Changes in ITR 3 for the Assessment Year 2024-25

Topic Covers:

1. New functionality
2. How to opt Old regime
3. Changes in New ITR forms

The financial year 2023-24 has ended and it’s time to finalise the income earned during the year and file the income tax return. As finance act amended some section which increased the discloser liability of the taxpayers. CBDT brought changes in the ITR 3 form for the assessment year 2024-25. In this article we discuss the changes and things that should be kept in mind while filing the return.

New functionality

• ITR verification through EVC

To verify the return of income through an electronic verification code amendment has been made to Rule 12. Now individuals and HUF who are liable to tax audits under Section 44AB can verify ITR through EVC code. Earlier, which can be done only through a digital signature.

The new tax regime is the default tax regime; taxpayers must choose to opt-out to go with the old regime

Amendment has been brought through the Finance Act 2023 in the provisions of Section 115BAC to make it the default tax regime for the assessee being an Individual, HUF, AOP, BOI and AJP. If an assessee wants to pay tax according to the old tax regime, he will have to explicitly opt out of the new tax regime (default) and choose to be taxed under the old tax regime.

How to exercise this option-

• Assessee having income (other than income from a business or profession)

To exercise this option, the assessee must select the tax regime at the time of filing the return of income (ITR) for the relevant assessment year under Section 139(1).

• Assessee having income from a business or profession

Such assessee can also opt for the old tax regime for a relevant year. To exercise this option assessee is required to file Form No. 10-IEA. This form is required to be filed on or before the due date for filing the return of income under Section 139(1).
In simple words, an assessee filing ITR 3 will be required to file Form 10-IEA to opt for the old tax regime. If he has income from Business or profession

Changes in New ITR Forms

Some other changes have been incorporate in the new ITR Forms

1. Details of Legal Entity Identifier (LEI)

To uniquely identify parties in financial transactions worldwide the Legal Entity Identifier (LEI) is used. It contains 20-character which is a combination of alpha-numeric code. For better risk management it has been implemented which helps to improve the quality and accuracy of financial data reporting systems.

As per the RBI Regulations, all single payment transactions of ₹ 50crores and above undertaken by entities (non-individuals) should include remitter and beneficiary LEI information. This applies to transactions undertaken through the NEFT and RTGS payment systems.

The new ITR Forms have incorporated a column for furnishing details of the LEI number to be in lined with the RBI regulations,. Such taxpayer who are seeking a refund of ₹ 50crores or more is required to furnish the LEI details.

2. Section44AB: Furnishing of the reason for tax audit

In the New ITR-3 form the assessee subject to audit under Section 44AB is required to provide additional details regarding circumstances under which the entity is obligated to undergo an audit, such as:

• Sales, turnover or gross receipts exceed the limits specified under Section 44AB;
• Assessee falling under Section 44AD/44ADA/44AE/44BB but not opting for presumptive basis;
• Others.

3. Acknowledgement number of the Audit Report and UDIN

Entities are required to furnish the acknowledgment number of the audit report and the UDIN at the time of providing information about audits conducted under Section 44AB, including audits under Section 92E.

4. To claim an enhanced turnover limit “Receipts in Cash” column added

The turnover threshold limit has been enhanced through the Finance Act 2023, from ₹ 2 crores to ₹ 3 crores for opting for the presumptive taxation scheme under Section 44AD. If the receipts in cash do not exceed 5% of the total turnover or gross receipts for the previous year.

Similarly, Amendment has been made to Section 44ADA to enhance the threshold limit of gross receipts from ₹ 50 lakhs to ₹ 75 lakhs, if the receipts in cash do not exceed 5% of the total gross receipts for the previous year.

The CBDT has amended ITR forms to give effect to the above amendments. Under the Schedule BP a new column of “receipts in cash” for disclosing cash turnover or cash gross receipts has been inserted.

5. Details of the sum payable to MSME

A new clause (h) in Section 43B has been inserted through the Finance Act 2023 to provide that any sum payable to a micro or small enterprise beyond the time limit specified in Section 15 of the Micro, Small and Medium Enterprises Development Act 2006 (MSME Act) shall not be allowed as a deduction.

Accordingly, to disclose the sum payable to Micro or small enterprises beyond the specified time limit per the MSMED Act, a new column is inserted under Part A-OI (Other Information).

6. Information pertaining to the Capital Gains Accounts Scheme

Information about the capital gains earned by the taxpayer is required to be disclosed in the Schedule-CG of ITR forms. This schedule requires disclosures about the capital asset sold, the particulars of the buyer, and specifics regarding the amount spent for claiming exemptions.

