Analysis of Changes Introduced in New ITR Forms 1 and 4 Notified for Assessment Year 2024-25

Table of Contents

1. No change in the applicability of ITR forms
2. New tax regime is now the default tax regime; taxpayers must choose to opt-out to prefer old regime
3. New column added to claim deduction under section 80CCH
4. “Receipts in Cash” column added to ITR-4 to claim enhanced turnover limit

Guess who decided to play Santa this year? The Income-tax Dept.

Surprising taxpayers with an unexpected and welcome gesture, the CBDT has played the role of an early Santa Claus this year by unveiling the Income Tax Return (ITR) Forms 1 and 4 for the Assessment Year 2024-25. These ITR Forms will be applicable for filing income tax returns with respect to income earned during the previous year 2023-24 (between 01-04-2023 to 31-03-2024).

The department usually notifies the ITR form before the start of the subsequent Assessment Year, i.e. in February or March. This unexpected early release not only marks a departure from the established timeline but also implies that taxpayers will have a more extended period to familiarize themselves with the changes, gather necessary documentation, and file their returns with greater precision.

We have scrutinized the new ITR Forms and have identified the key changes in new ITR forms viz-a-viz last year’s ITR Forms. These changes have been explained below.

1. No change in the applicability of ITR forms

The CBDT has not amended Rule 12 of the Income-tax Rules, 1962, which outlines the criteria for the applicability of ITR forms to different classes of taxpayers and method of furnishing returns.

The form to be used by a taxpayer to file the Income-tax return for the AY 2024-25 will be same as applicable for AY 2023-24 which is as follows:

2. New tax regime is now the default tax regime; taxpayers must choose to opt-out to prefer old regime

The Finance Act 2023 has amended the provisions of section 115BAC to make it the default tax regime for the assessee being an Individual, HUF, AOP, BOI and AJP. If an assessee does not want to pay tax according to the new tax regime, he will have to explicitly opt out of it and choose to be taxed under the old tax regime.

Section 115BAC(6) allows the eligible assessee to opt out of the new tax scheme. To exercise this option, the assessee having income (other than income from a business or profession)must indicate his choice of tax regime in the return of income to be furnished for the relevant assessment year under Section 139(1).

An assessee having income from a business or profession can also opt out of the new tax regime and switch to the old tax regime for a relevant year. However, he has to exercise this option in Form No. 10-IEA on or before the due date for filing the return of income under Section 139(1).

In simple words, an assessee filing ITR 1 is only required to indicate his choice of tax regime in the return of income. An assessee filing ITR 4 will be required to file Form 10-IEA to opt out of the new tax regime.

The new ITR Forms 1 and 4 have been amended to incorporate this change.

3. New column added to claim deduction under section 80CCH

The Finance Act 2023 added a new Section 80CCH, which states that individuals enrolled in the Agnipath Scheme and subscribing to the Agniveer Corpus Fund on or after 01-11-2022 will be eligible for a tax deduction for the total amount deposited in the Agniveer Corpus Fund.

ITR forms 1 and 4 have been amended to include a column to furnish the amount eligible for deduction under section 80CCH.

4. “Receipts in Cash” column added to ITR-4 to claim enhanced turnover limit

The Finance Act, 2023 has enhanced the turnover threshold limit from Rs. 2 crores to Rs. 3 crores for opting for the presumptive taxation scheme under Section 44AD if the receipts in cash do not exceed 5% of the total turnover or gross receipts for the previous year. It is also provided that the meaning of cash would include the cheque or a bank draft, which is not an account payee.

Similarly, Section 44ADA was amended to enhance the threshold limit of gross receipts from Rs. 50 lakhs to Rs. 75 lakhs, if the receipts in cash do not exceed 5% of the total gross receipts for the previous year.

To give effect to the above amendments, the CBDT has amended ITR-4 to include a new column of “receipts in cash” for disclosing cash turnover or cash gross receipts under the Schedule BP