Still no mention of crypto: Everything you need to know about ITR form changes
NEW DELHI: India’s Central Board of Direct Taxation (CBDT) has notified new Income Tax Return Forms (ITR) for tax year 2022-23 to file income tax return for the financial year 2021-22. Although the forms have mostly remained unchanged, there are some minor additions, such as disclosure of investments in unincorporated entities and income from taxpayers’ offshore retirement benefit accounts.
The newly notified forms do not change the applicability of the forms to different taxpayers
“The applicability of notified ITR forms for the financial year 2021-22 remains unchanged, however, some of the key changes include additional options to select residential status, statement of accrued interest on PF exceeding Rs 2.5 lakhs, a new deferred tax schedule on ESOP, additional capital gains disclosures, change of accounting period to calendar year for reporting foreign assets, etc. said Akhil Chandana, Partner, Grant Thornton Bharat.
There’s nothing about cryptowhich means that the ambiguity persists
“It is a relief to see that the ITR forms do not bring many changes as it makes filing convenient for taxpayers. In all ITR forms, new lines have been included where details should be reported (by those to whom it applies) for income accrued on foreign retirement accounts and any such income that has been claimed for tax relief under Section 89A. There is no schedule insertion. related to cryptocurrency disclosure, maybe this will be included in next year’s ITR forms,” said Srivatsan Chari, Co-Founder – Clair.
Like last year, ITR1 can be deposited by people whose total income does not exceed Rs 50 lakh. The source of this income may include: wages, property income and other sources such as interest income, dividends, etc. and agricultural income up to Rs 5,000.
What’s new: The assessee will have to provide information on income from overseas pension funds when calculating their net salary. The assessee will need to indicate whether the offshore pension fund is in a notified country.
The main changes explained
According to Saurrav Sood, Practice Head (International Tax), SW India, some of the key changes that require specific mention are:
– Deemed dividend under paragraph 2(22)(e) – the forms require separate reporting of deemed dividend income in the Other Sources schedule. Such specific mention will attract further scrutiny by the tax official at the time of assessment, as it will be self-disclosure by the taxpayer and will need to be supported by facts.
– Significant economic presence – the non-resident is required to confirm whether there is a significant economic presence for the reporting period. Such a statement will trigger further scrutiny by the tax official to determine its impact on the attribution of profits for such transactions in India, as it is an accepted fact that the attribution of profits to India is always a subjective matter and cannot be concluded with certainty by either party. .
– Employee Stock Option – forms have been changed adding a new schedule that will capture details of deferred tax on ESOPs. This will help track the amount that is being deferred due to the extended deadlines provided by the provision of the law in the case of ESOPs. But, when the employee terminates his employment between the date of exercise and the date of transfer, the deferred tax amount already disclosed will not be converted into an actual tax payment, so it is likely to trigger questions from the from the tax official.
-Secondary adjustment – the tax paid on the amount repatriated to India under secondary adjustment should be mentioned specifically in the forms. The new form has been amended to include details to be completed by the taxpayer for such adjustments in all tax years. This will help the tax office account for the additional tax the taxpayer paid under the secondary adjustment and will be a ready document to reconcile these amounts.
– Interest accrued on the provident fund in excess of the exemption limit – Schedule OS has been amended to require reporting of such interest that exceeds the exemption limit. This separate declaration will trigger the suo moto offer to tax of this income which was otherwise exempt before. It is likely that the amount will also find a specific mention in the Form 26As, so as to match the amount declared by the taxpayer.
Form ITR-2 asks for information on interest accrued in the Provident Fund (PF) on contributions above Rs 2.5 lakh per annum. In order to tax high-value depositors in the Employees Provident Fund (EPF), the government said last year that interest on employees’ provident fund contributions above Rs 2.5 lakh per annum would be taxed. from April 1, 2021. This form is filed by Hindu Undivided Individuals and Families (HUFs) with no income from business and occupation.
The assessee would be required to provide additional information on dividend income and dividend income attributable to Double Taxation Avoidance Agreement (DTAA) rates.
“The ITR 2 form has been modified to capture additional information. For stock option benefits provided by qualifying startups, the trigger for taxation is deferred to the point of sale. A separate timeline has now been introduced to capture the details of such a postponement. Interest accrued on PF contributions over specified limits is taxable. The tax dunning forms also seek to capture the details of such accrued interest,” said Saraswathi Kasturirangan, Partner, Deloitte India.
ITR-3 is filed by individuals with income as profits from a business/profession, while ITR-5 is filed by LLPs.
The ITR-4 can be filed by individuals, HUFs and companies whose total income does not exceed Rs 50 lakh and who have business and professional income.