In the new ITR-2, Schedule-CG has been modified to gather more information regarding the sums deposited in the Capital Gains Accounts scheme (CGAS). The following additional details towards CGAS are required to fill in the revised schedule:

• Date of deposit
• Account number
• IFS code

Until the previous Assessment Year, details pertaining to the sum deposited in CGAS were only required to be provided by the taxpayers.

7. Winnings from online games chargeable under Section 115BBJ

To tax winnings from online games, w.e.f. Assessment year 2024-25 the Finance Act 2023 has inserted a new Section 115BBJ. With effect from 01-04-2023 a corresponding Section 194BA has also been inserted for the deduction of tax from the net winnings from online games. Thus, all winnings from online games on or after 1-4-2023 shall be taxable under Section 115BBJ and subject to TDS under Section 194BA.

To disclose income by way of winning from online games chargeable under Section 115BBJ, to report such income in ITR form, Schedule OS has been amended.

8. Details of contributions made to political parties : New Schedule 80GGC

Deduction for contributions to a political party or electoral trust is allowed under Section 80GGC. The new ITR forms include a new Schedule 80GGC, which requires the furnishing of the following details:

• Date of Contribution
• Contribution Amount (with a breakdown of contributions made in cash and other modes)
• Eligible Contribution Amount
• Transaction Reference Number for UPI transfer or Cheque Number/IMPS/NEFT/RTGS
• IFS Code of the Bank

9. ‘Schedule – Tax Deferred on ESOP’ seeks PAN and DPIIT Registration Number of the eligible start-up

When an employer allots securities to an employee under ESOP scheme, free of cost or at a concessional rate, it is taxable as perquisite in the year of allotment of securities. However, the liability for payment or deduction of tax on such perquisite is deferred in the case of an employee of an eligible start-up.

Information relating to such tax-deferral as mentioned in Section 17(2)(vi) is furnished in the ‘Schedule – Tax Deferred on ESOP’. This schedule seeks information such as assessment year, amount of deferred tax brought forward, amount of tax payable in the current assessment year, balance amount of tax deferred to be carried forward to the next assessment year, etc.

In order to enhance transparency, the new ITR forms amended this schedule to seek additional details such as the PAN of the employer (an eligible start-up) and its DPIIT Registration number.

10. New column to claim deduction under Section 80CCH

A new Section 80CCH has been inserted through the Finance Act 2023, which states that individuals enrolled in the Agnipath Scheme and subscribing to the Agniveer Corpus Fund on or after 01-11-2022 will be eligible for a deduction for the amount deposited in the Agniveer Corpus Fund.

To furnish the amount eligible for deduction under Section 80CCH, new ITR forms have been amended.

11. Schedule 80U inserted for claiming deduction if the assessee is a person with a disability

In the new ITR-3, a new ‘Schedule 80U’ has been added, requiring details of deduction in case of a person with a disability.

The ‘Schedule 80U’ required the following details:

• Nature of disability
• Date of filing Form 10-IA
• Acknowledgment number of the Form 10-IA
• UDID number (If available)

12. Details towards maintenance & medical treatment of the person with a disability: New Schedule 80DD

In the previous ITR forms, the taxpayers were required to mention the amount claimed as a deduction under Section 80DD in Schedule VI-A. The new ITR forms have introduced a new ‘Schedule 80DD’ seeking details of deduction in respect of maintenance, including medical treatment of a dependent with a disability.

These details comprise:

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

13. Reporting of dividend income derived from a unit located in IFSC

The Finance Act, 2023 has amended the provisions of Section 115A by inserting a proviso to Section 115A(1)(a)(A) to provide that the dividend income received from a unit in an IFSC, as referred to in Section 80LA(1A) shall be taxed at a reduced tax rate of 10% instead of 20%.

‘Schedule OS’ has been amended in new ITR forms to incorporate such change.

14. Schedule-OS includes an additional column for the declaration of bonus payments received under life insurance policies

ITR forms have been updated to incorporate reporting of the sum received from excess or high premium life insurance policies which are chargeable to tax under the head ‘other sources’. The amendment has been made in the Schedule-OS.

15. Reporting of sums received by a unit holder from the business trust

[ITR 2, 3 and 5]

The Finance Act, 2023, inserted clause (xii) to Section 56(2) which provides that the sum received by the unit holder shall be taxable under the head of other sources.

Further, in case of redemption of units, under the proviso to clause (xii) of Section 56(2) it is provided that the cost of acquisition of the unit shall be allowed to be deducted from the sum received on redemption.

ITR forms have been amended to include a new column under Schedule-OS to report income earned by the unit holder under Section 56(2)(xii).

16. Reporting of all banks held at any time

From this assessment year it is obligatory for the taxpayer to disclose all the bank accounts they have ever held, with the exception of dormant accounts. And amendments have been made in this regard in the new ITR forms.

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