Key Changes in the Income Tax Return Forms AY 2024-25

The Income Tax Act changes frequently. For the Assessment Year 2024/25, various updates have been made to the ITR forms, and taxpayers should be aware of these changes to ensure their filing is accurate and timely.

1. There is no alteration in the applicability of ITR forms

The CBDT hasn’t changed the criteria for which ITR forms apply to different types of taxpayers or how returns should be submitted.

ITR Form	Used For/By
ITR-1	Also known as SAHAJ, ITR-1 is for resident individuals with income up to Rs. 50 lakh from salary and one house property. It does not include income from business or profession or capital gains.
ITR-2	ITR-2 is for individuals such as RoR, RNoR and NR, or HUFs with income of more than Rs. 50 lakh and income from more than 1 house property. They must not have business or professional income, must not receive any payments like interest or bonuses from a partnership firm, and should not include someone else’s income.
ITR-3	Individuals and HUFs earning an income from their business or profession can use ITR-3. This includes income from sources like interest, salary, bonuses, commissions, or compensation.
ITR-4	Also known as SUGAM, ITR-4 is for individual residents, HUFs, businesses (excluding LLPs), and those whose business or professional income is calculated under Sections 44AD, 44ADA, or 44AE with a total income of up to Rs. 50 lakh. Essentially, ITR-4 is for taxpayers opting for the presumptive taxation scheme
ITR-5	ITR-5 is for specific taxpaying entities, such as Limited Liability Partnerships (LLP), Associations of Persons (AOPs), Artificial Juridical Persons (AJP), Body of Individuals (BOIs), etc.
ITR-6	ITR-6 is for companies incorporated under the Indian Companies Act, 1956 or other legislation. This form is required for all such companies, regardless of whether they claim exemptions under Section 11.
ITR-7	ITR-7 is used by entities which need to file taxes as per specific sections, such as Section 139(4A) for income of charitable and religious trusts, Section 139 (4B) for political parties, Section 139 (4C) for scientific research institutions, and Section 139 4(D) for universities, colleges or other institutions.

2. Individuals and HUFs subject to audit can authenticate their ITR using EVC

Verification of ITR for individuals and Hindu Undivided Families (HUFs) liable to audits has been made much more convenient through the Electronic Verification Code (EVC). Before this change, the only way to verify ITR was through a digital signature.

3. Providing the deadline for filing the return

Taxpayers can select the due date from options –  July 31st, October 31st, or November 30th. This new column has been added to ITR forms 3, 5, and 6.

4. The new tax regime is now the default, and taxpayers must actively opt-out if they prefer to use the old regime

In 2023, amendments were made to Section 115BAC which made the new tax regime the default option for individuals, HUFs, AOPs, BOIs, and AJPs. If you don’t want to pay taxes according to the new structure, you must specifically opt out of it. For example, taxpayers not earning income from a business or profession (filing ITR 2) can simply indicate their choice in the income return. On the other hand, those who do have income from a business or profession (like when filing ITR 3), need to fill out Form 10-IEA by the due date to opt out.

4.1 Information about the Legal Entity Identifier (LEI)

The Legal Entity Identifier (LEI) is a unique 20-character code used to legally identify entities engaging in financial transactions. The RBI now requires non-individual entities to include LEI information for transactions of Rs. 50 crore or more through RTGS or NEFT transactions. The new ITR forms have been modified to include a column for the LEI number, and all non-individual taxpayers must provide this if they are seeking a refund of more than Rs. 50 crore.

4.2 Providing the rationale for a tax audit under Section 44AB

Under Section 44AB, assessees liable to audits have to provide some additional details. This information includes the specific circumstances that necessitate the audit, for example, when the turnover, sales, or gross receipts are above the limits of Section 44AB when an assessee is falling under Section 44AD, 44ADA, 44AE, or 44BB but not opting for presumptive taxation, and more. This process helps in the accurate assessment of tax liability.

Also Read: Tax Concepts in India – Know Meaning, Types of Taxation & More

4.3 Provision of the audit report’s acknowledgment number and UDIN

An acknowledgement number of the audit report along with the Unique Document Identification Number (UDIN) must be provided by companies liable to audits under Section 44AB. Including this information is important so that the audit report is officially recorded and can be easily traced.

4.4 An additional “Receipts in Cash” column has been introduced to increase the turnover limit for claims

The Finance Act has increased the turnover limit for the presumptive taxation scheme under Section 44AD from Rs. 2 crore to Rs. 3 crore and for Section 44ADA from Rs. 50 lakh to Rs. 75 lakh, provided cash receipts do not exceed 5% of the total. ‘Cash’ in this case is defined to include cheques or bank drafts that are not account payee. To reflect these changes, the CBDT has updated ITR forms with a new column for ‘receipts in cash’ under Schedule BP to report cash turnover or gross receipts.

