New ITR Forms for FY 2022-23 (AY 2023-24): Everything you need to know to file your taxes

Recent Update

The Income Tax Department has released JSON Schema for ITR 1 and ITR 4 for the Assessment Year 2023-24 (corresponding to the Financial Year 2022-23).

ITR 1 is applicable to individuals who are residents (but not ordinarily residents) with a total income of up to Rs. 50 lakh, and have income from salaries, one house property, other sources (such as interest), and agricultural income up to Rs. 5,000.

ITR 4 is applicable to individuals, HUFs, and firms (excluding LLPs) who are residents with a total income of up to Rs. 50 lakh and have income from business and profession computed under sections 44AD, 44ADA, or 44AE, and agricultural income up to Rs. 5,000.

The JSON Schema documents for ITR 1 and ITR 4 are 13KB and 23KB in size, respectively, and were first released on April 11, 2023.

Aadhaar Card is Mandatory for Income Tax Return Filing

The Income Tax Department has made it mandatory for all taxpayers to link their Aadhaar card with PAN on the Income Tax Department website.

What does ITR mean?

An Income Tax Return (ITR) is a document that taxpayers use to report information about the income they have earned and the applicable taxes to the income tax department. The income tax department has notified seven different forms, namely ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6, and ITR-7. Taxpayers must file their ITR on or before the specified due date. The type of ITR form that a taxpayer needs to file depends on their sources of income, the amount of income earned, and their taxpayer category, such as individuals, HUF, company, etc.

Who should use ITR-1 Form?

• ITR-1 or Sahaj is a type of Income Tax Return Form used by a resident individual in India.
• This form is applicable for the Assessment Year 2023-24.
• The form is applicable only if the individual's total income for the year includes the following:
  1. Income from salary/pension.
  2. Income from one house property (excluding cases where losses are brought forward from previous years).
  3. Income from other sources (excluding winnings from lottery and income from race horses).
  4. Agricultural income up to Rs 5000.
• Individuals with income from business or profession, or with capital gains, cannot use this form.
• It is important to file this form on time and provide accurate information to avoid any penalties or legal consequences.

Who can not use ITR-1 Form?

• Total income exceeding Rs. 50 lakh
• Agricultural income exceeding Rs. 5000
• Taxable capital gains
• Income from business or profession
• Income from more than one house property
• Director in a company
• Investments in unlisted equity shares at any time during the financial year
• Ownership of assets (including financial interest in any entity) outside India, including signing authority in any account located outside India
• Resident not ordinarily resident (RNOR) and non-resident
• Foreign income
• Assessable in respect of income of another person in respect of which tax is deducted in the hands of the other person
• Tax deducted under Section 194N
• Payment or deduction of tax deferred on ESOP
• Brought forward loss or loss needs to be carried forward under any income headTop of Form

Who should use ITR-2 Form?

ITR-2 is a tax return form that can be used by individuals or Hindu Undivided Families (HUFs) whose total income for the AY 2023-24 includes the following:

• Income from Salary/Pension
• Income from House Property
• Income from Other Sources (including Winnings from Lottery and Income from Race Horses)
• If you are an Individual Director in a company
• If you have had investments in unlisted equity shares at any time during the financial year
• Being a resident not ordinarily resident (RNOR) and non-resident
• Income from Capital Gains
• Having any foreign income
• Agricultural income more than Rs 5,000
• Owning assets (including financial interest in any entity) outside India, including signing authority in any account located outside India
• If tax has been deducted under Section 194N
• If in case payment or deduction of tax has been deferred on ESOP
• If you have any brought forward loss or loss needs to be carried forward under any income head

Additionally, this form can also be used if the income of another person such as spouse or child is to be clubbed with the assessee's income, and if such income falls in any of the above categories. The total income can be more than Rs 50 Lakhs.

Who should file ITR-3 Form?

• ITR-3 Form is for individuals or Hindu Undivided Families (HUFs) who have income from a proprietary business or profession.
• If you have income from carrying on a business or profession, you should file ITR-3.
• If you are an individual director in a company, you are also eligible to file ITR-3.
• If you have invested in unlisted equity shares at any time during the financial year, you should file ITR-3.
• The return may also include income from House property, Salary/Pension and Income from other sources.
• If you have income as a partner in a firm, you should file ITR-3.
• If you are not eligible to file ITR-1, ITR-2, and ITR-4, you should file ITR-3.

