In a move towards streamlining tax procedures and enhancing transparency, the Income Tax Department has introduced significant changes to income tax return (ITR) forms, effective April 1, 2024. These modifications encompass a spectrum of requirements aimed at simplifying tax compliance for businesses while reinforcing reporting standards.
1. Simplification of Tax Procedures for Businesses
Recognizing the need for simplified tax procedures, the income tax department has relaxed criteria for presumptive taxation under Section 44AD of the Income Tax Act, 1961. This initiative aims to alleviate the tax burden on businesses by introducing a new column for disclosing cash turnover or gross receipts in ITR forms 5 and 6. The cash turnover threshold has been elevated to Rs. 3 crores, provided that cash receipts remain below 5% of the total turnover or gross receipts from the previous year.
2. Additional Requirements for MSMEs in ITR-6 Filing
Companies utilizing ITR-6 for income tax return filings now encounter additional requisites, necessitating the inclusion of the Legal Entity Identifier (LEI), MSME registration number, and reasons for tax audit under Section 44AB of the IT Act. Furthermore, the updated form mandates disclosure of winnings from online games under Section 115BBJ of the IT Act and virtual digital assets, further augmenting transparency in tax reporting.
3. Stringent Reporting Mandates for Companies Seeking Refunds
Companies seeking refunds exceeding Rs. 50 crores are subjected to stringent reporting mandates, necessitating the provision of the Legal Entity Identifier (LEI). Moreover, ITR-6 imposes the inclusion of acknowledgment numbers and Unique Document Identification Number (UDIN) for tax audit reports under Section 44AB of the IT Act and transfer pricing reports under Section 92E of the IT Act.
The comprehensive overhaul in income tax return forms signifies a concerted effort by the Income Tax Department to modernize tax compliance frameworks and fortify reporting standards. By introducing both simplifications and additional requirements tailored to the needs of businesses, the amendments aim to foster a more efficient and transparent tax ecosystem. As businesses prepare to adapt to these changes, adherence to the revised reporting mandates is imperative for ensuring compliance and upholding the integrity of tax systems.