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CBDT issues corrigendum to include sec. 43B(h) disallowance under clause 22 of Form 3CD

editor — Thu, 21 Mar 2024 07:32:17 +0000

The Central Board of Direct Taxes (CBDT) introduced amendments to Form 3CD through Notification No. 27/2024 /F. No. 370142/3/2024-TPL, dated 05-03-2024. These amendments primarily focused on enhancing disclosures related to certain provisions of the Income Tax Act.

Disclosure of Section 43B(h) Disallowance (Clause 26): The notification included a requirement for disclosure of disallowances under section 43B(h) within Clause 26 of Form 3CD. This amendment aimed to ensure transparency and comprehensive reporting of such disallowances in accordance with the Income Tax Act.
Amendment of Clause 22: Notably, Clause 22 of Form 3CD, which pertains to interest restrictions under the MSME (Micro, Small, and Medium Enterprises) Development Act, was not initially amended in the notification. However, subsequent revisions have now been made to Clause 22 to incorporate the disclosure of amounts disallowed under section 43B(h).

Source: https://www.nyca.in/wp-content/uploads/2024/03/notification-27-2024.pdf

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Filing of Form 10-IEA for Income-Tax Return

editor — Wed, 20 Mar 2024 09:47:20 +0000

The Income-Tax Department has introduced Form 10-IEA for individuals who wish to switch back to the old tax regime from the new one. Here’s a breakdown of what you need to know about this form and its implications:

Introduction of New Tax Regime: The new tax regime was initially introduced under the Union Budget 2020. However, it was made the default tax regime by the Budget 2023.
Default Selection: By default, individuals are placed under the new tax regime unless they choose to opt-out.
Need for Form 10-IEA: Individuals who want to revert to the old tax regime need to fill out Form 10-IEA. This form requires various details, including PAN, tax status (individual, HUF, etc.), and any tax benefits claimed for the International Financial Services Centre (IFSC). It also asks for the taxpayer's history of switching between tax regimes.
Deadline: Form 10-IEA must be submitted before the tax filing deadline of July 31, 2024. Failure to do so could result in the taxpayer being unable to switch to the old regime later in the year.
Implications: Switching back to the old tax regime may be beneficial for individuals who want to claim deductions and exemptions not allowed under the new regime, such as those under Section 80C, Section 80D, and deductions for home loan interest, education, house rent, and LTA.
Tax Rates: Under the new tax regime, lower-income groups benefit from lower tax rates. However, those earning between Rs 5 lakh and Rs 7.5 lakh may face higher taxes compared to the old regime due to fewer deductions and exemptions.
Clarity Awaited: There is still ambiguity regarding whether Form 10-IEA is mandatory for all individuals or only for certain categories like businessmen and self-employed individuals. Further clarity on the procedure for opting out of the tax regime is awaited from the Income-Tax Department.
Professional Income: Taxpayers filing under ITR-4 (for individuals with business or professional income) must submit Form 10-IEA to opt out of the new tax regime.
Importance of Details: Although providing past details may seem cumbersome, it's crucial for ensuring accurate claims of deductions and exemptions. Self-employed individuals are allowed to switch back to the old tax regime only once in their lifetime.
Consequences of Non-Compliance: Failing to submit Form 10-IEA before the deadline could result in being unable to file belated tax returns under the old tax regime. This means forfeiting tax exemptions and being considered under the new tax regime automatically.

In summary, Form 10-IEA is a crucial document for individuals wishing to switch back to the old tax regime from the new one. It’s essential to understand its requirements and implications to make informed decisions about tax filing.

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Update on Option to File ITR-U Under Section 139(8A) of IT Act

editor — Sat, 09 Mar 2024 05:28:40 +0000

The Income Tax Department has released a recent update, dated March 7, 2024, regarding the provision to submit an Updated Income Tax Return (ITR) under section 139(8A) of the Income Tax Act, 1961. This provision allows individuals to file an updated return for any assessment year within twenty-four months from the end of the relevant assessment year, irrespective of their previous filing status. Form 61 must be used for filing the updated return.

Under section 139(8A) of the Income Tax Act 1961, any person, whether or not they have previously filed a return under subsections (1), (4), or (5), can file an updated return for an assessment year (referred to as the relevant assessment year) for their income or income of any other assessable person, within the specified timeframe.

However, certain conditions apply:

The provision does not apply if the updated return results in a loss, decreases the total tax liability determined based on the original return, or increases the refund due.
Individuals cannot file an updated return if certain circumstances are present, such as a search initiated under section 132, a survey conducted under section 133A, or if they have received notices related to seized assets or documents.
No updated return can be furnished if proceedings for assessment, reassessment, or any other related process are pending or completed for the relevant assessment year.
Further, if the person has sustained a loss in any previous year and has filed a return of loss within the prescribed time, they are allowed to file an updated return.
Additionally, if there are any adjustments to losses carried forward or unabsorbed depreciation in subsequent previous years due to the filing of an updated return, a return must be filed for each subsequent previous year.

These provisions aim to streamline the process of filing updated returns and ensure compliance with the Income Tax Act.

For detailed information, individuals can refer to the Income Tax Portal.

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CBDT Introduces Key Changes to Income-tax Rules: Fourth Amendment Rules, 2024

editor — Wed, 06 Mar 2024 12:11:45 +0000

In a move aimed at streamlining tax compliance and ensuring transparency, the Central Board of Direct Taxes (CBDT) has issued Notification No. 27/2024 dated March 05, 2024, notifying the Income-tax (Fourth Amendment) Rules, 2024. These amendments, made to the Income-tax Rules, 1962, bring significant updates to various forms and deduction rules under the Income-tax Act, 1961.

