Latest news with #ITR4
Time of India
09-06-2025
- Business
- Time of India
ITR Filing FY 2024-25: Have you got an Income Tax notice? Don't ignore it! Top types of tax notices & actions required
ITR filing. A proper understanding and appropriate response to these notices can help you avoid penalties, conserve time and remain stress-free. (AI image) ITR filing FY 2024-25: As the Income Tax Return filing season for FY 2024-25 (AY 2025-26) begins, it's important to understand that merely filing your ITR does not end your responsibility. In some cases, the Income Tax Department might issue notices even after you have submitted and verified your returns. Whilst this can be concerning, most notices are standard procedures that can be handled systematically. A proper understanding and appropriate response to these notices can help you avoid penalties, conserve time and remain stress-free. Consider these essential guidelines if you receive a notice, as listed by Sudhir Kaushik, Founder & CEO of in a column in ET Wealth: * Never Ignore: Every notice has a deadline; missing it can result in penalties. * Importance of 26AS & AIS: These will help you to verify and reconcile your income and TDS data. * Accuracy: Mismatches can lead to additional scrutiny or tax demands. * Prompt action: Even minor notices can lead to complications if unaddressed. * Expert help: For complex notices, consult a chartered accountant or a tax professional immediately. Also Read | Big cheer! Home loan rates head below 8% - how much will 1% RBI repo rate cut reduce your EMI or tenure? Check calculations Here is a straightforward guide regarding common income tax notices and their appropriate handling procedures provided by Sudhir Kaushik: Section 245: Adjustment against Previous Dues When you qualify for a tax refund whilst having outstanding tax liabilities from earlier assessment years, the tax authorities retain the right to offset it. Required Actions: * Review the notification available in your account under 'e-Proceedings'. * Within 15 days, you must either accept or contest the stated grounds. * Should you fail to respond, your refund will be automatically adjusted against the dues. Section 142(1): Initial Assessment Investigation This represents a preliminary verification process initiated when tax returns remain unfiled or additional information is required by the tax authorities. Required Actions: * Submit your pending tax return. * Provide all requested documentation within the specified time frame. * Non-compliance may result in financial penalties or detailed examination. Also Read | ITR e-filing FY 2024-25: ITR-1 and ITR 4 forms enabled online for return filing on income tax e-filing portal; check details Section 143(1): Assessment Notice Post Return Processing This notice is commonly issued by the tax department to verify your submitted return against their database. The Income Tax department sends this when they detect discrepancies in TDS, mathematical errors, claims for deductions that appear incorrect, or when returns are submitted late. Required Actions: * Access your account on the income tax website to examine the notice * No response required if the assessment is accurate * Clear any tax dues within 30 days if applicable * Submit a correction request with supporting evidence if the assessment contains errors Section 139(9): Defective return When a tax return contains errors or lacks required information, the tax authorities classify it as defective. The primary concerns typically involve incomplete income information and inaccurate entries related to deductions. Required Actions: * A period of 15 days is provided to make corrections and submit again. * Access your account, locate the notice in the 'e-Proceedings' section, and submit your response. * Non-compliance within the stipulated time frame could result in invalidation of your return. Section 133(6): Information Request for Financial Details This formal notice requires explanation regarding specific financial activities, including substantial cash deposits and real estate acquisitions. Required Actions: * Provide supporting documentation, including banking records and contractual papers. * Ensure timely submission to prevent additional investigation. Also Read | ITR filing FY 2024-25: Income tax payers take note! These 7 mistakes in income tax return filing this year can cost you big HRA and TDS Discrepancy Notifications These notifications are issued when discrepancies are detected between your claimed house rent allowance (HRA) or TDS information and the tax department's database. Required Actions: * Verify that TDS requirements are met for monthly rent payments above Rs. 50,000 * Maintain proper documentation including rent receipts and landlord's PAN details * Should the discrepancy be confirmed, submit a revised return and safeguard all supporting documents for future reference Section 143(2) Detailed Review Notice under Section 143(2): This notification indicates that your tax return requires comprehensive verification through detailed