Although the ITR forms have been notified, the filing of these forms has not yet been activated on the income tax portal. “This timely notification with few changes will make it easier for the assessee to gather the required information and will give tax authorities enough time to develop the usefulness of the ITR forms in a timely manner,” said CA Inderpal Singh Pasricha, Senior Partner , IP Pasricha. & Co.
The newly notified forms do not change the applicability of the forms to different taxpayers
“The applicability of notified ITR forms for the financial year 2021-22 remains unchanged, however, some of the key changes include additional options to select residential status, statement of accrued interest on PF exceeding Rs 2.5 lakhs, a new deferred tax schedule on ESOP, additional capital gains disclosures, change of accounting period to calendar year for reporting foreign assets, etc. said Akhil Chandana, Partner, Grant Thornton Bharat.
There’s nothing about cryptowhich means that the ambiguity persists
“It is a relief to see that the ITR forms do not bring many changes as it makes filing convenient for taxpayers. In all ITR forms, new lines have been included where details should be reported (by those to whom it applies) for income accrued on foreign retirement accounts and any such income that has been claimed for tax relief under Section 89A. There is no schedule insertion. related to cryptocurrency disclosure, maybe this will be included in next year’s ITR forms,” said Srivatsan Chari, Co-Founder – Clair.
Like last year, ITR1 can be deposited by people whose total income does not exceed Rs 50 lakh. The source of this income may include: wages, property income and other sources such as interest income, dividends, etc. and agricultural income up to Rs 5,000.
What’s new: The assessee will have to provide information on income from overseas pension funds when calculating their net salary. The assessee will need to indicate whether the offshore pension fund is in a notified country.
The main changes explained
According to Saurrav Sood, Practice Head (International Tax), SW India, some of the key changes that require specific mention are:
– Deemed dividend under paragraph 2(22)(e) – the forms require separate reporting of deemed dividend income in the Other Sources schedule. Such specific mention will attract further scrutiny by the tax official at the time of assessment, as it will be self-disclosure by the taxpayer and will need to be supported by facts.
– Significant economic presence – the non-resident is required to confirm whether there is a significant economic presence for the reporting period. Such a statement will trigger further scrutiny by the tax official to determine its impact on the attribution of profits for such transactions in India, as it is an accepted fact that the attribution of profits to India is always a subjective matter and cannot be concluded with certainty by either party. .
– Employee Stock Option – forms have been changed adding a new schedule that will capture details of deferred tax on ESOPs. This will help track the amount that is being deferred due to the extended deadlines provided by the provision of the law in the case of ESOPs. But, when the employee terminates his employment between the date of exercise and the date of transfer, the deferred tax amount already disclosed will not be converted into an actual tax payment, so it is likely to trigger questions from the from the tax official.
-Secondary adjustment – the tax paid on the amount repatriated to India under secondary adjustment should be mentioned specifically in the forms. The new form has been amended to include details to be completed by the taxpayer for such adjustments in all tax years. This will help the tax office account for the additional tax the taxpayer paid under the secondary adjustment and will be a ready document to reconcile these amounts.
– Interest accrued on the provident fund in excess of the exemption limit – Schedule OS has been amended to require reporting of such interest that exceeds the exemption limit. This separate declaration will trigger the suo moto offer to tax of this income which was otherwise exempt before. It is likely that the amount will also find a specific mention in the Form 26As, so as to match the amount declared by the taxpayer.
Form ITR-2 asks for information on interest accrued in the Provident Fund (PF) on contributions above Rs 2.5 lakh per annum. In order to tax high-value depositors in the Employees Provident Fund (EPF), the government said last year that interest on employees’ provident fund contributions above Rs 2.5 lakh per annum would be taxed. from April 1, 2021. This form is filed by Hindu Undivided Individuals and Families (HUFs) with no income from business and occupation.
The assessee would be required to provide additional information on dividend income and dividend income attributable to Double Taxation Avoidance Agreement (DTAA) rates.
“The ITR 2 form has been modified to capture additional information. For stock option benefits provided by qualifying startups, the trigger for taxation is deferred to the point of sale. A separate timeline has now been introduced to capture the details of such a postponement. Interest accrued on PF contributions over specified limits is taxable. The tax dunning forms also seek to capture the details of such accrued interest,” said Saraswathi Kasturirangan, Partner, Deloitte India.
ITR-3 is filed by individuals with income as profits from a business/profession, while ITR-5 is filed by LLPs.
The ITR-4 can be filed by individuals, HUFs and companies whose total income does not exceed Rs 50 lakh and who have business and professional income.
Although the ITR forms have been notified, the filing of these forms has not yet been activated on the income tax portal. “This timely notification with few changes will make it easier for the assessee to gather the required information and will give tax authorities enough time to develop the usefulness of the ITR forms in a timely manner,” said CA Inderpal Singh Pasricha, Senior Partner , IP Pasricha. & Co.