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Income Tax News: Latest Update! ITR 2 and ITR 3 for FY 2023-24 Released, Here’s What You Need to Know

Streamlining Tax Compliance: Essential Updates on ITR-2 and ITR-3 for FY 2023-24

The Central Board of Direct Taxes (CBDT) has recently unveiled the income tax return (ITR) forms for the financial year 2023-24, specifically catering to ITR-2 and ITR-3. These forms are instrumental for various entities, including individuals with specific income types, to fulfill their tax obligations. Let’s delve into the intricacies of these forms and who should utilise them.

Filing ITR 2: Who Should Utilise It?

ITR-2 serves individuals and Hindu Undivided Families (HUFs) without income from business or profession. Individuals falling under the following categories should opt for ITR-2:

  • Residents (ordinarily or non-ordinarily) or non-resident individuals.
  • Hindu Undivided Families (HUFs).
  • Directors of a company.
  • Individuals holding investments in unlisted equity shares.
  • Those with income from multiple sources, including salaries, more than one house property, capital gains, and other sources such as interest income.

Consequences of Using the Wrong ITR Form

Incorrectly using an ITR form can lead to various repercussions. Taxpayers might face a tax notice, prompting them to rectify the mistake by submitting a revised ITR using the correct form. Penalties or additional consequences could also be imposed by the income tax department.

New Details in ITR-2 for FY2023-24

ITR-2 for the fiscal year 2023-24 incorporates specific details highlighted by tax experts for accurate reporting and compliance. These include:

  • Legal Entity Identifier (LEI) Details: Vital for identifying legal entities in financial transactions.
  • Details of Contributions to Political Parties: Including contribution date, mode of payment, and transaction specifics.
  • Details of Deduction for Maintenance of a Dependent with Disability: Requirements include dependent type, PAN, and Form 10IA details.
  • Verification of ITR with EVC for Tax Audit Cases: Offering a convenient option for individuals or HUFs subjected to a tax audit.

Understanding ITR-3: Who Should Submit It?

ITR-3 targets individuals and HUFs with income under “profits or gains of business or profession” who don’t qualify for ITR-1, ITR-2, or ITR-4. It’s intended for:

  • Individuals with Business or Professional Income: Covering self-employment, freelancing, consultancy, or other business or professional activities.
  • HUFs with Business or Professional Income: Including those engaged in business or profession generating income from such activities.

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