Comprehensive Analysis of Changes in ITR-6 for A.Y. 2024-25: CBDT Notification No. 16/2024

 

Introduction:

In a significant move, the Central Board of Direct Taxes (CBDT) released Notification No. 16/2024 on January 24, 2024, introducing notable revisions to the Income Tax Return (ITR) Form ITR-6 for the Assessment Year (A.Y.) 2024-25. The modifications, scheduled to be implemented from April 1, 2024, are specifically tailored for companies (excluding those eligible for exemption under section 11). This detailed analysis aims to provide insights into the key changes outlined in the CBDT notification and their implications on tax compliance for businesses.

 

Key Highlights of the CBDT Notification:

1. Information of Notification:

   The CBDT, through Notification No. 16/2024, has released the modified ITR-6 form for the upcoming Assessment Year. This signifies a crucial update for companies in terms of their tax reporting obligations.

2. Key Changes in ITR 6 Form:

   The notification alludes to essential revisions or additions incorporated into the ITR-6 form. These changes may encompass adjustments to reporting obligations, supplementary disclosures, or modifications to the format of specific sections.

3. Applicability:

   The updated ITR-6 form is relevant for companies that do not qualify for exemption under section 11 of the Income Tax Act. It is crucial for businesses falling within this category to be aware of the alterations and ensure adherence to the revised form.

4. Valuable Date:

   The alterations implemented in the ITR-6 form will take effect starting April 01, 2024. Companies are recommended to acquaint themselves with the changes and adjust their filing procedures accordingly.

5. AY 2024-25:

   The ITR-6 form has been customized for the Assessment Year 2024-25, indicating that companies must utilize this form when submitting their income tax returns for the financial year concluding on March 31, 2024.

6. Need for Tax Compliance:

   Businesses within the scope of ITR-6 are encouraged to thoroughly examine the revised form to guarantee precise and compliant reporting. Companies must comprehend any new requirements and align their financial data accordingly.

7. Transmission from CBDT:

   Companies are encouraged to stay informed about any further communications or clarifications from the CBDT regarding the revised ITR-6 form. Any additional guidance provided by the tax authorities should be promptly incorporated into the filing process.

8.  Suggestion for Businesses: 

   The firms concerning the time and resources for the preparation and filing of the revisions in the ITR-6 form might have certain implications. Businesses are recommended to strategically plan and allocate resources to meet the new compliance standards.

 

Detailed Analysis of Key Changes in ITR-6:

1.  Legal Entity Identifier (LEI):

   One of the significant additions to the ITR-6 form is the inclusion of a column for the Legal Entity Identifier (LEI). The LEI is a 20 Character unique alphanumeric code used globally to identify parties involved in financial transactions. This aligns with RBI regulations, particularly those requiring entities involved in single payment transactions of Rs. 50 crores and above to include remitter and beneficiary LEI information. The primary objective is to enhance the accuracy of financial data reporting systems, especially in transactions through NEFT and RTGS payment systems.

2.  Schedule 115TD for Accreted Income:

   The introduction of Schedule 115TD addresses the tax payable on accreted income for funds or institutions approved under Section 10(23C) or registered under Section 12AB. This becomes relevant when such entities undergo conversion into a non-charitable form or face situations like the transfer of assets upon dissolution to a non-charitable institution. The schedule requires detailed information on the computation of accreted income, tax payable, and challans for depositing tax on accreted income. This addition reflects the regulatory emphasis on ensuring comprehensive reporting of income sources and associated taxes.

3.  Disclosure of Capital Gains Accounts Scheme (CGAS): 

   Modifications in Schedule-CG have been introduced to capture more information regarding sums deposited in the Capital Gains Accounts Scheme (CGAS). In addition to details about the sum deposited, the new ITR-6 requires information like the date of deposit, account number, and IFS code. This enhances the reporting of capital gains-related information, providing a more comprehensive overview of the taxpayer's financial activities. It aligns with the broader regulatory push for transparency in financial reporting.

4.  Schedule 80GGC for Political Contributions:

   The introduction of Schedule 80GGC signifies a notable addition to the ITR-6 form, requiring detailed disclosures of contributions made to political parties. This includes information such as the date of contribution, contribution amount (with a breakdown of modes), eligible contribution amount, transaction reference number for UPI transfer or cheque, and the IFS code of the bank. Unlike previous forms, this schedule demands a more intricate disclosure beyond the mere amount eligible for deduction under Section 80GGC. This addition aligns with the regulatory focus on transparency and accountability in political funding.

