For the assessment year 2024-25, the Central Board of Direct Taxes has not altered the criteria for the applicability of Income Tax Return forms for different classes of taxpayers and methods of furnishing returns. The form that a taxpayer must use remains the same as that for the assessment year 2023-24.
ITR-1 can be filed by an individual who is ordinarily resident in India. ITR-4 can be filed only by an individual or a Hindu Undivided Family who is ordinarily resident in India and by a firm, other than an LLP, resident in India. The forms apply differently based on the nature of income, residential status, and specific circumstances such as directorship in a company, receipt of ESOPs from eligible start-ups, ownership of multiple house properties, or earning certain categories of capital gains and other income.
For example, salary income for an ordinarily resident individual can be reported in ITR-1, 2, 3, or 4, while salary income for a non-resident or not ordinarily resident person can only be reported in ITR-2 or 3. Income from one house property without carried forward losses may be reported in ITR-1, 2, 3, or 4, but if there are carried forward losses, only ITR-2 or 3 may be used. Business income generally requires ITR-3, while presumptive business income for a resident person can be reported in ITR-4. Various conditions apply for income from other sources, capital gains, deductions, and specific tax provisions.
In addition to individuals and HUFs, the applicability of forms for other assessees, such as firms, LLPs, companies, AOPs, BOIs, local authorities, artificial juridical persons, business trusts, and investment funds, remains unchanged. The selection of the correct form ensures proper disclosure and compliance.
Individuals and HUFs Liable for Audit Can Verify ITR Using Electronic Verification Code
Rule 12 has been amended to allow individuals and Hindu Undivided Families liable to tax audits under Section 44AB to verify their income tax returns through an electronic verification code. Previously, verification could only be done using a digital signature. This change offers flexibility and convenience, especially for those who may not have easy access to digital signature certificates but still need to comply with audit requirements.
Furnishing of Due Date for Filing of Return
Newly introduced in ITR Forms 3, 5, and 6 is a column seeking information on the statutory due date for filing the income tax return. Taxpayers must select the applicable deadline from a dropdown menu offering July 31st, October 31st, or November 30th. This helps ensure clarity about compliance timelines and assists both the taxpayer and the tax administration in tracking filings against deadlines.
New Tax Regime as Default
The Finance Act 2023 amended Section 115BAC, making the new tax regime the default for individuals, HUFs, AOPs, BOIs, and AJPs. If an assessee wishes to pay tax under the old regime, they must actively opt out of the default regime.
For taxpayers without income from business or profession, indicating their choice in the income tax return suffices. However, those with business or professional income must file Form 10-IEA on or before the due date under Section 139(1) to opt out of the new regime.
For instance, an individual filing ITR-2 can simply indicate their choice within the form, while an ITR-3 filer with business income must submit the prescribed form. The ITR forms for 2024-25 have been updated to include this requirement, ensuring clear reporting of the chosen tax regime.
Details of Legal Entity Identifier
The Legal Entity Identifier is a 20-character alphanumeric code used to uniquely identify parties in financial transactions globally. It enhances the accuracy and quality of financial data reporting for improved risk management. In line with Reserve Bank of India regulations, all non-individual entities undertaking single payment transactions of INR 50 crore or more must provide both remitter and beneficiary LEI details for transactions through NEFT or RTGS.
Accordingly, the new ITR Forms 2, 3, 5, and 6 now include a column for furnishing the LEI number if a taxpayer is seeking a refund of INR 50 crore or more.
Furnishing of Reason for Tax Audit Under Section 44AB
ITR Forms 3, 5, and 6 now require assessees subject to tax audit to provide reasons for the audit requirement. This includes situations where turnover or gross receipts exceed prescribed limits, cases where presumptive taxation provisions apply but income is not offered on a presumptive basis, and other applicable circumstances. This ensures better categorisation and clarity on the basis for audit.
