We have already discussed about the various ITR which are already available to us i.e. ITR 1 to 4.
In today’s post let’s discuss about ITR 5, various amendment made in ITR 5 for AY 2022-23 and who are eligible for filing the same.
Let’s first see who is eligible to use ITR 5 Form?
This Form can be used by a person being a
- Limited Liability Partnership (LLP),
- Association of Persons (AOP),
- Body of Individuals (BOI),
- Artificial Juridical Person (AJP) referred to in clause (vii) of section 2(31),
- local authority referred to in clause (vi) of section 2(31),
- representative assessee referred to in section 160(1)(iii) or (iv),
- Primary Agricultural Credit Society,
- Co‐operative Bank other than a primary agricultural credit society or a primary co‐operative agricultural and rural development bank,
- Primary Co‐ operative Agricultural and Rural Development bank,
- any other cooperative society, society registered under Societies Registration Act, 1860 or under any other law of any State, trust
- other than trusts eligible to file Form ITR‐7,
- estate of deceased person,
- estate of an insolvent,
- business trust referred to in section 139(4E),
- investments fund referred to in section 139(4F) and
- Any other AOP /BOI.
However, a person who is required to file the return of income under section 139(4A) or 139(4B) or 139(4D)shall not use this form.
Below are the Key changes in ITR 5 as compared to ITR for AY 2022‐23:
1. Change in Schedule FA:
Schedule FA deals with disclosure of foreign assets by a person who is a ordinary resident in India. Till now while declaring foreign assets in this schedule assessee was free to declare foreign assets held by him as on end of relevant accounting period of foreign jurisdiction.
Now no separate accounting periods shall be followed, CBDT had mandated all the taxpayers to report the foreign assets held by them as on 31st December. Thus, while filing Income Tax return for AY 2022-23, assessee has to disclose foreign assets held between 01.01.2021 to 31.12.2021.
2. Declaration of Significant Economic Presence (SEP) by non-resident:
Concept of SEP was introduced by Finance Act, 2020 and made applicable form AY 2022-23 and since this will be the first year of application of the provision, assessee need to file declaration of same while filing return of income.
To read more about concept of SEP CLICK HERE: Threshold limit prescribed by CBDT for determining “Significant Economic presence” of a business in India | Now many online portals will be taxed in India | Digital tax – Taxontips
3. Change in ITR Form to adjust unabsorbed depreciation pertaining to additional depreciation to WDV of asset in relation to section 115BAC and 115BAD:
Provision of section 115BAC and 115BAD provides that if an assessee has any unabsorbed depreciation because of additional depreciation and if he opts for above provisions then the assessee can adjust the value of such unabsorbed depreciation to the WDV of the asset as on 01.04.2021.
Do remember that similar provision was introduced under section 115BAA for companies however, CBDT had sent notices to companies who had opted for the new regime and made above adjustment wherein such adjustment were not considered.
To read more on such intimation issued by CBDT CLICK HERE: Intimation issued u/s 143(1) of the Act for AY 2020-21 does not allow depreciation on adjustment of WDV due to additional depreciation to companies opting for section 115BAA – Taxontips
4. Disclosure for alternative tax regime opted under Section 115BAD
Similar to above two types of entities the following disclosures are required in ITR 5 in respect of the new lower tax regime of Section 115BAD for co-operative socities:
(a) Where a co-operative society has opted for an alternative tax regime, it has to furnish the AY in which said option is exercised for the first time and the date of filing of form 10-IF with acknowledgement number;
(b) Where a co-operative society is choosing to opt for an alternative tax regime this year, it has to furnish the date of filing of the form 10-IF with acknowledgement number.
5. Additional information sought from the assessee not opting for the presumptive tax scheme:
The audit under Section 44AB is mandatory if the total sales, turnover or gross receipt from the business during the previous year exceeds Rs. 1 crore. However, if the cash receipt and cash payment do not exceed 5%, the audit shall be mandatory if the turnover of the business assessee exceeds Rs. 10 crores during the financial year.
For the purpose of computing the limit of 5%, payment or receipt by cheque drawn on a bank or by a bank draft, which is not an account payee, shall be deemed to be the payment or receipt in cash only.
The old ITR Forms required the assessee to furnish the response regarding cash receipts and payments only, and it did not consider the receipt or payment through non-account payee cheque or DD.
The following additional disclosures are required regarding Audit Information:
(a) Whether total sales, turnover or gross receipt is between Rs. 1 crore and Rs. 10 crores. If not, is it below Rs. 1 crore or exceeds Rs. 10 crores?
(b) The new ITR forms require aggregation of receipts and payment in cash and non-account payee cheque or DD while computing the limit of 5% as mentioned above.
A few additional questions have been added which further clarifies the turnover situation of assessee which is a welcoming change as in earlier ITR form the questions were not very clear.
To read more about Tax Audit under Income Tax Act CLICK HERE: Who needs to get their Books of accounts audited under Income Tax Act | Tax audit under Income tax – Taxontips
6. Limiting the rate of surcharge on dividend income:
After Finance Act, 2020 dividend was made taxable in the hands of recipient at applicable tax rates. However, the rate of surcharge on such dividend was restricted to 15% if income exceeds as in case of capital gain.
Thus, in case of Individual, HUF, AOP, BOI, the surcharge on tax on dividend income shall be levied at the rate of 10% if it exceeds Rs. 50 lakh but does not exceed Rs. 1 crore and at the rate of 15% when it exceeds Rs. 1 crore.
The consequential changes have been made in Schedule Part B – TTI (Computation of tax liability on total income) to limit the rate of surcharge on dividend income taxable under Section 115AD and other dividend income.
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