Key Changes and Updates

1.) Form No. 3CD:

The amendment introduces new clauses for adjustments concerning sections 115BAA, 115BAC, and 115BAD for specific assessment years. These adjustments aim to ensure accurate reporting of income under different tax regimes.
Additionally, adjustments regarding expenditures in violation of the law have been incorporated into Form No. 3CD, enhancing scrutiny of expenses claimed by taxpayers.

2.) Form No. 3CEB:

3.) Form No. 65:

Source: https://www.nyca.in/wp-content/uploads/2024/03/CBDT-Notification-No.-27-2024-05.03.2024.pdf

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Extension of Deadline for Trusts/Institutions to Rectify Audit Report Submissions for Tax Exemption

editor — Wed, 06 Mar 2024 04:43:05 +0000

Circular No. 02/2024, issued by the CBDT on March 05, 2024, grants an extension to trusts and institutions that submitted incorrect audit report forms for the assessment year (A.Y.) 2023-24. They are allowed to rectify their submissions by March 31, 2024, especially those needing to switch between Form No. 10B and Form No. 10BB to maintain their tax exemption status.

Eligibility Criteria for Tax Exemption:

The Income-tax Act, 1961, provides tax exemption for income earned by various entities such as funds, educational institutions, hospitals, etc., subject to fulfilling certain conditions.

Prescribed Forms for Audit Report:

Forms for audit reports, namely Form No. 10B and Form No. 10BB, were introduced via Notification No. 7 of 2023, effective from April 01, 2023, for assessment year 2023-24 and onwards.

Changes in Forms for A.Y. 2023-24:

A.Y. 2023-24 saw the implementation of the new forms, marking the first year of their effectiveness.

Rectification of Incorrect Submissions:

The CBDT allows trusts/institutions that erroneously submitted Form No. 10B instead of Form No. 10BB, or vice versa, for A.Y. 2023-24, to rectify their submissions by March 31, 2024. Failure to adhere to the prescribed form may result in denial of tax exemption.

Source: https://incometaxindia.gov.in/communications/circular/circular-no-2-2024.pdf

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Understanding ITR-U: Definition and Updates

editor — Tue, 05 Mar 2024 11:34:46 +0000

Introduction to ITR-U:

ITR-U, or Updated Income Tax Return, is a form introduced by the government to allow taxpayers to rectify errors or omissions in their previous income tax returns. It can be filed within two years from the end of the relevant assessment year.

Latest Update on ITR-U:

As of January 1st, 2024, taxpayers cannot file belated or revised ITRs after December 31st, 2023. However, they can file an updated return using the ITR-U form, specifically designed for correcting minor errors or omissions in the original ITR.

What is ITR-U?

ITR-U enables individuals to update their ITRs by rectifying errors or omissions within two years from the end of the relevant assessment year. It provides an opportunity to enhance tax compliance without triggering legal action.

Eligibility Criteria for Filing ITR-U:

Under Section 139(8A) of the Income Tax Act, individuals who have made errors or omissions in their original, belated, or revised returns are eligible to file an updated return using ITR-U.

Ineligibility for Filing ITR-U:

Certain situations disqualify individuals from filing ITR-U, including already filing an updated return, resulting in lower tax liability, or facing search or survey proceedings by the Income Tax authorities.

Time Limit for Filing ITR-U:

The time limit for filing ITR-U is 24 months from the end of the relevant assessment year. For example, for the assessment year 2023-24, the last date to file ITR-U is March 31st, 2026.

Additional Tax Implications:

Additional tax is applicable when filing ITR-U, with rates of 25% or 50% depending on the timing of the return filing.

How to File Form ITR-U:

Filing Form ITR-U involves furnishing Part A and Part B of the form, providing general information and details of additional income, respectively. The form must be verified using either a Digital Signature Certificate or an Electronic Verification Code.

Filing ITR-U with TaxCloudIndia:

TaxCloudIndia offers a user-friendly platform for preparing and filing ITR-U. Users can follow a step-by-step guide to select or recreate the return, enable ITR-U, and fill out the necessary schedules.

Conclusion:

ITR-U serves as a valuable tool for taxpayers to rectify errors or omissions in their previous income tax returns within a specified time frame, thereby enhancing tax compliance and avoiding legal repercussions.

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Income Tax Department enabled the Online Filing of Form I SWF

editor — Tue, 05 Mar 2024 10:35:59 +0000

On March 04, 2024, the Income Tax Department released a notification announcing the activation of online submission for Form I SWF, as outlined in Circular No. 15 of 2020, issued on July 22, 2020.

Source: IncomeTax Portal

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CBDT Introduces Income Tax Return Form ITR-7 for AY 2024-25

editor — Mon, 04 Mar 2024 04:30:32 +0000

The Central Board of Direct Taxes (CBDT) has recently issued Notification No. 24/2024 dated March 01, 2024, announcing the release of the Income Tax Return (ITR) Form ITR-7 for the Assessment Year (A.Y.) 2024-25. This form is specifically designed for individuals and companies obligated to file returns under sections 139(4A), 139(4B), 139(4C), or 139(4D) of the Income Tax Act. The notification comes into effect from April 01, 2024.

ITR-7 serves the purpose of tax compliance for entities falling under the aforementioned sections, ensuring adherence to the Income-tax Rules, 1962 as specified in rule 12.

For further details and to access the complete notification here: https://www.nyca.in/wp-content/uploads/2024/03/CBDT-Introduces-Income-Tax-Return-Form-ITR-7-For-AY-2024-25.pdf

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