Blogs & Articles

New ITR Forms for FY 2022-23 (AY 2023-24)

April 13, 2023
4:57 am

The Income Tax Department has recently introduced JSON Schema for ITR 1 and ITR 4 for the Assessment Year 2023-24, which corresponds to the Financial Year 2022-23.

ITR 1 applies to individuals who are residents (but not ordinarily residents) and have a total income of up to Rs. 50 lakh, with income from salaries, one house property, other sources (like interest), and agricultural income up to Rs. 5,000.
ITR 4 is applicable to individuals, HUFs, and firms (except LLPs) who are residents and have a total income of up to Rs. 50 lakh, with income from business and profession computed under sections 44AD, 44ADA, or 44AE, and agricultural income up to Rs. 5,000. These JSON Schema documents for ITR 1 and ITR 4 were released on April 11, 2023, and are 13KB and 23KB in size, respectively.

Aadhaar Card Is Required to File Income Tax Returns

The Income Tax Department has issued a mandate that requires all taxpayers to link their Aadhaar card with PAN through the Income Tax Department website.

What is ITR

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

Who should use ITR-1 Form

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

Who may not utilise the 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 head.

ITR-2 Form: Who Should Use It?

Hindu Undivided Families (HUFs) or individuals may utilise the ITR-2 tax return form if their total income for the AY 2023–24 includes any of the following:

Income from Salary/Pension
Income from House Property
Income from Other Sources (including Winnings from Lottery and Income from Race Horses)
Being a Director in a company (for individuals)
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
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
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 head.

This form can also be used if the assessee’s income is to be combined with the income of another person, such as a spouse or child, and if that additional income falls under one of the categories mentioned above. The overall income may exceed Rs. 50 lakhs.

Who needs to submit ITR-3 Form?

ITR-3 Form is meant for individuals or Hindu Undivided Families (HUFs) who earn income from a proprietary business or profession.
If you earn 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 ITR-3 return may also include income from House property, Salary/Pension, and Income from other sources.
If you earn 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 significant changes that will be made to ITR-3 as of FY 2022–2023

The Income Tax department has introduced a new schedule VDA to report income from cryptocurrencies and other virtual digital assets separately.
All transactions related to VDAs, including purchase and sale dates, need to be reported in the schedule VDA.
New questions have been added to the ITR forms to determine whether taxpayers have opted out of the New Tax Regime in previous years.
Foreign institutional investors, such as FII/FPI, must disclose their SEBI registration number as an additional measure.
Advances received from individuals specified in Section 40A(2)(b) of the Income Tax Act and others must be reported under the ‘Advances’ heading in Source of Funds.
The newly introduced section ‘Trading Account’ requires taxpayers to report turnover and income from intraday trading.

ITR-4 Form: Who Should Use It?

The ITR-4 form is for individuals, HUFs, and partnership firms (excluding LLPs) who are residents and have income from specific sources.
ITR-4 covers income from business under the presumptive income scheme (section 44AD or 44AE) and professional income under the 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), and income from other sources up to Rs 50 lakh (excluding lottery and race-horses) are also covered by ITR-4.
Freelancers whose gross receipts do not exceed Rs 50 lakhs can also opt for the presumptive scheme.
Under a presumptive income scheme, 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.
Taxpayers whose business turnover exceeds Rs 2 crore will have to file ITR-3 instead of ITR-4.

Who cannot utilise the ITR-4 Form?

Individuals are required to file ITR if their total income exceeds Rs 50 lakh.
If an individual has income from more than one house property, they are required to file Return.
If an individual owns any foreign asset or has signing authority in any account located outside India, they are required to file Income Tax Return.
Individuals who have income from any source outside India are required to file Tax Return.
Directors in a company are required to file Tax Return.
If an individual has invested in unlisted equity shares at any time during the financial year, they are required to file Income Tax Return.
Resident not ordinarily resident (RNOR) and non-resident individuals are required to file Return.
Individuals who have foreign income are required to file Return.
Individuals assessable in respect of the income of another person in respect of which tax is deducted in the hands of the other person are required to file Income Tax Return.
If payment or deduction of tax has been deferred on ESOP, individuals are required to file Income Tax Return.
Individuals who have any brought forward loss or loss needs to be carried forward under any income head are required to file Tax Return.

ITR-4 Budget 2023 Update

Category	Previous limits	Revised Limits
Sec 44AD for small businesses	Rs. 2 crores	Rs. 3 crores
Sec 44ADA for professionals	Rs. 50 lakhs	Rs. 75 lakhs

ITR-5 Form

The ITR-5 form is designed for filing income tax returns for 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, individuals who are required to file their income tax returns under section 139(4A) or 139(4B) or 139(4C) or 139(4D) are not permitted to use this form.

ITR-6 Form

Companies that do not seek exemption under section 11 of the Income Tax Act, which pertains to income from property held for charitable or religious purposes, must file their tax returns electronically. In other words, such companies are not permitted to file their returns on paper.

ITR-7 Form

ITR 7 is a tax return form that is mandatory for individuals and companies required to file returns under different sections of the Income Tax Act. The following entities are required to file ITR 7:

Persons who receive income from a property held under trust or other legal obligation wholly for charitable or religious purposes or in part only for such purposes, as per Section 139(4A).
Political parties whose total income exceeds the maximum amount not chargeable to income tax, as per Section 139(4B).
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, as per Section 139(4C).
Universities, colleges or other institutions not required to file a return of income or loss under any other provision of this section, as per Section 139(4D).
Business trusts not required to file a return of income or loss under any other provisions of this section, as per Section 139(4E).
Investment funds referred to in Section 115UB not required to file a return of income or loss under any other provisions of this section, as per Section 139(4F).