Furnishing of Acknowledgement Number of Audit Report and UDIN
Where an audit has been conducted under Section 44AB, including audits under Section 92E, the assessee must now provide the acknowledgement number of the audit report along with the Unique Document Identification Number issued by the Institute of Chartered Accountants of India. This addition improves transparency and helps in the verification of audit compliance.
Receipts in Cash Column for Enhanced Turnover Limit
The Finance Act 2023 increased the turnover threshold for presumptive taxation under Section 44AD from INR 2 crore to INR 3 crore if cash receipts do not exceed 5% of total turnover. Similarly, under Section 44ADA, the gross receipts threshold for professionals was increased from INR 50 lakh to INR 75 lakh under the same condition. For this purpose, cash includes cheques or bank drafts that are not account payee.
To reflect this, ITR Forms 3, 4, and 5 now include a specific column for reporting receipts in cash under the Schedule of Business and Profession, enabling accurate application of the enhanced limit.
Disclosure of Sums Payable to MSMEs Beyond the Prescribed Time Limit
Section 43B allows deductions for certain expenses only on actual payment, even under the mercantile system of accounting. The Finance Act 2023 inserted a new clause in this section to disallow any sum payable to micro or small enterprises beyond the time limit specified under Section 15 of the MSME Act.
New ITR Forms 3, 5, and 6 include a column under the section for Other Information to disclose sums payable to such enterprises beyond the prescribed limit, aligning tax compliance with MSME protection provisions.
Disclosure of Information About the Capital Gains Account Scheme
The Schedule CG in ITR Forms seeks information about capital gains earned by the taxpayer. This schedule requires details such as the particulars of the capital asset sold, buyer information, and amounts spent to claim exemptions. For the assessment year 2024-25, Schedule-CG has been expanded to capture more information related to sums deposited under the Capital Gains Account Scheme (CGAS).
Taxpayers now need to provide additional details, including the date of deposit, account number, and IFSC code of the account where the deposit was made. Before this change, only the sum deposited was reported. The new details enhance transparency and help in the tracking of capital gains reinvested under the scheme.
Disclosure of Winnings from Online Games Chargeable Under Section 115BBJ
The Finance Act 2023 introduced Section 115BBJ, which taxes winnings from online games starting from the assessment year 2024-25. A corresponding Section 194BA mandates the deduction of tax at source from net winnings from online games, effective April 1, 2023.
ITR forms 2, 3, 5, and 6 have been amended to include Schedule-OS, which now requires taxpayers to disclose income from winnings on online games chargeable under this new section. This ensures that taxable gaming income is properly reported and taxed.
New Schedule 80GGC Seeks Details of Contributions Made to Political Parties.
Section 80GGC provides deductions for donations made to political parties or electoral trusts. The updated ITR forms 2, 3, 5, and 6 now include a new Schedule 80GGC. This schedule requires taxpayers to furnish comprehensive details of contributions, including date of contribution, amount contributed (with a breakdown between cash and other modes), eligible amount for deduction, transaction reference number for UPI transfers, cheque numbers or electronic payment references, and the bank’s IFSC code.
Previously, only the total eligible amount was disclosed. This addition promotes greater transparency and tracking of political contributions for tax purposes.
Schedule – Tax Deferred on ESOP Seeks PAN and DPIIT Registration Number of Eligible Startup
When employees receive securities under Employee Stock Option Plans (ESOPs) either free or at concessional rates, such perquisites are taxable in the year of allotment. However, tax liability can be deferred for employees of eligible startups under Section 17(2)(vi).
The ‘Schedule – Tax Deferred on ESOP’ in ITR forms 2 and 3 has been enhanced to capture additional details, including the PAN of the employer (eligible startup) and its DPIIT registration number. Other details such as the assessment year, deferred tax amount brought forward, tax payable in the current year, and balance deferred tax to be carried forward are also reported, thereby improving transparency in tax deferral claims.