4.5 Revealing the amount owed to MSME after the specified deadline

MSME stands for  Micro, Small, and Medium Enterprises. Section 43B allows certain deductions only when payments are made, regardless of the accounting method used. Taxpayers must provide details of expenses previously disallowed under Section 43B but now allowable due to payment. In 2023, a new rule was added – any payments to micro or small enterprises beyond the deadline set by the MSME Act Section 15 cannot be deducted. Thus, a new column has been added to Part A-OI of ITR forms for disclosing these overdue payments.

4.6 Revealing details related to the Capital Gains Accounts Scheme

Before Assessment Year 2034/24, assessees only needed to provide the information related to the sum deposited in the Capital Gains Accounts Scheme (CGAS) in the Schedule-CG in ITR forms. This part includes details about the sold asset, buyer, and amounts spent for exemptions. ITR-2, however, has not been updated to include more information about deposits in the CGAS. Now, taxpayers must provide the date of deposit, account number, and IFSC code on top of the sum deposited details.

4.7 Reporting earnings from online gaming falls under Section 115BBJ

In 2023, the Finance Act also introduced Section 115 BBJ to tax winnings from online games starting from Assessment Year 2024/25. This is on top of a Section 194 BA update, which now requires tax deduction at source on the net winnings from online games. So all winnings from online games on or after 1st April 2023 are taxable under Section 115 BBJ and subject to TDS under Section 194 BA. Schedule OS in the ITR forms has been updated to include a section for reporting income from online game winnings taxable under Section 115 BBJ.

4.8 Recently proposed Schedule 80GGC requests information on donations provided to political organizations

Section 80G allows taxpayers to get deductions on the donations made to eligible organisations, and Section 8GGC allows deductions for donations made specifically to political organisations or electoral trusts. Previously, taxpayers needed to only enter just the eligible deduction amount under Section 80GGC, but the ITR forms have now been updated to include a detailed Schedule 80GGC. This means one will have to provide more details such as the date of the contribution, contribution amount (cash or any other modes), eligible contribution amount, transaction reference number (for UPI transfers), or cheque number/IMPS/NEFT/RTGS, and the bank’s IFSC code.

4.9 Scheduled Tax Deferral on ESOP requires the PAN and DPIIT Registration Number from the qualifying startup.

For startups that qualify for tax deferral on Employee Stock Option Plans (ESOPs), one is required to provide the PAN of the employer and DPIIT (Department for Promotion of Industry and Internal Trade) registration number. When an employer grants securities to an employee under an ESOP scheme for free or at a discount, it’s taxable as a benefit in the year of allotment. For employees of eligible startups, the tax payment on this benefit can be deferred. The Schedule – Tax Deferred on ESOP in the ITR forms asks you to fill in details like the assessment year, deferred tax amount carried forward, tax payable in the current year, and remaining deferred tax. ITR forms however now require more information for transparency, like the PAN of the employer of an eligible startup, and its DPIIT Registration number.

4.10 An additional column has been introduced for claiming deductions under Section 80CCH

Section 80CCH was introduced in 2023, which allows individuals in the Agnipath Scheme 

who contribute to the Agniveer Corpus Fund from 1st December 2022 onwards to claim a deduction for their contributions to the Agniveer Corpus Fund. The new ITR forms now include a column for taxpayers to report the amount eligible for deduction under this new section.

4.11 Section 80U is included to allow deduction claims for individuals who have a disability

Section 80U of the Income Tax Act allows disabled taxpayers to claim a deduction of Rs. 75,000 for individuals with a normal disability and Rs. 1,25,000 for those with a severe disability. Previously, this deduction was reported in Schedule VI-A of the ITR forms. But now, the new ITR-3 includes a dedicated Schedule 80U for these details. Disabled taxpayers can enter information such as the nature of the disability, UDID number, and the filing date of Form 10-IA, as well as the Form 10-IA acknowledgement number.

4.12 Fresh Schedule 80DD requests information pertaining to the upkeep and healthcare needs of individuals with disabilities

Section 80DD is similar to Section 80U. While Section 80U is applicable when the taxpayer is disabled, Section 80DD allows taxpayers to claim a deduction when a family member has a disability. The benefits under this Section are also the same, that is, a deduction of Rs. 75,000 for individuals or HUFs who incur medical expenses or pay insurance premiums for a family member with a normal disability, and Rs. 1,25,000 for severe disabilities. Previously, this deduction was also reported in Schedule VI-A of the ITR forms, but the new ITR forms have added a dedicated Schedule 80DD to provide more details, such as type of dependent (like spouse, child, or parent), the nature of the disability, PAN and Aadhaar of the dependent, date of filing and acknowledgement number of Form 10-IA, and the UDID number.

