New ITR Forms for FY 2022-23
An Income Tax Return or ITR is a form that taxpayers in India fill out to report their income and applicable taxes as per the income tax laws. For this process, the income tax department has now specified seven income tax return forms: ITR-(1-8). You can figure out which form is applicable to you by the nature of your business, your income, your taxpayer category, and more. There have lately been many changes and updates in the entire income tax system to make things easier on both ends and to support some major causes. Here, you will learn about all the changes brought in the new ITR forms that would be applicable in this financial year.
First, let us understand how the eligibility for using the seven different income tax return forms works.
Who Can and Cannot Use Form ITR-1?
It is necessary to file ITR-1 within the specified deadlines and with accurate information to avoid unfavourable legal situations. The following individuals can use the new ITR-1 form:
Resident of India
Who earns income from sources like salary/pension, other sources like a lottery, house property, or agriculture up to INR 5000
The following cases deny the use of ITR-1:
- Earn income from capital gains, a business, or a profession
- Total income is more than INR 50 lakhs
- Capital gains are taxable
- Income generated from multiple house properties
- Equity investment
- Not an ordinary resident
- Non-resident
- Tax or payment deduction deferred on ESOP
- Forwarded losses
- Income from agriculture exceeds INR 5000
- Company director
- Owns assets outside India
- Abroad income
- Deduction of tax as per section 194N
Who Can Use Form ITR-2?
Hindu Undivided Families and individuals can utilize form ITR-2 if their total income falls under the following categories:
- Salary or Pension
- Lottery or other income sources
- Equity share investments
- Capital gains
- Income from agriculture up to INR 5000
- Tax Deductions as per Section 194N
- Losses brought forward
- House property income
- Income as an individual director
- It can be for a non-resident or not ordinarily resident
- Foreign Income
- From assets owned outside India
- Tax deductions as per ESOP
Total income for ITR-2 can be above INR 50 lakhs.
Usability of ITR-3 and Recent Changes
Form ITR-3 is suitable for a Hindu Undivided Family or an individual who earns income from a proprietary business or profession. Besides all the points mentioned for the eligibility of ITR-2, the only difference that exists is that one can be a partner in a company to file ITR-3. Moreover, form ITR-3 is an option when you can't use ITR-1, 2, or 4.
New changes brought into the ITR-3 system since the financial year 2022-23 are as follows:
A new schedule VDA has been added that can be used to report income from VDA or cryptocurrency. One must mention the purchase and sales dates in every VDA transaction.
You will now need to answer additional questions that determine if you opted out of the New Tax Regime in the past few years.
- SEBI registration number will now work as a disclosure measure for foreign investors.
- Now, the advances included in the return form must be mentioned in a separate heading- advances.
- Trading Account is the new income heading for the income or turnover earned from intraday trading.
Who Can and Cannot Use Form ITR-4?
Indian residents who are from partnership firms (but not LLP), HUFs, or individuals can file ITR-4 income comes from the following :
- From business as per the presumptive taxation scheme
- Pension or salary up to INR 50 lakhs
- Other sources like lottery up to INR 50 lakhs
- From profession as per the presumptive taxation scheme
- Only one house property up to INR 50 lakhs
This form is also open for freelancers who opt for the presumptive taxation scheme, only if their income is under INR 50 lakhs. ITR-4 can not be filed if a business's turnover exceeds INR 2 crores. In that case, it must use the ITR-3 form.
Here are a few cases that deny your use of ITR-4:
- Income exceeding INR 59 lakhs
- Owning any foreign asset
- Income sources outside of India
- Investing in equity shares
- Foreign Income
- Tax or payment deduction deferred on ESOP
- Income generated from multiple house properties
- Signing authority in a foreign bank
- Company director
- Not an ordinary resident
- Non-resident
- Forwarded losses
The presumptive taxation scheme limits have been revised for the financial year 2023-24 under sections 44AD and 44DA. For small businesses, the limit is now INR 3 crores, which was previously INR 2 crores. For professionals, it is now extended to INR 75 lakhs from INR 50 lakhs.
All About Form ITR-5
ITR-5 is the form for most entities like LLPs, AOPs, BOIs, and more. However, if one requires to file an income tax return India under sections 139(4A), 139(4C), or 139(4D) must not use ITR-5.
Filing Form ITR-6
ITR-6 is an electronically available form for companies that do not claim an exemption for the income earned from charitable sources. This also means that paper filing income tax returns is not available for such companies.
Who Can Use ITR-7?
ITR-7 is for those companies or people who are mandated to file returns as per multiple sections of the Income Tax Act. These sections are 139(4A) to 139(4F), which say varied things for filing an income tax return form.
Conclusion
Do you understand all about the income tax return form?
If not, let Lawgical India help you file your returns. Our Legal Team experts have years of experience doing it and ensuring strict compliance with all income tax laws of India. Contact us to learn more.