New Column Added to Claim Deduction Under Section 80CCH
The Finance Act 2023 introduced Section 80CCH to provide deductions for individuals enrolled in the Agnipath Scheme who subscribe to the Agniveer Corpus Fund on or after November 1, 2022.
The new ITR Forms 1, 2, 3, and 4 include a column to report the amount eligible for deduction under Section 80CCH. This enables taxpayers to claim this new deduction easily within their income tax return filings.
Schedule 80U Inserted for Claiming Deduction If the Assessee Is a Person With a Disability
Section 80U provides an absolute deduction for resident individuals suffering from disability or severe disability. The deduction amounts are INR 75,000 and INR 1,25,000, respectively.
Previously, taxpayers claimed this deduction under Schedule VI-A. The new ITR-3 form introduces a separate ‘Schedule 80U’ that requires detailed information, including the nature of disability, date of filing Form 10-IA, acknowledgement number of Form 10-IA, and UDID number if available. This change facilitates more structured reporting of disability-related deductions.
New Schedule 80DD Seeks Details Toward Maintenance and Medical Treatment of Person With a Disability
Under Section 80DD, a resident individual or HUF may claim deductions for medical expenses or insurance premiums paid for a family member with a disability. The deduction amount is the same as Section 80U, depending on severity.
In the new ITR forms 2 and 3, ‘Schedule 80DD’ has been introduced to capture details such as the nature of disability, type of dependent (e.g., spouse, child, parent, sibling, or HUF member), PAN and Aadhaar of the dependent, filing date, acknowledgement number of Form 10-IA, and UDID number. This structured information supports the legitimacy and accuracy of the claim.
Reporting of Dividend Income Derived From a Unit Located in IFSC
The Finance Act 2023 amended Section 115A to reduce the tax rate on dividends received from units located in an International Financial Services Centre (IFSC) to 10%, down from 20%.
The updated Schedule OS in ITR forms 2, 3, 5, and 6 now requires taxpayers to report such dividend income accordingly. This reflects the preferential tax treatment accorded to IFSC income streams.
Schedule-OS Includes Additional Column for Declaration of Bonus Payments Received Under Life Insurance Policies
Amendments to Section 56(2) by the Finance Act 2023 introduced taxability on amounts received from excess or high premium life insurance policies as income under the head ‘Other Sources’.
Accordingly, ITR forms have been updated to include a new column in Schedule-OS for taxpayers to declare bonus payments received under life insurance policies, ensuring compliance with the revised taxation framework.
Reporting of Sums Received by a Unitholder From the Business Trust
To prevent dual non-taxation of amounts distributed by business trusts, the Finance Act 2023 inserted clause (xii) to Section 56(2). Under this provision, sums received by unitholders are taxable under ‘Income from Other Sources’. In cases of redemption, the cost of acquisition may be deducted from the amount received.
ITR forms 2, 3, and 5 have been amended to include a new column in Schedule-OS for reporting income under this clause, facilitating accurate reporting and tax compliance for business trust unitholders.
Reporting of All Banks Held at Any Time
The ITR forms require taxpayers to provide information about their bank accounts, including the account selected for receiving income tax refunds.
The revised ITR forms now mandate disclosure of all bank accounts held by the taxpayer at any time during the year, except dormant accounts. This comprehensive disclosure aims to improve transparency and ease the reconciliation of banking and tax records.
Adjustment of Unabsorbed Depreciation about Additional Depreciation from Written Down Value of Block of Assets as on 01-04-2023
The Finance Act 2020 introduced Section 115BAC to provide an alternative tax regime with lower rates for individuals and Hindu Undivided Families. The Finance Act 2023 extended this regime as the default for AOPs, BOIs, and AJPs as well. However, taxpayers opting for Section 115BAC must forego certain exemptions and deductions.
One such provision relates to unabsorbed depreciation attributable to additional depreciation. Taxpayers opting for the new regime are not allowed to set off this unabsorbed depreciation. Instead, this depreciation must be added to the written down value (WDV) of the asset block as of April 1, 2023, in the prescribed manner.