4.13 Recording of dividend earnings from a unit situated in an International Financial Services Centre (IFSC)

Section 115A was also amended in the Finance Act of 2023 to include a provision that reduces the tax rate on dividend income from a unit in an International Financial Services Centre (IFSC) to 10% instead of 20%. The new ITR forms have updated Schedule OS to reflect this amendment.

4.14 Schedule-OS now incorporates an extra column specifically designated for reporting bonus payments received from life insurance policies

To accurately report income from life insurance policies, an extra column has been added to Schedule-OS to report bonus payments. The Finance Act of 2023 introduced a new clause (XIII) in Section 56 (2), which states that sums received from life insurance policies with excess or high premiums are taxable under ‘other sources.’ The new ITR forms have now been updated to include a section in Schedule-OS for reporting this income.

4.15 Recording the amounts received by a unitholder from the business trust

Another new clause (XII) was added to Section 56 (2) in the Finance Act to prevent the double non-taxation of certain distributions from business trusts to their unitholders. This clause states that such distributions are taxable under the head ‘income from other sources,’ and when units are redeemed, the cost of acquiring the units can be deducted from the redemption amount. The ITR forms have been updated to include a new column in Schedule-OS for reporting this income.

4.16 Documentation of all banks held at any point

A new measure was taken to make ITR filing more transparent and help in accurate financial reporting when ITR forms were changed to require taxpayers to provide details about all their bank accounts held at any point during the financial year. This includes selecting the specific account for receiving income tax refunds, however dormant accounts need not be reported. Consulting a tax consultant can be beneficial to navigate these changes, however dormant accounts need not be reported.

4.17 Adaptation of unabsorbed depreciation (related to additional depreciation) from the written down value of the block of assets as of April 1, 2023

The new tax regime was introduced in 2020 with the introduction of Section 115BAC, which offered lower tax rates for individuals and HUFs. In 2023, this benefit was expanded to include more entities such as BOIs, AJPs, and AOPs, and also made the default tax regime. 

Under the new tax regime, unabsorbed additional depreciation cannot be used for tax offset but must be added to the written down value of assets as of 1st April 2023. The new ITR forms have updated Schedule DPM (depreciation on Plant and Machinery) to reflect this adjustment, and require the written down value of the block of assets to include unabsorbed additional depreciation not used due to opting for Section 115BAC.

4.18 Fresh Schedule 80-IAC requests information regarding qualifying startups

Under certain conditions, eligible startups can claim deductions for three consecutive assessment years within 10 years under Section 80 IAC. Before, taxpayers only needed to enter the amount of deduction claimed in ITR forms, but in the updated ITR-5, a new schedule was added. This schedule requires detailed information about these deductions, such as the nature of the business, the startup’s date of incorporation, the certificate number from the Inter-Ministerial Board of Certification, the first assessment year in which the deduction was claimed, and the amount claimed for the current assessment year. 

4.19 New Schedule 80LA is looking for information about offshore banking units or IFSC

A new Schedule 80LA has been introduced in ITR-5 to gather information about offshore banking units or IFSC. This section offers deductions for certain incomes earned by these entities. Banks can claim a 100% deduction on their income for 10 consecutive assessment years, while IFSC units can do so for 10 years within a 15-year period. The new ITR-5 form now includes Schedule 80LA, which asks companies to provide details such as the date and number of registration, the authority granting registration, type of entity, type of income, the first assessment year the deduction was claimed, and the amount of deduction claimed for the current assessment year.

4.20 A new ‘Schedule 115TD’ has been introduced for reporting the tax owed on accrued income

If any fund or institution approved under Section 10 (23C) or registered under Section 12AB changes into a non-charitable form or fails to renew its registration, it must pay additional tax on its accreted income. This income tax is charged at the highest rate and is separate from regular income tax. Such entities such as Section 8 companies, cannot use ITR-7 for their returns if they no longer qualify for Section 12AB or Section 10 (23C) registration or approval. A new Schedule 115TD has been introduced for reporting tax owed on this accrued income. This schedule requires taxpayers to enter details like the calculation of accreted income, tax payable, and information about tax payment challans.

4.20 The assessee has been identified as an MSME

The new ITR-5 form requires you to provide your status as a Micro, Small, or Medium Enterprise and also include your registration number as per the MSME Development Act of 2006.

Also Read: What Happens if You Don’t File Your ITR on Time?

4.21 New option available for choosing the concessional regime under Section 115BAE

A new option under Section 115 BAE allows taxpayers, such as resident co-operative societies involved in manufacturing or production, to choose a different tax regime. If these societies choose this regime, they can benefit from lower tax rates if they meet certain conditions. But in order to take full advantage of Section 115 BAE, the co-operative society must file Form No. 10-IFA by the due date for the first return of income for any year.  So the new ITR-5 form now includes a section where the society must confirm if they are opting for this regime and provide details like the date of filing Form 10-IFA and its acknowledgement number.