Major Changes in ITR Form, announced for AY 2022-23

CBDT has announced schema and Income Tax Forms ITR 1 to 7 for Financial year 2021-22 i.e. Assessment year 2022-23.

In this post let’s discuss what are some important updates that have been made in these years forms as compared to Income Tax Forms of AY 2021-22.

1. Change in Schedule FA:

[ITR 2,3,5,6]

Schedule FA deals with disclosure of foreign assets by a person who is a ordinary resident in India. Till now while declaring foreign assets in this schedule assessee was free to declare foreign assets held by him as on end of relevant accounting period of foreign jurisdiction.

Now no separate accounting periods shall be followed, CBDT had mandated all the taxpayers to report the foreign assets held by them as on 31st December. Thus, while filing Income Tax return for AY 2022-23, assessee has to disclose foreign assets held between 01.01.2021 to 31.12.2021.

2. Declaration of Significant Economic Presence (SEP) by non-resident:

[ITR 3, 5, 6]

Concept of SEP was introduced by Finance Act, 2020 and made applicable form AY 2022-23 and since this will be the first year of application of the provision, assessee need to file declaration of same while filing return of income.

3. Separate disclosure of Interest of contribution to EPF above Rs. 2.5 lakh:

[ITR 2 & 3]

Finance Act, 2021 had introduced a provision under section 10(11) and 10(12) wherein it was mentioned that if the contribution recognised and statutory provident fund by the employee is above Rs. 2.5 lakh in a year then the interest on that excess contribution will be taxable.

However, if the amount of employer does not make contribution then the threshold limit mentioned above will be increased to Rs. 5,00,000.

To read more on such taxability CLICK HERE: 2 Major amendments in Budget 2021 which would affect HNI – High net worth individuals – Taxontips

4. Change in ITR Form to adjust unabsorbed depreciation pertaining to additional depreciation to WDV of asset in relation to section 115BAC and 115BAD:

[ITR 3 & 5]

Provision of section 115BAC and 115BAD provides that if an assessee has any unabsorbed depreciation because of additional depreciation and if he opts for above provisions then the assessee can adjust the value of such unabsorbed depreciation to the WDV of the asset as on 01.04.2021.

Do remember that similar provision was introduced under section 115BAA for companies however, CBDT had sent notices to companies who had opted for the new regime and made above adjustment wherein such adjustment were not considered.

5. A New Schedule has been inserted to report amount of tax deferred on ESOP:

In Finance Act, 2020 the deferment of tax in case of ESOP was introduced and was made applicable in ITR for AY 2021-22, however few changes have been made further in ITR for AY 2022-23 with some more disclosure such as:

(a) Amount of tax deferred in ITR filed for AY 2021-22;
(b) Date of sale of specified securities and amount of tax attributable to such sale;
(c) Date on which he ceased to be an employee of the organisation;
(d) Amount of tax payable in current assessment year;
(e) Balance amount of tax deferred to be carried forward to next assessment years.

6. Disclosure for alternative tax regime opted under Section 115BAC:

[ITR 3 & 4]
The following disclosures are being required in ITR 3 and ITR 4 in respect of the new lower tax regime under Section 115BAC:
(a) Whether the assessee has opted for an alternative tax regime under Section 115BAC and filed Form 10-IE in AY 2021-22;
(b) For the AY 2022-23, the assessee has to choose from the following options:

Opting in now
Not opting
Continue to opt
Opt out

7. Disclosure for alternative tax regime opted under Section 115BA/115BAA/115BAB

[ITR 6]
The following new disclosures have been added in ITR 6 in respect of the companies who have opted for new lower tax regime of Section 115BA/115BAA/115BAB:
(a) Where the domestic company has opted for the alternative tax regime, it has to furnish the AY in which said option is exercised for the first time and the date of filing of the relevant form (10-IB/ 10-IC/ 10-ID) with acknowledgement number;
(b) Where the domestic company is choosing to opt for alternative tax regime this year, it has to furnish the date of filing of the relevant form (10-IB/ 10-IC/ 10-ID) with acknowledgement number.

This was very much required for the companies considering the notices being issued in AY 2020-21 to companies who have forgot to file Form 10-IC but opted for new tax regime.

8. Disclosure for alternative tax regime opted under Section 115BAD

[ITR 5]

Similar to above two types of entities the following disclosures are required in ITR 5 in respect of the new lower tax regime of Section 115BAD for co-operative socities:
(a) Where a co-operative society has opted for an alternative tax regime, it has to furnish the AY in which said option is exercised for the first time and the date of filing of form 10-IF with acknowledgement number;
(b) Where a co-operative society is choosing to opt for an alternative tax regime this year, it has to furnish the date of filing of the form 10-IF with acknowledgement number.

9. Additional information sought from the assessee not opting for the presumptive tax scheme:

[ITR 3, 5 & 6]

The audit under Section 44AB is mandatory if the total sales, turnover or gross receipt from the business during the previous year exceeds Rs. 1 crore. However, if the cash receipt and cash payment do not exceed 5%, the audit shall be mandatory if the turnover of the business assessee exceeds Rs. 10 crores during the financial year.

For the purpose of computing the limit of 5%, payment or receipt by cheque drawn on a bank or by a bank draft, which is not an account payee, shall be deemed to be the payment or receipt in cash only.

The old ITR Forms required the assessee to furnish the response regarding cash receipts and payments only, and it did not consider the receipt or payment through non-account payee cheque or DD.

The following additional disclosures are required regarding Audit Information:
(a) Whether total sales, turnover or gross receipt is between Rs. 1 crore and Rs. 10 crores. If not, is it below Rs. 1 crore or exceeds Rs. 10 crores?
(b) The new ITR forms require aggregation of receipts and payment in cash and non-account payee cheque or DD while computing the limit of 5% as mentioned above.

A few additional questions have been added which further clarifies the turnover situation of assessee which is a welcoming change as in earlier ITR form the questions were not very clear.

To read more about Tax Audit under Income Tax Act CLICK HERE: Who needs to get their Books of accounts audited under Income Tax Act | Tax audit under Income tax – Taxontips

10. Limiting the rate of surcharge on dividend income:

[ITR 2, 3 & 5]

After Finance Act, 2020 dividend was made taxable in the hands of recipient at applicable tax rates. However, the rate of surcharge on such dividend was restricted to 15% if income exceeds as in case of capital gain.

Thus, in case of Individual, HUF, AOP, BOI, the surcharge on tax on dividend income shall be levied at the rate of 10% if it exceeds Rs. 50 lakh but does not exceed Rs. 1 crore and at the rate of 15% when it exceeds Rs. 1 crore.

The consequential changes have been made in Schedule Part B – TTI (Computation of tax liability on total income) to limit the rate of surcharge on dividend income taxable under Section 115AD and other dividend income.

It is important to note that as of now only JSON schema of ITR have been released for ITR 1 to 4 and that can be only used by software providers to implement the new ITR forms in their software and also it is the first version and taking experience from last year it is not advisable to file the return in hurry using this first version.

Hence you should wait for April end or May start and then start filing your return of income.

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