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Business Standard
5 days ago
- Business
- Business Standard
ITR-1, ITR-4 forms go live: Know what has changed, who can file online
People can file their Income Tax returns (ITR) for assessment year 2025-26 as the Central Board of Direct Taxes (CBDT) has enabled the online filing of ITR-1 and ITR-4 forms on its e-filing portal The website has pre-filled data, aimed at simplifying the return filing process for millions of salaried and small business taxpayers. Who can file ITR-1 and ITR-4? Both ITR forms are designed for individuals with relatively simple income profiles, said Naveen Wadhwa, vice-president of Taxmann. ITR-1 (Sahaj) is for resident individuals (not Hindu Undivided Families, HUF) or firms) having: Salary or pension income One-house property (no carried-forward losses) Income from other sources (excluding lottery or racehorse winnings) Total income up to Rs 50 lakh Long-term capital gains under Section 112A up to Rs 1.25 lakh (new inclusion) ITR-4 (Sugam) is for resident individuals, HUFs, or firms (other than LLPs) having: Presumptive income under sections 44AD, 44ADA, or 44AE Total income up to Rs 50 lakh Income from one-house property and other sources Long-term capital gains under Section 112A up to Rs 1.25 lakh, with no capital losses carried forward According to CBDT's rules, individuals earning capital gains up to Rs 1.25 lakh under Section 112A (from listed equity shares, mutual funds, or business trusts) can now file ITR-1 or ITR-4, provided there is no carried forward loss. This change addresses a long-standing concern among small investors. Calculate Income Tax: Income Tax Calculator Tool 'This amendment will benefit a large number of small taxpayers who earlier had to switch to complex forms like ITR-2 or ITR-3 just because of minor capital gains,' said Wadhwa. Wadhwa explained the changes that taxpayers need to keep in mind this time: Aadhaar Enrolment ID not accepted: From October 1, 2024, only the actual Aadhaar number (not the enrolment ID) can be used for PAN applications and return filing. Capital gains disclosures: If your capital asset was sold after July 23, 2024, new tax rules apply. Taxpayers must now disclose the transfer date, as tax rates and indexation benefits differ based on that. Detailed tax regime disclosure: ITR-4 now requires more specifics on whether the taxpayer wants to opt out of the new tax regime under Section 115BAC. Where to file returns Taxpayers can log in to to access the pre-filled ITR-1 and ITR-4 forms and submit them online. With the ITR forms now live, experts suggest early filing to avoid last-minute rush or errors. 'Taxpayers should cross-check their prefilled data, especially TDS and bank interest, before submission,' said Wadhwa. For AY 2025–26, the deadline for most individual taxpayers is September 15 (for non-audit taxpayers).
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Business Standard
19-05-2025
- Business
- Business Standard
Got a big gift recently? Here's how it could trigger a tax surprise
Received a generous gift recently, like a flat from a relative or a big cash transfer from a friend? This windfall might land you in trouble with the taxman if you're not careful. Here's what you need to know about how gifts are taxed under Indian income tax laws. What kinds of gifts are taxable? 'Under Section 56(2)(x) of the Income Tax Act, gifts received without consideration—like cash, property, or even virtual digital assets—can become taxable if the total value exceeds Rs 50,000 in a financial year,' says Naveen Wadhwa, vice-president, Taxmann. This includes: · Cash or bank transfers received as gifts. · Immovable property (like land or a house) received for free or at a much lower price. · Movable assets, such as jewellery, shares, art, or crypto, if received free or at a discount. In such cases, Wadhwa adds, the value must be reported as "Income from Other Sources" in your ITR for the relevant year. Are there any exemptions? Yes, and some are quite generous. Wadhwa explains that gifts from 'relatives' are fully exempt from tax. But the law has a specific definition for relatives: it includes your spouse, siblings, parents, children, and their spouses—but not friends or distant cousins. Wadhwa further clarifies: 'Gifts received on your marriage are also completely tax-free—regardless of amount. Inheritance, gifts received under a will, or in contemplation of death are also exempt.' That said, Wadhwa suggests it's a good practice to disclose even exempt gifts in the "Exempt Income" (Schedule EI) section of your ITR to avoid future scrutiny. When does a gift become taxable? Kunal Savani, partner at Cyril Amarchand Mangaldas, explains: 'Once the total value of gifts received without consideration exceeds Rs 50,000, the full amount—not just the excess—becomes taxable under 'Income from Other Sources'.' He cautions that this applies not just to cash gifts, but also to discounted purchases—say, if you bought a house worth Rs 70 lakh from a non-relative for Rs 10 lakh, the Rs 60 lakh difference may be taxed. Savani also reminds taxpayers to check if the donor qualifies as a "relative" per the Income Tax Act before assuming tax-free status. Practical ITR tips for gift receivers 'Keep detailed records of every gift you receive—especially high-value ones,' advises Ritika Nayyar, partner at Singhania & Co. This includes: · Nature and value of the gift · Date of receipt · Donor's name and relationship · Supporting documents like gift deeds or bank transfers 'If you're receiving an immovable property as a gift, the stamp duty value becomes key to determining taxability,' she adds. Even if a gift is exempt, Nayyar recommends voluntary disclosure under Schedule EI of your ITR, just to be on the safe side. Can you get into trouble for not declaring gifts? Yes, and the consequences can be serious. 'With the I-T department using AI-powered analytics and reviewing AIS (Annual Information Statement), it's very easy for them to spot large deposits or unusual transactions,' warns CA Deepesh Chheda, partner at Dhruva Advisors LLP. 'If you forget to declare a taxable gift, or claim an incorrect exemption, it could result in a tax notice, penalties, and interest,' he adds. Keep it transparent All four experts strongly advise erring on the side of caution. If you're salaried or middle-income and received any gifts during the year—be it cash, property, or assets—check if they fall under taxable categories and file your ITR accordingly. 'The key is clarity and documentation—know the rules, assess fair market value correctly, and maintain all gift-related records,' Wadhwa said.
