITR forms.

ITR-1 (Sahaj): This simplified form is commonly used by resident individuals with income from salary, one house property, family pension, and other sources (such as interest from bank and post office deposits), along with agricultural income up to Rs 5,000. The total income for the financial year must not exceed Rs 50 lakh.

It's important to note that ITR-1 is not suitable for individuals classified as Resident Not Ordinarily Resident (RNOR) or Non-Resident Indians (NRI). Additionally, individuals with income from lotteries, racehorses, or legal gambling cannot use this form.

Additionally, individuals with taxable capital gains, investments in unlisted equity shares, income from business or profession, or holding a directorial position in a company are not eligible to utilize ITR 1.

In the recently released ITR 1 for AY 2024-25, a few minor adjustments have been made. A new field, 80CCH, has been added under 'Part C – Deductions and Taxable Total Income' to allow deductions for contributions to the Agnipath scheme. Additionally, under 'PART E – Other Information,' a new dropdown has been included for the type of account, which was absent in the old ITR-1.

The document also highlights the deductions related to the Agniveer corpus under section 80CCH. It specifies that individuals who enroll in the Agnipath scheme and subscribe to the Agniveer corpus fund on or after November 1, 2022, will qualify for a 100 percent tax deduction on the total amount deposited in the Agniveer corpus fund.

ITR-4 (Sugam) – Detailed Turnover Breakdown Required

This form is designed for resident individuals, Hindu Undivided Families (HUFs), and firms (excluding LLPs) with a total income of up to Rs 50 lakh, calculated under the presumptive taxation scheme (sections 44AD, 44ADA, or 44AE). Similar to ITR-1, ITR-4 is not suitable for RNOR and non-resident Indians.

Individuals utilizing this scheme for filing returns can declare income at a specified percentage of gross turnover or receipts, relieving them from the burdensome task of maintaining books of accounts and undergoing account audits. To learn more about the presumptive taxation scheme (PTS),

When filing returns using ITR-4 (Sugam), individuals such as contractual IT professionals, tuition teachers (academic, dance, or drawing), or those providing professional services from home can opt for the presumptive taxation scheme (PTS) if proper books of accounts are not maintained, under Section 44ADA.

One significant change under the newly issued ITR 4 is the requirement to provide a breakdown of turnover under sections 44AD and 44ADA into three categories. “This entails providing details of revenue received through a/c payee cheques, a/c payee bank drafts, or the bank electronic clearing system and prescribed electronic modes, along with details of cash receipts & any other mode.

Another significant modification is that if the return is submitted in reply to a notice under sections 139 (9) /142 (1)/148/153C or an order under section 119 (2) (b), the unique number/document identification number (DIN) and date of such notice or order are no longer mandatory. This is a favorable development, streamlining the form-filling procedure.

Also Read: Three Noteworthy Changes In ITR Forms 1 & 4

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