ITR Filing Season: Key Updates Every Taxpayer Needs to Know

ITR Filing FY 2024-25: What’s New This Year?

The Income Tax Department has released the forms for the financial year 2024–25, and while most changes are aimed at streamlining the process and supporting automated processing, it’s essential to be aware of them to file your return accurately.

Changes to Watch Out For

Here are some of the key updates:

ITR-1 and Capital Gains

Good news for those with long-term capital gains from listed securities up to the exempted threshold of Rs 125,000! You can now file your return using ITR-1, provided you meet all other eligibility criteria. However, if you have any short-term capital gains or capital losses to carry forward, you’ll need to use a different ITR form.

Due to changes in capital gains tax rates announced in Budget 2024, the Capital Gains Schedule has been modified. It now reports gains separately for periods before and on or after July 23, 2024, to ensure the correct tax rates are applied. Your broker or mutual fund will provide the necessary details in the required format.

Buyback of Shares

Starting October 1, 2024, the responsibility for paying tax on buyback of shares shifts from the companies to the individual taxpayers. Remember, the entire buyback amount is taxable as deemed dividend, and you can’t deduct the cost of acquisition. You can, however, carry forward the cost as a deemed capital loss to offset future gains.

Reporting Payments to MSMEs

If you’re reporting income from business or profession, you must now disclose the number of days within which payments were made to Micro, Small, and Medium Enterprises (MSMEs). Any payment made beyond 45 days will not be allowed as a deductible business expense.

Asset and Liability Reporting

The threshold for reporting assets and liabilities under the AL Schedule has been increased from INR 5 million to INR 10 million. This is a welcome relaxation, but it’s still a good idea to maintain proper records of your assets, liabilities, and any movements throughout the year.

Who Needs to File?

Even if you don’t have taxable income, you may still be required to file a return under certain conditions. This includes:

• Spending more than Rs 200,000 on foreign travel
• Paying over Rs 100,000 in electricity bills during the year
• Having TDS or TCS of Rs 25,000 or more (Rs 50,000 for senior citizens)
• Holding a signing authority in a foreign account

It’s worth checking these criteria for your spouse or parents, especially if they have joint ownership with you in your financial assets.

Avoid Tax Notices

To avoid unwanted notices from the tax department, remember to:

• File your return accurately
• Complete all reporting schedules carefully
• Reconcile your financial transactions, TDS, and TCS with the AIS/TIS and the Significant Financial Transactions (SFT) report available on the portal

With advanced data-matching and automation, discrepancies are easily flagged, and you may be required to respond to queries. As part of good housekeeping, it is important to collect both Form 16 and Form 16A etc, rather than relying solely on the income and tax details from Form 26AS. These forms are typically made available by June 15. It is advisable to wait until then before filing your return. However, if you choose to file before June 15, make sure to review your Form 26AS again after that date to confirm that there have been no changes in the income or tax figures reported by the payer. Any discrepancies in these numbers could lead to an inquiry from the tax authorities and may require a revision of your tax return.