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Business Standard
16-05-2025
- Business
- Business Standard
Filing tax returns with wrong ITR form can invalidate and delay process
Resident individuals may use ITR-1 if their total income is within ₹50 lakh and comes from salary or pension Sanjeev Sinha Listen to This Article The Central Board of Direct Taxes (CBDT) has notified the key Income Tax Return (ITR) forms for the financial year 2024-25 (assessment year 2025-2026), allowing taxpayers to file their returns. Salaried individuals should consider both their income level and sources beyond salary when selecting the appropriate ITR form. 'The correct ITR form depends on the type and quantum of income, losses incurred, type of investments made, foreign assets, and so on,' says Naveen Wadhwa, vice-president, Taxmann. Who should go for ITR-1
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Business Standard
14-05-2025
- Business
- Business Standard
ITR forms seek more information: Changes for AY 2024-25 you need to know
The Central Board of Direct Taxes (CBDT) has rolled out seven revised Income Tax returns (ITR) forms for Assessment Year 2024-25. While most forms remain familiar, there are several changes to ensure the government's push for greater disclosure and streamlined reporting. Here's a look at the major changes in ITR-1 to ITR-7, as highlighted by Naveen Wadhwa, vice-president at Taxmann. ITR-1 and ITR-4: More control for taxpayers A new feature allows taxpayers to choose between the old and new tax regimes directly within the forms. The feature offers clarity and flexibility, especially for those unsure of the most beneficial regime. However, taxpayers who have to file Form 10-IEA for exercising the option (due date being July 31) will need to file it separately; the ITR doesn't substitute that requirement. ITR-2 and ITR-3: Expanded reporting norms New fields have been added for reporting income from Virtual Digital Assets, continuing the government's push for transparency in crypto and digital asset earnings. The forms now ask for detailed disclosures on 'assets located outside India,' further tightening compliance under the Black Money Act. ITR-5 and ITR-6: Aligning with latest laws Trusts and institutions governed under Sections 10 (23C), 11, or 12 now must provide more detailed information regarding donations received and utilization thereof. ITR-6 includes a new schedule on 'elective taxes under section 115BAE' for new manufacturing co-operatives. ITR-7: Greater scrutiny for charitable entities Institutions claiming exemptions under Sections 10(23C) or 11/12 must now disclose registration details and approval numbers, a move to plug loopholes. There's a mandate to reconcile income and application of funds, bringing in more transparency for tax-exempt entities. One common thread: Enhanced transparency Across all forms, there's a clear trend, more fields, more disclosures, and tighter compliance. As Wadhwa notes, these changes indicate a deeper integration of tax data with other financial records, aiding cross-verification by authorities. The revised forms are now notified and available for filing. Taxpayers are advised to go through the updated forms carefully or consult professionals to avoid errors and ensure compliance
Business Standard
14-05-2025
- Business
- Business Standard
Changes in ITR Form 6 for 2025: Key updates taxpayers should know
The Central Board of Direct Taxes (CBDT) has notified revised Income Tax Return (ITR) forms for assessment year (AY) 2025-26. ITR Form 6, used by companies not claiming exemption under Section 11, has several changes that reflect amendments to the Income Tax Act, particularly those introduced through the Finance (No. 2) Act, 2024. Naveen Wadhwa, vice-president at Taxmann, explains changes in ITR Form 6. Key changes in ITR form 6 Reporting under section 44BBC for cruise shipping companies A new presumptive taxation scheme under Section 44BBC has been introduced for non-resident operators of cruise ships. ITR Form 6 now includes fields in Schedule BP and Part A-Gen to report income computed under this new scheme. 20 per cent of gross receipts from cruise services will be considered as deemed profit. Tax audit may not be required, following the same approach as Section 44B. Following changes effective from July 23, 2024: Short-term capital gains under Section 111A will be taxed at 20 per cent, instead of 15 per cent. Long-term capital gains under Sections 112 and 112A will attract a flat 12.5 per cent tax without indexation. The form requires separate disclosures based on whether the asset was transferred before or after July 23, 2024. Buyback proceeds as deemed dividend Effective October 1, 2024, buyback proceeds from domestic companies are taxable in the hands of shareholders under Section 2 (22) (f). ITR Form 6 reflects this by shifting such income to the 'other sources' schedule. Capital gains arising from buybacks are to be reported as nil, resulting in a notional capital loss. Unlisted bonds under section 50AA The form captures gains from unlisted bonds and debentures transferred after July 23, 2024, as short-term capital gains, as per the widened scope of Section 50AA. 'These revisions ensure alignment with updated tax provisions while making the form more comprehensive for corporate filers,' said Wadhwa. With enhanced disclosures and category-specific fields, companies will need to prepare well for taxes to avoid compliance hurdles.
