The Income Tax department periodically updates tax return forms to gather additional information from taxpayers. In December 2023, ITR forms 1 and 4 were revised for Assessment Year 2024-25 to align with changes introduced by the Finance Act 2023 amendments. These modifications and reporting requirements were implemented by the Central Board of Direct Taxes (CBDT).

Tag regime

One significant change in the revised forms is the inclusion of a section for taxpayers to declare their chosen tax regime when filing ITR 1. For individuals filing ITR 4, the option to opt out of the new tax regime requires submitting Form 10-IEA. Additionally, a new column has been introduced to claim deductions under section 80CCH in the updated ITR Forms 1 and 4.

More information required

I-T department's primary goal is to monitor inaccurate tax deductions effectively. During the previous year, the Income Tax (I-T) department distributed numerous notifications to individual taxpayers, essentially prompting them to validate the tax deductions they had claimed.

For example, at present, there is a requirement to provide additional information regarding contributions made to political parties. It is imperative to furnish the specifics of donations given under section 80GGC to political entities. Alongside the donation sum eligible for 100 percent tax exemption, it is necessitated to disclose a detailed breakdown encompassing payment methods, specific transaction identification associated with bank transfers, and similar information.

Furthermore, it is crucial to retain supporting documentation for all tax-saving investments undertaken, in case inquiries are raised.

Similarly, day traders must specify details concerning cess and turnover in scenarios where assets are both purchased and sold within the same day.

Capital Gains Account Scheme

The Capital Gains Account Scheme is an essential aspect for taxpayers using Income Tax Return (ITR) forms 2, 3, 5, and 6. There has been a significant change in reporting requirements as compared to the previous year's forms. Previously, only the deposited amount needed to be disclosed; however, the revamped Schedule CG now mandates providing comprehensive details such as the deposit date, account number, and IFSC code.

Annual bonuses from life insurance policies

In the ITR-2 and ITR-3 forms, individuals who have received annual bonuses from life insurance policies are required to disclose the details of bonus payments in the dedicated column. Furthermore, they are obligated to specify if any money obtained from a high-premium life insurance policy is subject to taxation. If so, the surplus amount should be reported under 'other sources' income in a separate schedule.

Maturity proceeds from life insurance policies where annual premiums exceed 10 percent of the sum assured are taxable. Notably, according to the Budget 2022 and Budget 2023 announcements, proceeds from Ulips with annual premiums exceeding Rs 2.5 lakh and endowment policies with yearly premiums higher than Rs 5 lakh are also taxable.

If you are not utilising the ITR-1 form, it is essential to disclose not only the existing bank accounts but also any additional accounts that you may have.

Form 10-IEA for ITR-4 form

The Income Tax Return-4, also known as SUGAM, is designed for individuals, Hindu Undivided Families (HUFs), and firms (excluding Limited Liability Partnerships) with total income not exceeding Rs 50 lakh, and who derive income from business and profession computed under sections 44AD, 44ADA, or 44AE of the Income Tax Act.

Taxpayers choosing to file ITR-4 now have the requirement of submitting Form 10-IEA to formally opt out of the newly introduced tax regime. Form 10-IEA was implemented to offer taxpayers the flexibility of reverting to the old tax regime, should they prefer to do so.

A new section titled "Receipts in Cash" has been included in the ITR-4 form to facilitate the assertion of an increased turnover limit.

Legal Entity Identifier

Income Tax Return (ITR) forms 2, 3, 5, and 6 are crucial documents used by taxpayers in India to accurately report their income to the tax authorities. These forms necessitate the inclusion of a Legal Entity Identifier (LEI), a distinct 20-character alphanumeric code. The primary purpose of the LEI is to uniquely identify entities participating in financial dealings on a global scale.

Taxpayers must furnish their LEI details when seeking refunds exceeding Rs 50 crore. This obligatory disclosure is designed to enhance transparency and trackability in significant financial transactions, with the intention of deterring fraudulent behavior and upholding financial probity.

Unique Document Identification Numbers

Companies filing ITR 6 must now include acknowledgment numbers and Unique Document Identification Numbers (UDIN) for audit reports as per section 44AB (tax audit report) and section 92E (transfer pricing report).

Medical expenses

Claim deductions for maintenance and medical treatment expenses for a differently abled dependent in Schedule 80DD, not under Schedule VI-A.

Required information includes:

> Nature of the disability
> Type of dependent (spouse, son, daughter, father, mother, brother, sister, or member of the HUF)
> PAN of the dependent
> Aadhaar number of the dependent
> Date of filing and acknowledgment number of Form 10-IA
> UDID Number.

Details on Agniveer Corpus Fund

Section 80CCH of the Income Tax Act was incorporated into the legislation by the Finance Act of 2023. This particular section grants taxpayers utilizing ITR forms 1, 2, 3, or 4 the opportunity to claim a deduction for funds deposited into the Agniveer Corpus Fund. Consequently, an exclusive column denoted as "PART C – DEDUCTIONS AND TAXABLE TOTAL INCOME" is now included to indicate the permissible deduction value.

Declaration on ESOPs

Employees working for specific start-up companies are eligible for a tax deferral on employee stock options (ESOPs) or shares distributed to employees without charge or at a reduced rate.

To access these tax advantages on ESOPs, individuals must provide the tax sum, the relevant financial year, along with the PAN of the qualified start-up and the registration number from the Department for Promotion of Industry and Internal Trade (DPIIT).

Crypto earnings, virtual winnings

In order to provide a comprehensive breakdown of your investments in cryptocurrencies or virtual digital assets (VDAs) for the year, it is necessary to disclose a detailed quarter-wise analysis of your holdings. This information will be required for the submission of Income Tax Returns (ITR) form 1, 2, and 4.

Regarding the reporting of earnings from online gaming activities, it is noteworthy that the Schedule OS has undergone modifications to facilitate the declaration of prize money obtained through online games, which is subject to taxation under Section 115BBJ.