scrutiny. Required Actions: * Submit all supporting documentation to validate your income, claimed deductions and expenses * If summoned, attend the scheduled hearings or provide responses via the online portal * Failure to respond could result in estimated tax assessments being made by authorities Section 148: Assessment of Undisclosed Income This notice is issued when tax authorities have reason to believe that certain income was not disclosed in previously filed returns. Required Actions: * Submit an updated return or provide clarification as requested in the notice. * Present evidence to validate the income source and attach supporting documentation. * Non-compliance may result in reassessment of previous years and monetary penalties. Section 271AAC(1): Penalty for Undisclosed Income When substantial unexplained deposits are discovered during assessment proceedings, authorities may issue this notification. Required Actions: * Submit supporting documents that establish the origin of funds. * Failure to justify the income source can result in penalties amounting to 60% of the undisclosed amount. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Economic Times
15-05-2025
- Business
- Economic Times
9 changes in ITR-1, ITR-2, ITR-3, ITR-4 you need to know for FY 2024-25 (AY 2025-26) income tax return filing
The Income Tax Department has notified the income tax return forms for FY 2024-25 (AY 2025-26), incorporating the changes in tax laws announced in the July 2024 budget. However, taxpayers will have to wait for the release of the ITR filing e-utilities on the income tax portal to file their ITR. ET Wealth Online explains the nine changes made in this year's ITR forms that will make your ITR filing process easier for FY 2024-25 (AY 2025-26). Changes in ITR forms for FY 2024-25 (AY 2025-26) 1. Expansion of eligibility to file ITR 1 and ITR 4: This year, the Income Tax Department has expanded the eligibility by relaxing the eligibility criteria, making more taxpayers eligible to file their tax return using ITR 1 and ITR 4. The new rules allow even taxpayers with long-term capital gains from equity and equity mutual funds to file a tax return using ITR1 and ITR 4 (as applicable), provided the capital gains do not exceed Rs 1.25 lakh. Naveen Wadhwa, Vice-President of Research and Advisory at Taxmann, says, "The Budget 2024 increased the LTCG exemption limit on listed equity and equity mutual funds from Rs 1 lakh to Rs 1.25 lakh. In previous years' ITR forms, even if a taxpayer's LTCG under Section 112A was within the exemption limit and there was no tax payable, the presence of capital gains income made them ineligible to file the simpler ITR-1 forms. Instead, they were required to file the return in ITR-2 or ITR-3 forms, which are more complex and time-consuming. This resulted in a genuine hardship for small taxpayers. To address this, the Central Board of Direct Taxes (CBDT) has notified that taxpayers are eligible for filing ITR-1 and ITR 4, even if they have LTCG under Section 112A, provided the total LTCG does not exceed Rs 1.25 lakh and there is no brought forward or carry forward capital loss. This move eases the compliance burden and simplifies return filing for small taxpayers with limited capital gains with no losses to be brought forward." ITR1 and ITR 4 notified by the tax department: Check the major changes here 2. Aadhaar enrolment ID not acceptable: One of the quiet changes made in Budget 2024 was removal of the acceptance of the Aadhaar enrolment ID for the PAN application, and also at the time of filing the ITR. Post this amendment, PAN applications and ITRs can no longer be filed using Aadhaar enrolment ID instead of the actual Aadhaar number. This year's income tax return forms (ITR 1, ITR 2, ITR 3 and ITR 5) have been amended to remove the column to enter the Aadhaar enrolment ID. Wadhwa says, "The ITR forms for FY 2024-25 (AY 2025-26) do not have the Aadhaar Enrolment ID column this year. If the taxpayers do not have an Aadhaar number, then they will not be able to file ITR this year." 3. Opting out of new tax regime by small business owners: Taxpayers having business income cannot switch/choose tax regimes every financial year, unlike individuals who don't have business income. As per the income tax rules, taxpayers having business income have once in a lifetime option to switch from the old to the new tax regime. However, this switching requires submission of a form to the tax department. Wadhwa says, "The previous year ITR-4 simply asked whether the taxpayer had opted out of the new tax regime. If yes, then the taxpayer was required to provide the date and acknowledgement number of Form 10-IEA if applicable. However, the ITR-4 for FY 2024-25 (AY 2025-26) has introduced a more detailed disclosure. It now seeks confirmation of past filings of Form 10-IEA and asks whether the taxpayer wants to continue opting out of the new Tax Regime in the current year." 4. Mention TDS section in ITR form: This year's income tax return forms (ITR 1, ITR 2, ITR 3 and ITR 5) require taxpayers to mention the TDS section under which tax was deducted from the income earned in FY 2024-25. Wadhwa says, "The requirement to mention the TDS section in the ITR form is applicable if tax is deducted on income other than salary. Earlier, there was no requirement to mention the TDS section in the ITR form while claiming the tax credit. However, from this year, a taxpayer must mention the section under which the benefit of TDS credit is being taken." 