The amended Schedule DPM in ITR Forms 3 and 5 reflects this adjustment. It provides that the WDV of the block as on April 1, 2023, shall be increased by the amount of unabsorbed depreciation related to additional depreciation that was disallowed due to opting for Section 115BAC. This ensures the correct computation of depreciation and compliance with tax regulations.
New Schedule 80-IAC Seeks Details in Respect of Eligible Startup..
Section 80-IAC provides tax deductions to eligible startups for three consecutive assessment years out of ten, subject to certain conditions.
The revised ITR-5 now includes a new schedule requiring startups to furnish detailed information related to these deductions. This includes the date of incorporation, nature of business, certificate number from the Inter-Ministerial Board of Certification, the first assessment year in which the deduction was claimed, and the amount of deduction claimed for the current assessment year.
Previously, taxpayers only needed to disclose the deduction amount. The new schedule promotes transparency and helps in monitoring the validity and eligibility of startup deductions.
New Schedule 80LA Seeking Details Towards Offshore Banking Unit or International Financial Services Centre
Section 80LA provides deductions on the income of Offshore Banking Units and units located in International Financial Services Centres (IFSC). For banks, 100% of income is deductible for ten consecutive assessment years. For IFSC units, 100% of income is deductible for ten out of fifteen years.
The newly inserted Schedule 80LA in ITR Forms 5 and 6 requires companies to provide details,, including the type of entity, nature of income, authority granting registration, registration date, registration number, first assessment year of claiming deduction, and the amount of deduction claimed for the current year.
This detailed disclosure facilitates compliance and regulatory oversight over deductions claimed by entities operating in offshore and IFSC jurisdictions.
New Schedule 115TD Inserted for Reporting Tax Payable on Accreted Income
Certain funds or institutions approved under Section 10(23C) or registered under Section 12AB may incur additional income tax on accreted income if they convert into non-charitable forms, fail to renew registration, or transfer assets to non-charitable institutions.
Such entities, including Section 8 companies, must report accreted income and pay tax at the maximum marginal rate, in addition to regular income tax. This is to discourage misuse of charitable exemptions.
To capture this, the new Schedule 115TD has been inserted in ITR Forms 5 and 6. It requires computation of accreted income based on the fair market value of assets less liabilities, the tax payable on this income, and details of challans evidencing tax payment. This promotes transparency and correct tax liability reporting for affected entities.
Assessee Recognized as Micro, Small, and Medium Enterprise (MSME)
The updated ITR-5 form requires entities to disclose their recognition status as an MSME and provide the registration number allotted under the Micro, Small, and Medium Enterprises Development Act, 2006.
This information assists the tax authorities in verifying eligibility for various benefits and in monitoring compliance with MSME-related provisions.
New Field for Opting for Concessional Regime Under Section 115BAE
The Finance Act 2023 introduced a concessional tax regime under Section 115BAE for resident cooperative societies engaged in manufacturing or production. To avail this benefit, the cooperative society must file Form 10-IFA before the due date under Section 139(1) in the first return relevant to the assessment year starting April 1, 2024.
The revised ITR-5 includes a new field asking whether the assessee is a manufacturing cooperative society opting for taxation under Section 115BAE. Additionally, details such as the date of filing Form 10-IFA and its acknowledgement number must be furnished.
This change aligns tax filings with the new scheme and aids in the administration of concessional rates.
Individuals and HUFs Liable for Audit Can Verify ITR Using Electronic Verification Code
Amendment to Rule 12 now allows individuals and Hindu Undivided Families (HUFs) who are required to undergo tax audits under Section 44AB to verify their Income Tax Returns (ITRs) using an Electronic Verification Code (EVC). Previously, such taxpayers were mandated to use a digital signature for verification.
This change simplifies the verification process for audited taxpayers, making it more accessible and less dependent on digital signatures, while maintaining compliance standards.
