Five major changes taxpayers should be aware of when filing their taxes this year

The government has notified the new tax return forms (ITRs) through a notification for the 2022-23 tax year. There are no major changes in the ITR forms.

“In accordance with the provisions of the Income Tax Act, the deadline for filing ITRs by taxpayers (tax audit not applicable) for fiscal year 2021-22 is July 31, 2022. For other taxpayers to whom the verification is applicable, the deadline for filing the return is October 31, 2022. If the taxpayer has entered into a specified domestic or international transaction, the deadline for filing the return is November 30, 2022,” says Archit Gupta, Founder and CEO of Cleartax, a tax portal.

That said, some important changes have been incorporated into the ITR forms in line with the Finance Law Amendment 2022, which taxpayers should keep in mind when filing their returns.

Income from overseas retirement benefits
Form ITR-1 requests details of income from retirement benefit accounts in a foreign country. In the 2021 budget, the Minister of Finance had proposed to notify rules to remove hardship for Non-Resident Indians (NRIs) from double taxation on money accumulated in foreign retirement accounts. The Central Board of Direct Taxes (CBDT) had, therefore, in a notification published on April 4, 2022, included Canada, the United States and the United Kingdom as countries falling under Section 89A of this list.

“Form ITR-1 requests details of retirement benefit accounts maintained in a notified country under Section 89A of the Income Tax Act, which are to be included in net pay. It also seeks details of income from retirement benefit accounts held in other foreign countries. Taxpayers must mention the amount of relief to be reduced from taxation under the said section,” says Gupta.

Interest on PF contribution above Rs 2.5 lakh
In ITR-2 and ITR-3, taxpayers should report accrued interest on the contribution amount to the taxable provident fund account under “Schedule OS – Income from Other Sources”.

Declaration of deferred taxes on ESOPS
An appendix titled “Appendix – Deferred Taxation on ESOP” has been inserted into ITR-2 and ITR-3. A separate declaration of ESOPS provided by eligible start-ups is required, since the tax case is deferred to the point of sale. The new calendar will capture the details related to such a postponement.

Additional information for the new tax regime
In ITR-3 and ITR-4, taxpayers should indicate whether they elected for the new tax regime under Section 115BAC and whether Form 10-IE was filed in fiscal year 2020-21. Additionally, taxpayers can opt or opt out of the lawsuit, or even opt out of the new tax regime for the 2021-22 fiscal year.

Additional Capital Gains Information
In ITR-2, ITR-3, ITR-5 and ITR-6, the taxpayer must provide additional information relating to capital gains transactions.

“The disclosure requirement includes details of the year of the improvement cost if the taxpayer incurred such cost in different fiscal years, and separate disclosure of acquisition cost and indexed acquisition cost “, adds Gupta.

Here are some important changes to ITR forms for the 2021-22 fiscal year. Taxpayers should take note of these changes and provide the necessary information accordingly when filing their tax returns.