5. New capital gains rules incorporated in ITR forms: Budget 2024 announced new capital gains rules, effective July 23, 2024. Hence, if you have made capital gains by selling listed or unlisted shares, equity mutual funds, houses, land, or any other capital asset, then the date of sale is important to calculate the correct capital gains amount and the appropriate tax on it. Wadhwa says, "Taxpayers should check the date of sale and transfer of the capital asset to know whether the tax will be calculated based on the old rules or new rules. If the transfer date is before July 23, 2024, the old tax provisions will continue to apply, including the 15% tax rate on STCG covered under Section 111A, the 20% tax rate on LTCG covered under Section 112 with indexation benefit, and the 10% tax rate on LTCG under Section 112A. However, if the transfer occurs on or after 23rd July 2024, new tax provisions will apply. The ITR form requires a disclosure of the date of transfer, separate reporting for transfers made before and on or after 23rd July 2024, and the proper application of revised tax rates and indexation rules."If you have capital gains, then income from them will be reported in ITR 2, ITR 3 and ITR 5, as applicable. 6. Separate reporting for capital gains from unlisted bonds and debentures: Budget 2024 changed the taxation rules for unlisted bonds and debentures. The new rules are effective July 23, 2024. Wadhwa says, "According to the new rules, if unlisted debentures or bonds were issued on or before July 22, 2024, but redeemed, matured, or transferred on or after 23rd July 2024, the entire gain will be taxed as short-term capital gains, regardless of the holding period. As per the new rules, the gains will be taxed at the income tax slab rates applicable to your income. However, if the maturity, redemption or transfer occurs before July 23, 2024, the resulting gain will be classified as long-term and taxable according to the old provision. Under the old rules, the capital gains will be taxed at 20% with indexation benefit."The reporting of capital gains from unlisted bonds and debentures has to be done in ITR-2, ITR-3 or ITR-5, as applicable. 7. Reporting of buy-back proceeds as deemed dividends: From October 1, 2024, the amount received on the buy-back of shares by domestic listed companies will be considered as deemed dividends in the hands of shareholders. The new rule was announced in Budget 2024. Wadhwa says, "ITR-2, 3 and 5 have been amended so that shareholders can report the buy-back proceeds as dividend income under the section 'Income from other sources'. Under the capital gains schedule, the taxpayers will be required to report zero as sale proceeds so that the cost of acquiring shares results in a capital loss. This capital loss can be brought forward and set off against other long-term capital gains for the next eight assessment years." 8. Providing disability certificates for deduction under Section 80DD and 80U: Under the old tax regime, a taxpayer could claim a deduction under Section 80DD or Section 80U for expenditure made for disabled individuals. This year, a taxpayer claiming any of the deduction is required to provide acknowledgement number of the disability certificate as well. Wadhwa says, "Till previous years, a taxpayer could claim a deduction under Section 80DD or Section 80U by quoting the Form 10-IA as per income tax rules. However, from this year, taxpayer is also required to provide acknowledgement number of disability certificates along with Form 10-IA to claim deduction."Section 80DD can be claimed by a resident individual or HUF who incurs medical expenditure or pays an insurance premium for the care of a dependent family member with a disability or severe deduction under Section 80U is available to a resident individual who is himself suffering from a disability or severe says, "This reporting requirement is applicable only if ITR-2 and ITR-3 is filed. There is no reporting requirement if the taxpayer files ITR-1." 9. Asset reporting applicable if total income exceeds Rs 1 crore: There is good news for taxpayers having income above Rs 50 lakh. From this year, a taxpayer is required to report their assets and liabilities only if the gross total income exceeds Rs 1 crore. Wadhwa says, "Earlier, a taxpayer was required to report their assets and liabilities if their gross total income exceeded Rs 50 lakh in a financial year. However, from this year, the reporting in Schedule AL will be mandatory only if gross total income exceeds Rs 1 crore."The reporting in Schedule AL can be done in the ITR 2 and ITR 3.