Furnishing of Due Date for Filing of Return in ITR Forms
ITR Forms 3, 5, and 6 have been updated to include a new mandatory field that requires the taxpayer to select the due date for filing the return. The due date options available in a dropdown menu are July 31st, October 31st, or November 30th.
This inclusion helps the tax department track and manage the timing of filings better and ensures accurate assessment of late filing penalties and compliance monitoring.
New Tax Regime as Default and Opting Out Option for Old Regime
The Finance Act 2023 amended Section 115BAC, making the new tax regime the default tax regime for individuals, Hindu Undivided Families, Association of Persons, Body of Individuals, and Artificial Juridical Persons. Taxpayers must now explicitly opt out of the new regime if they wish to be taxed under the old regime.
For taxpayers without business or professional income, the choice must be indicated directly in the ITR form submitted for the relevant assessment year under Section 139(1). Taxpayers with business or professional income must file Form 10-IEA on or before the due date to opt out.
ITR forms 1, 2, 3, 4, and 5 have been modified accordingly to incorporate these changes and collect the taxpayer’s choice of tax regime.
Legal Entity Identifier (LEI) Details in ITR Forms
To comply with RBI regulations for high-value financial transactions (single payments of INR 50 crores or more), the ITR Forms 2, 3, 5, and 6 now include a field for furnishing the Legal Entity Identifier (LEI).
LEI is a 20-character alphanumeric code designed to uniquely identify financial entities worldwide. This requirement aligns tax reporting with financial transaction standards and enhances transparency in large financial dealings.
Furnishing Reason for Tax Audit Under Section 44AB
The revised ITR Forms 3, 5, and 6 ask taxpayers subject to audit under Section 44AB to provide additional details explaining the reasons for the audit. These include turnover or gross receipt thresholds exceeding prescribed limits, opting out of presumptive taxation schemes despite eligibility, or other specific circumstances.
This requirement aids the tax authorities in understanding audit triggers and assessing compliance risks more effectively.
Furnishing Acknowledgment Number of Audit Report and UDIN
When submitting audit information under Section 44AB or an an audit under Section 92E related to international transactions, companies must now provide the acknowledgment number of the audit report along with the Unique Document Identification Number (UDIN).
This ensures authenticity and traceability of audit reports and strengthens the integrity of audit-related disclosures in the income tax return.
“Receipts in Cash” Column Added for Claiming Enhanced Turnover Limit for Presumptive Taxation
The Finance Act 2023 increased the turnover threshold for opting for presumptive taxation under Sections 44AD and 44ADA from INR 2 crores to INR 3 crores and from INR 50 lakhs to INR 75 lakhs, respectively, subject to conditions on cash receipts.
To implement this, the amended ITR Forms 3, 4, and 5 include a new column to declare receipts in cash or cheque/bank drafts not account payee. This disclosure is critical as the scheme’s eligibility depends on cash receipts being 5% or less of total turnover or gross receipts.
This amendment facilitates proper verification of eligibility for presumptive taxation under the new thresholds.
Conclusion
The updates in the Income Tax Return forms for Assessment Year 2024-25 reflect significant regulatory and procedural changes introduced by the Finance Act 2023 and related rules. While the applicability of ITR forms remains consistent with the previous year, the forms have been enhanced to incorporate new disclosures, compliance requirements, and transparency measures. These include the default adoption of the new tax regime with an explicit opt-out option for the old regime, the introduction of schedules for political contributions, ESOP tax deferrals, startup deductions, and accreted income reporting. Additional details regarding audits, cash receipts for presumptive taxation, and payments to MSMEs are now mandatory, facilitating more rigorous compliance and better data accuracy. Furthermore, the inclusion of Legal Entity Identifiers expanded bank disclosures aligns with broader financial regulatory frameworks. Together, these changes aim to streamline tax administration, enhance taxpayer accountability, and improve monitoring of tax compliance in an evolving economic environment. Taxpayers and professionals must carefully review these modifications to ensure accurate and timely filing in line with the updated requirements.