Key changes to note in AY2023-24 income tax forms

The Central Board of Direct Taxes (CBDT) has notified the new income tax return (ITR) forms for assessment year (AY) 2023-24 even before the end of the relevant financial year, i.e, current FY2022-23. The new ITR forms are almost identical to that of the previous year, with minor strategic updates.

Disclosure of income from transfer of VDA

Virtual digital assets (VDA) means any information, code, number or token (not being Indian currency or foreign currency), generated through cryptographic means or otherwise, providing a digital representation of value exchanged with or without consideration, with the promise or representation of having inherent value, or functions as a store of value or a unit of account including its use in any financial transaction or investment, but not limited to investment scheme; and can be transferred, stored or traded electronically. Essentially, it refers to cryptocurrencies and also includes non-fungible tokens.

Vide the Finance Act 2022, the finance minister had announced a separate provision for the computation of income on the transfer of VDA. Accordingly, a new schedule is now added to the ITR form, for disclosure of income from the transfer of VDA. The schedule seeks details on date of acquisition, date of transfer, head of income (CG or business income), cost of acquisition, consideration received, and net income from transfer of VDA (nil in case of loss)

Additional information on donations

On donations entitled for 50% (subject to qualifying limits) deduction under section 80G, taxpayers will now have to provide a donation reference number in their ITRs. The donation reference number (DRN) will enable the income tax department to verify the legitimacy of the donation and verify whether the same is eligible for deduction under the provisions of the said section. It should be noted that the DRN is required to be provided in addition to other particulars like name and address of the donee, PAN, mode of donation, etc.

One possible reason for the addition of DRN may be that false claims are being made under this section or that receipts reported by these donees do not match the aggregate claimed by taxpayers.

Property details

Earlier for property situated outside India, taxpayers would select the state as ‘foreign’ and provide the address in the prescribed form. However, now a new field for specifying the country where the property is situated is added to Schedule HP.

The field for ‘country’ not only provides the income tax department accurate location of the property but also enables to apply any double taxation avoidance agreement, if applicable.

Turnover and income from intraday trading

Another important change made to the new ITR forms is that two new fields related to turnover from intraday trading are added to the trading account. Intraday trading is deemed to be income from the profit of the business. However, earlier there was no separate disclosure required for such transactions.

Additional disclosure for details of TCS

The particulars for tax collection at source (TCS) are now similar to that of tax deducted at source (TDS). While these can be verified and auto-populated from Form 26AS, the new particulars will enable taxpayers to not only claim credit for the TCS but also carry forward the credit to subsequent assessment years.

ITR forms are self-declarations about the particulars of taxable income provided by a taxpayer to the income tax department. The forms are used under the Computer Assisted Scrutiny Selection (CASS) model, to identify defective returns, process ITRs under section 143(1) and select cases for further scrutiny. The additions made to the new ITRs are to enhance the effectiveness of this model.

Neeraj Agarwala is partner at Nangia Andersen India. Neetu Brahma, manager, Nangia Andersen India, contributed to this article.