Changes in Income Tax Return Forms for FY 2022-23 (AY2023-24) impacting ITR filing: 3 key updates

As taxpayers prepare to file their tax returns for the financial year 2022-23, it's important to be aware of some changes made to the ITR forms. These changes, compared to the previous year, should be known before beginning the filing process. Let's take a closer look at the significant updates introduced in the latest ITR forms.

1. Disclosing the ARN number in case the made donations are eligible for section 80G deduction 

Did you make a donation that qualifies for a section 80G deduction in the financial year 2022-23? Merely possessing a donation receipt may not be enough to claim the deduction anymore. 

The Income Tax Return (ITR) form now mandates taxpayers to include the Donation Reference Number (referred to as ARN in the ITR forms) when making donations to entities where a 50% deduction is permitted, up to the qualifying limit. 

The ARN serves as a unique reference number and can be found on Form 10BE or the receipt provided by the recipient organization. Therefore, if your donation qualifies for the aforementioned deduction, it is necessary to ensure that your Form 10BE or donation receipt accurately displays the ARN.
 

2. Reporting income from cryptocurrencies, Non-Fungible Tokens, and other Virtual Digital Assets (VDAs):

Starting from 1st April 2022, the Income Tax Act has incorporated specific measures to tax incomes related to Virtual Digital Assets (VDAs). 

Additionally, Tax Deducted at Source (TDS) under section 194S is applicable to payments received for cryptocurrency transactions. The Income Tax Return (ITR) forms have been revised to include necessary disclosures concerning income derived from VDAs. 

Taxpayers are now obliged to specify whether the income from VDAs should be classified as business income or capital gains and accordingly disclose it under the appropriate income category.

If you made any money from cryptocurrencies in the financial year 2022-23, it's important to have all the relevant information ready when filing your tax return to avoid any complications. The information you'll need includes the date you acquired the cryptocurrencies, the date you sold or transferred them, the cost you incurred when acquiring them, and the amount you received from the sale. 

It's also advisable to check your Form 26AS and AIS to make sure that any income from Virtual Digital Assets (VDAs) for which tax was deducted under the new section 194S has been correctly included in your income tax return.

3. Other Changes 

Under certain situations, the taxpayer may encounter Tax Collected at Source (TCS) deductions. For instance, when making remittances under the Liberalised Remittance Scheme, the bank may collect TCS. In such cases, the taxpayer has the opportunity to claim this TCS amount as a credit or set off against their income tax liability in their Income Tax Return (ITR). 

Additionally, in unique scenarios, the taxpayer may be eligible to claim TCS credit pertaining to another individual to offset their own tax obligation. To cater to these exceptional scenarios, the ITR form now offers an option for taxpayers to claim credit for TCS related to another person.

Starting from 1st April 2021, Indian residents can choose to delay paying taxes on income earned from foreign retirement benefits until they withdraw the funds from the account. This option is known as Section 89A relief. However, if the taxpayer becomes a non-resident later on, the income that received relief under Section 89A in previous years will become taxable for the taxpayer.

The new ITR forms for the financial year 2022-23 now ask for additional information. Previously, only income in the year of withdrawal from the retirement benefits account needed to be disclosed. 

However, now it is also necessary to disclose any income that was claimed as relief under Section 89A in earlier years and has become taxable in the current year, like when the taxpayer becomes a non-resident. 

Other changes in the ITR forms for the assessment year 2023-24 include disclosing advances in the Balance Sheet in ITR-3 and providing the SEBI registration number for taxpayers who are Foreign Institutional Investors (FII) or Foreign Portfolio Investors (FPI) registered with SEBI.

Also Read: Income Tax Department Takes Action Against Tax-Evading Social Media Influencers. Find Out More

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