Time of India
13-05-2025
- Business
- Time of India
9 changes in ITR-1, ITR-2, ITR-3, ITR-4 you need to know for FY 2024-25 (AY 2025-26) income tax return filing
The Income Tax Department has notified the income tax return forms for FY 2024-25 (AY 2025-26), incorporating the changes in tax laws announced in the July 2024 budget. However, taxpayers will have to wait for the release of the ITR filing e-utilities on the income tax portal to file their ITR. #Operation Sindoor The damage done at Pak bases as India strikes to avenge Pahalgam Why Pakistan pleaded to end hostilities Kashmir's Pahalgam sparks Karachi's nightmare ET Wealth Online explains the nine changes made in this year's ITR forms that will make your ITR filing process easier for FY 2024-25 (AY 2025-26). Changes in ITR forms for FY 2024-25 (AY 2025-26) 1. Expansion of eligibility to file ITR 1 and ITR 4: This year, the Income Tax Department has expanded the eligibility by relaxing the eligibility criteria, making more taxpayers eligible to file their tax return using ITR 1 and ITR 4. The new rules allow even taxpayers with long-term capital gains from equity and equity mutual funds to file a tax return using ITR1 and ITR 4 (as applicable), provided the capital gains do not exceed Rs 1.25 lakh. Naveen Wadhwa, Vice-President of Research and Advisory at Taxmann, says, "The Budget 2024 increased the LTCG exemption limit on listed equity and equity mutual funds from Rs 1 lakh to Rs 1.25 lakh. In previous years' ITR forms, even if a taxpayer's LTCG under Section 112A was within the exemption limit and there was no tax payable, the presence of capital gains income made them ineligible to file the simpler ITR-1 forms. Instead, they were required to file the return in ITR-2 or ITR-3 forms, which are more complex and time-consuming. This resulted in a genuine hardship for small taxpayers. To address this, the Central Board of Direct Taxes (CBDT) has notified that taxpayers are eligible for filing ITR-1 and ITR 4, even if they have LTCG under Section 112A, provided the total LTCG does not exceed Rs 1.25 lakh and there is no brought forward or carry forward capital loss. This move eases the compliance burden and simplifies return filing for small taxpayers with limited capital gains with no losses to be brought forward." Live Events ITR1 and ITR 4 notified by the tax department: Check the major changes here 2. Aadhaar enrolment ID not acceptable: One of the quiet changes made in Budget 2024 was removal of the acceptance of the Aadhaar enrolment ID for the PAN application, and also at the time of filing the ITR. Post this amendment, PAN applications and ITRs can no longer be filed using Aadhaar enrolment ID instead of the actual Aadhaar number. This year's income tax return forms (ITR 1, ITR 2, ITR 3 and ITR 5) have been amended to remove the column to enter the Aadhaar enrolment ID. Wadhwa says, "The ITR forms for FY 2024-25 (AY 2025-26) do not have the Aadhaar Enrolment ID column this year. If the taxpayers do not have an Aadhaar number, then they will not be able to file ITR this year." 3. Opting out of new tax regime by small business owners: Taxpayers having business income cannot switch/choose tax regimes every financial year, unlike individuals who don't have business income. As per the income tax rules, taxpayers having business income have once in a lifetime option to switch from the old to the new tax regime. However, this switching requires submission of a form to the tax department. Wadhwa says, "The previous year ITR-4 simply asked whether the taxpayer had opted out of the new tax regime. If yes, then the taxpayer was required to provide the date and acknowledgement number of Form 10-IEA if applicable. However, the ITR-4 for FY 2024-25 (AY 2025-26) has introduced a more detailed disclosure. It now seeks confirmation of past filings of Form 10-IEA and asks whether the taxpayer wants to continue opting out of the new Tax Regime in the current year." 4. Mention TDS section in ITR form: This year's income tax return forms (ITR 1, ITR 2, ITR 3 and ITR 5) require taxpayers to mention the TDS section under which tax was deducted from the income earned in FY 2024-25. Wadhwa says, "The requirement to mention the TDS section in the ITR form is applicable if tax is deducted on income other than salary. Earlier, there was no requirement to mention the TDS section in the ITR form while claiming the tax credit. However, from this year, a taxpayer must mention the section under which the benefit of TDS credit is being taken." 