Tax season is on the horizon but fear not! To simplify return filing, the 12 changes has been updated in ITR-6 form for Assessment Year 2024-25. These updates range from streamlining audit reporting to capturing new income sources. Whether you’re a seasoned business owner or a new startup, understanding these changes can ensure accurate reporting and potentially streamline your tax filing experience. Let’s dive into the details!
Legal Entity Identifier details
Imagine a unique ID code for businesses involved in large financial transactions (above ₹50 crore) – that’s what the Legal Entity Identifier (LEI) is! It helps track financial activity and manage risk better. The Reserve Bank of India (RBI) requires this code for certain high-value transactions. This applies to payments made through NEFT and RTGS systems (electronic money transfers) by companies and other organizations (not individuals).
You might even encounter the LEI on tax forms! The new ITR-6 tax return form now has a section for LEI details. This is only required if your company is claiming a tax refund of ₹50 crore or more.
Tax on Accumulated Income for Charities Changing Status
Charities registered under Section 12AB or approved under Section 10(23C) of GST Act. might owe extra tax if they:
- Convert to a non-charitable form.
- Fail to renew their registration.
- Dissolve and transfer assets to a non-charity.
This tax applies to the “accreted income,” which is basically the charity’s accumulated wealth. They’ll need to file a different tax form (ITR-6) and pay the maximum tax rate on this income. A new section (Schedule 115TD) has been added to 12 changes in ITR-6 for reporting this tax that is in IT form 2024-25. It requires details like how much tax is owed and proof of payment.
Capital Gain Account Scheme
The schedule -CG contains details from capital investments selling, this is a section specific in tax returns. This section already asks for details like what you sold, who you sold it to, and how much you spent to reduce your tax bill. Recently, the government updated this section (especially 12 changes in ITR-6) to collect more information about money deposited in the Capital Gains Account Scheme (CGAS). CGAS lets you save money from selling investments to use later for buying a house and avoid paying taxes. In addition to the details, you provided before, you’ll now also need to include:
- The date you deposited the money in CGAS.
- Your account number for CGAS
- The IFS code of the bank where your CGAS account is held.
- This extra information helps the government track your CGAS activity better.
More Details Needed for Donations to Political Parties in India
Filing taxes in India that is through Income Tax login? If you donated to a political party or electoral trust to claim a deduction under Section 80GGC, there’s an update! The new ITR-6 instructions require more details about your donation. Previously, you only needed to provide the total eligible deduction amount. Now, you’ll need to break down your donation further:
- Date of Donation: When you made the donation.
- Breakdown by Payment Method: How much you donated by cash, cheque, UPI transfer, or other electronic methods (IMPS, NEFT, RTGS).
- Specific Transaction Details
- For Electronic Transfers: The reference number for your UPI transaction.
- For Cheque or Other Methods: The cheque number or a reference number for the electronic transfer.
- Bank Information (if electronic transfer): The IFS code of the bank where the donation was deposited.
By collecting this extra information, the government aims for better tracking of political donations.
Section 80- IAC – Details regarding start-up
The Indian tax form for companies (ITR-6) Income tax form 2024-25, has a new section for startups claiming tax benefits under Section 80-IAC. This section lets eligible startups reduce their taxes for 3 out of 10 years.
Before, the form only asked for the total deduction amount. Now, it requires more details about your startup:
- Startup Birthday: The date your startup was officially formed (incorporated).
- What You Do: The kind of business your startup is in.
- Certification Number: A unique code you get from the government after approval.
- Tax Benefit Start Year: The first year you claimed this tax benefit.
- This Year’s Benefit: The amount of tax deduction claimed this year.
This extra information helps the government keep better track of startup activity and benefits claimed.
Schedule 80 LA – Details regarding offshore banking unit or IFSC
The Indian tax code offers a new benefit for companies operating in International Financial Service Centres (IFSCs). These centres aim to attract foreign investment and businesses.
Banks, foreign banks, and units operating within an IFSC can claim this deduction under Section 80LA. What’s the Benefit?
- Banks: Get 100% of their income tax-free for 10 straight years.
- IFSC Units: Get 100% of their income tax-free for 10 out of 15 years (you choose which years).
To claim this benefit, companies need to provide more details in the new ITR-6 form:
- Company Type: Are you a bank, foreign bank, or IFSC unit?
- What You Do: Briefly describe the type of income you earn.
- Who Approved You: The government agency that registered you.
- Registration Date: When you officially started operating in the IFSC.
- Your ID Number: A unique registration number assigned to you.
- First Year for Benefit: The year you first claimed this tax break.
- This Year’s Benefit: The amount of tax deduction claimed this year.
By collecting this information, the government can better track activity in these financial centres.
Sum payable to MSME Vendors needs to be disclosed.
Pay Now, Deduct Later: Deductions are allowed once the payment is made not before it.
Keeping Track: The tax form (ITR) now has a new section where you need to report any expenses you couldn’t deduct in the past because of the “pay now” rule but can deduct this year because you finally made the payment.
The New clause Section 43B(h) is a subsection of Section 43 b of the Income Tax Act, and has been added in the Income Tax Act, 1961for the social and economic welfare of small and medium enterprises and to ensure the payments are made on time. Pay up on time! Section 15 of the MSME Development Act says big companies must pay smaller ones within 45 days to get tax benefits on those payments. Overdue payments cost you. The tax deduction will not be allowed for the payment made to MSME vendors beyond 45 days of the deadline.
Section 115BBJ – Disclosure of online game winnings
There’s an update for gamers in India regarding taxes on winnings from online games. Here’s a simplified breakdown:
New Tax on Winnings: Starting in the tax year 2024-25 (assessments filed later), any winnings from online games will be taxed by the government.
TDS will be deducted on winnings from online games this has been since April 2023. The tax form 12 changes in ITR-6 has been updated to include a new section where you can report your online gaming winnings for tax purposes.
Dividend income from an IFSC unit needs to be reported.
The Indian government has reduced the tax on dividends you receive from certain investment units.
- Previously, these dividends were taxed at 20%.
- Now, the tax rate is a lower 10%: This is applicable to dividends from a special economic zone that is from units in an International Financial Service Centre (IFSC)
- Filing your taxes (ITR-6): The tax form has been updated to reflect this change. When reporting your income, you’ll see the new lower tax rate applied to these specific dividends.
Furnishing of New details
- Audit Reports: Companies that get audited (under Section 44AB or 92E) now need to provide two extra pieces of information:
- Acknowledgement number: A unique code for your audit report.
- UDIN: A special number assigned to your auditor.
These helps track audits more effectively.
Micro, Small & Medium Enterprises (MSMEs)
The companies need to provide their registration number and have to update if they are registered as MSME companies.
Furnishing Reasons for Audits (Section 44AB):
Companies audited under Section 44AB (based on sales or turnover) need to give more details about why they were audited. This could be because:
- Their sales exceeded the limit for skipping an audit.
- They qualified for a simplified tax plan (Section 44BB or 44BBB) but didn’t use it.
- By collecting this extra information, the government aims for better tracking of company finances and tax compliance.
Conclusion
With these 12 changes in mind, you’re prepared to tackle your ITR-6 filing for Assessment Year 2024-25! Remember, staying informed keeps your tax reporting accurate and avoids any roadblocks. Follow these updated guidelines for hassle-free tax return submission.