5 Key changes applicable for ITR-3 with effect from FY 2022-23

1. A new schedule VDA has been added to separately report income from crypto/other VDAs. Every VDA transaction needs to be reported along with sale and purchase dates.
2. New questions have been added to determine if you had opted out of the New Tax Regime in previous years.
3. Foreign institutional investors (FII/FPI) need to provide their SEBI registration number as an additional disclosure measure.
4. Advances received from individuals specified in Sec 40A(2)(b) of the Income Tax Act and others must be reported under the ‘Advances’ heading in Source of Funds.
5. Turnover and income from intraday trading must be reported under the newly introduced section ‘Trading Account’.

Who should use ITR-4 Form?

• The ITR-4 form is for individuals and HUFs, Partnership firms (excluding LLPs) who are residents and have income from specific sources.
• The income sources covered by ITR-4 include:
  • Business income under presumptive income scheme (section 44AD or 44AE)
  • Professional income under presumptive income scheme (section 44ADA)
  • Income from salary or pension up to Rs 50 lakh
  • Income from one house property up to Rs 50 lakh (excluding loss to be carried forward)
  • Income from other sources up to Rs 50 lakh (excluding lottery and race-horses)
• Freelancers can also opt for the presumptive scheme if their gross receipts do not exceed Rs 50 lakhs.
• A presumptive income scheme is when the income is calculated based on a minimum rate calculated as a percentage of gross receipts or gross turnover or based on ownership of commercial vehicles.
• If the turnover of a business exceeds Rs 2 crore, then the taxpayer will have to file ITR-3.

Who cannot use ITR-4 Form?

• If their total income exceeds Rs 50 lakh
• If they have income from more than one house property
• If they own any foreign asset
• If they have signing authority in any account located outside India
• If they have income from any source outside India
• If they are a Director in a company
• If they have had investments in unlisted equity shares at any time during the financial year
• If they are a resident not ordinarily resident (RNOR) and non-resident
• If they have foreign income
• If they are assessable in respect of the income of another person in respect of which tax is deducted in the hands of the other person.
• If payment or deduction of tax has been deferred on ESOP
• If they have any brought forward loss or loss needs to be carried forward under any income head

Budget 2023 Update on ITR-4

Budget 2023 has amended Sec 44AD and Sec 44ADA to revise presumptive taxation limits for FY 2023-24 (AY 2024-25) as follows:

ITR-5 Form

ITR-5 form is used for filing income tax returns by entities such as firms, Limited Liability Partnerships (LLPs), Association of Persons (AOPs), Body of Individuals (BOIs), Artificial Juridical Person (AJP), estates of deceased or insolvent persons, business trusts, and investment funds.

However, a person who is required to file the return of income under section 139(4A) or 139(4B) or 139(4C) or 139(4D) shall not use this form.

ITR-6 Form

Companies that are not claiming exemption under section 11 (Income from property held for charitable or religious purposes) are required to file their return electronically only. This means that paper filing of returns is not allowed for these companies.

ITR-7 Form

ITR 7 is a tax return form that needs to be filed by persons and companies required to furnish returns under various sections of the Income Tax Act. These include:

• Section 139(4A): Persons in receipt of income derived from property held under trust or other legal obligation wholly for charitable or religious purposes or in part only for such purposes.
• Section 139(4B): Political parties whose total income exceeds the maximum amount not chargeable to income tax.
• Section 139(4C): Scientific research associations, news agencies, associations or institutions referred to in section 10(23A), institutions referred to in section 10(23B), funds, universities, educational institutions, hospitals, and medical institutions.
• Section 139(4D): Universities, colleges or other institutions not required to furnish a return of income or loss under any other provision of this section.
• Section 139(4E): Business trusts not required to furnish a return of income or loss under any other provisions of this section.
• Section 139(4F): Investment funds referred to in section 115UB not required to furnish a return of income or loss under any other provisions of this section.

Top of Form
Bottom of Form

The author is a Chartered Accountant with 2 decades of experience into Accounting, Taxation, Auditing, Risk & Compliance, Credit Controls, Due diligence. Currently, the author is the founder and managing partner at RRL Global services.