5. New capital gains rules incorporated in ITR forms: Budget 2024 announced new capital gains rules, effective July 23, 2024. Hence, if you have made capital gains by selling listed or unlisted shares, equity mutual funds, houses, land, or any other capital asset, then the date of sale is important to calculate the correct capital gains amount and the appropriate tax on it. Wadhwa says, "Taxpayers should check the date of sale and transfer of the capital asset to know whether the tax will be calculated based on the old rules or new rules. If the transfer date is before July 23, 2024, the old tax provisions will continue to apply, including the 15% tax rate on STCG covered under Section 111A, the 20% tax rate on LTCG covered under Section 112 with indexation benefit, and the 10% tax rate on LTCG under Section 112A. However, if the transfer occurs on or after 23rd July 2024, new tax provisions will apply. The ITR form requires a disclosure of the date of transfer, separate reporting for transfers made before and on or after 23rd July 2024, and the proper application of revised tax rates and indexation rules." If you have capital gains, then income from them will be reported in ITR 2, ITR 3 and ITR 5, as applicable. 6. Separate reporting for capital gains from unlisted bonds and debentures: Budget 2024 changed the taxation rules for unlisted bonds and debentures. The new rules are effective July 23, 2024. Wadhwa says, "According to the new rules, if unlisted debentures or bonds were issued on or before July 22, 2024, but redeemed, matured, or transferred on or after 23rd July 2024, the entire gain will be taxed as short-term capital gains, regardless of the holding period. As per the new rules, the gains will be taxed at the income tax slab rates applicable to your income. However, if the maturity, redemption or transfer occurs before July 23, 2024, the resulting gain will be classified as long-term and taxable according to the old provision. Under the old rules, the capital gains will be taxed at 20% with indexation benefit." The reporting of capital gains from unlisted bonds and debentures has to be done in ITR-2, ITR-3 or ITR-5, as applicable. 7. Reporting of buy-back proceeds as deemed dividends: From October 1, 2024, the amount received on the buy-back of shares by domestic listed companies will be considered as deemed dividends in the hands of shareholders. The new rule was announced in Budget 2024. Wadhwa says, "ITR-2, 3 and 5 have been amended so that shareholders can report the buy-back proceeds as dividend income under the section 'Income from other sources'. Under the capital gains schedule, the taxpayers will be required to report zero as sale proceeds so that the cost of acquiring shares results in a capital loss. This capital loss can be brought forward and set off against other long-term capital gains for the next eight assessment years." 8. Providing disability certificates for deduction under Section 80DD and 80U: Under the old tax regime, a taxpayer could claim a deduction under Section 80DD or Section 80U for expenditure made for disabled individuals. This year, a taxpayer claiming any of the deduction is required to provide acknowledgement number of the disability certificate as well. Wadhwa says, "Till previous years, a taxpayer could claim a deduction under Section 80DD or Section 80U by quoting the Form 10-IA as per income tax rules. However, from this year, taxpayer is also required to provide acknowledgement number of disability certificates along with Form 10-IA to claim deduction." Section 80DD can be claimed by a resident individual or HUF who incurs medical expenditure or pays an insurance premium for the care of a dependent family member with a disability or severe disability. The deduction under Section 80U is available to a resident individual who is himself suffering from a disability or severe disability. Wadhwa says, "This reporting requirement is applicable only if ITR-2 and ITR-3 is filed. There is no reporting requirement if the taxpayer files ITR-1." 9. Asset reporting applicable if total income exceeds Rs 1 crore: There is good news for taxpayers having income above Rs 50 lakh. From this year, a taxpayer is required to report their assets and liabilities only if the gross total income exceeds Rs 1 crore. Wadhwa says, "Earlier, a taxpayer was required to report their assets and liabilities if their gross total income exceeded Rs 50 lakh in a financial year. However, from this year, the reporting in Schedule AL will be mandatory only if gross total income exceeds Rs 1 crore." The reporting in Schedule AL can be done in the ITR 2 and ITR 3.
