ITR filing: Income Tax department notifies ITR-2, ITR-3 forms for FY 2023-24. Details here

ITR-3 is a specialised form designed for individuals with complex financial scenarios, especially those involving business or professional income.

The Central Board of Direct Taxes (CBDT) has officially released the income tax return (ITR) forms, specifically ITR-2 and ITR-3, for the financial year 2023-24 (assessment year 2024-25). These forms are to be used by various entities, including individuals with specific types of income, for filing their income tax returns. The deadline for filing ITR-2 and ITR-3 is set for July 31, 2024. Notably, taxpayers subjected to income tax audit and possessing business income are required to submit ITR-3 by October 31, 2024.

Who should file ITR 2?

Individuals and Hindu Undivided Families (HUFs) who do not have income from profits and gains of business or profession are required to file ITR using ITR-2.  The form should be utilised by individuals or HUFs falling under the following criteria:

A) Residents (ordinarily or non-ordinarily) or non-resident individuals.

B) Hindu Undivided Families (HUFs).

C) Directors of a company.

D) Individuals holding investments in unlisted equity shares.

E) Those with income from multiple sources, including salaries, more than one house property, capital gains, and other sources such as interest income.

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Potential consequences if an incorrect ITR form is used

Using an incorrect ITR form can lead to various consequences, and it's essential to ensure the accuracy of the chosen form. If an incorrect ITR form is used, the following consequences may arise:

Tax Notice: The income tax department may issue a tax notice to the taxpayer if it is identified that the ITR has been filed using the wrong tax return form. The notice will typically instruct the taxpayer to rectify the mistake.

Correction Requirement: Taxpayers will be required to submit a revised ITR using the correct tax return form. This is crucial to ensure that the income details and other financial information are accurately reported.

Penalties: Depending on the nature of the mistake or the non-compliance, there might be penalties or additional consequences imposed by the tax authorities.

To avoid these issues, it is advisable to carefully review the ITR forms and choose the one that aligns with the taxpayer's income sources and financial situation.

Also Read | Govt to give up on Rs 3,500 crore-worth disputed direct tax demands: Revenue Secretary

New details in ITR-2

For the FY2023-24, ITR-2 includes specific details highlighted by tax experts. These additional details are essential for accurate reporting and compliance:

Legal Entity Identifier (LEI) details

Taxpayers are now required to provide information related to LEI in the ITR-2 form. LEI details are vital for identifying legal entities participating in financial transactions.

Details of Contributions to Political Parties

Taxpayers claiming contributions made to political parties need to furnish detailed information, including date of the contribution, mode of payment, and transaction details such as cheque number or IFSC code.

Details of Deduction for Maintenance of a Dependent with Disability

Individuals or HUFs can claim deductions for maintenance, including medical treatment, of a dependent who is a person with a disability. The information required includes the type of dependent, PAN (Permanent Account Number), and Form 10IA details.

Verification of ITR with EVC for Tax Audit Cases

Individuals or HUFs subjected to a tax audit can now verify their ITR using Electronic Verification Code (EVC), providing a more convenient option.

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Who is required to submit ITR-3

ITR-3 is designated for individuals and HUFs who have income under the head "profits or gains of business or profession" and who do not qualify to file Form ITR-1 (Sahaj), ITR-2, or ITR-4 (Sugam). Following entities are required to file ITR-3:

Individuals with Business or Professional Income

Individuals who have income derived from profits or gains of business or profession are mandated to file ITR-3. This includes income from self-employment, freelancing, consultancy, or any other form of business or professional activities.

HUFs with Business or Professional Income

HUFs engaged in business or profession and generating income from such activities must use ITR-3 for filing their income tax returns.