5.  Schedule 80-IAC for Start-ups:

   Deductions under Section 80-IAC for eligible start-ups now involve providing additional details, as outlined in the new schedule. Information such as the date of incorporation, nature of business, certificate number obtained from the Inter-Ministerial Board of Certification, the first assessment year in which deduction was claimed, and the amount claimed for the current assessment year is now required. This expanded reporting enhances the understanding of the start-up landscape seeking such deductions and provides tax authorities with a more comprehensive view of the claimed benefits.

6.  Schedule 80LA for Offshore Banking Units or IFSC:

   The insertion of Schedule 80LA is significant as it focuses on deductions available under Section 80LA for certain incomes of Offshore Banking Units and the International Financial Services Centre (IFSC). Companies are now required to provide detailed information, including the type of entity, type of income, authority granting registration, date of registration, registration number, first assessment year for which deduction is claimed, and the amount of deduction claimed for the current assessment year. This addition aligns with the regulatory framework encouraging financial activities in offshore units and IFSCs.

7.  Disclosure of MSME Payments Beyond Time Limit:

   The amendment related to MSME payments beyond the specified time limit introduces a new column under Part A-OI (Other Information). This column requires the disclosure of sums payable to micro or small enterprises beyond the time limit specified in the Micro, Small and Medium Enterprises Development Act 2006 (MSME Act). This aligns with the Finance Act 2023, emphasizing timely payments to MSMEs and reflects the government's commitment to supporting smaller enterprises.

8.  Winnings from Online Games (Section 115BBJ): 

   The Finance Act 2023 introduces Section 115BBJ, taxing winnings from online games starting from the Assessment Year 2024-25. Correspondingly, Schedule OS in ITR-6 is amended to disclose income from winning online games chargeable under Section 115BBJ. This addresses the taxation of income generated from the burgeoning online gaming industry. The addition of this schedule aligns with the changing landscape of income sources and the need to capture and tax emerging trends in the digital economy.

9.  Reporting Dividend Income from IFSC:

   The amendment to Section 115A introduces a reduced tax rate of 10% for dividend income received from a unit in an IFSC. Schedule OS in ITR-6 is updated to reflect this change, ensuring accurate reporting of dividend income at the revised tax rate. This change aligns with the government's efforts to promote financial activities within IFSCs and provides clarity on the tax treatment of dividend income from such units.

10.  Company's Due Date for Filing Return:

    A new column is introduced in ITR-6, requiring companies to provide information about the due date for filing their income tax return. This includes selecting the applicable due date from the provided options of either October 31st or November 30th. This addition emphasizes timely compliance with filing deadlines, providing tax authorities with a clearer understanding of the companies' adherence to regulatory timelines.

11.  Acknowledgement Number and UDIN for Audit Reports:

    Companies are now required to furnish the acknowledgement number of the audit report and the Unique Document Identification Number (UDIN) when reporting audits conducted under Section 44AB. This enhances the transparency and authenticity of audit-related information. The inclusion of UDIN ensures that the audit reports are uniquely identified and can be verified for their authenticity, contributing to the credibility of financial disclosures.

12.  Micro, Small, or Medium Enterprise Recognition:

    ITR-6 mandates that companies provide information regarding their recognition status as a Micro, Small, or Medium Enterprise. This includes furnishing the registration number allotted as per the Micro, Small and Medium Enterprises Development Act, 2006. This information contributes to a comprehensive understanding of the economic landscape for such enterprises, allowing tax authorities to assess the impact of tax policies on smaller businesses.

13.  Reason for Tax Audit under Section 44AB:

    New details are sought from companies subject to audit under Section 44AB. This includes additional information about the circumstances under which the company is obligated to undergo an audit. Examples include exceeding turnover limits specified under Section 44AB, falling under specific sections like 44BB or 44BBB but not offering income on a presumptive basis, or other relevant circumstances. This addition provides tax authorities with insights into the reasons for tax audits, facilitating a more targeted and effective audit process.

Conclusion:

In conclusion, the changes introduced in the new ITR-6 for Assessment Year 2024-25 reflect a proactive approach by the CBDT to align tax reporting requirements with evolving regulatory landscapes and economic activities. The detailed analysis of each change highlights the government's focus on enhancing transparency, capturing emerging income sources, and ensuring compliance with specific regulatory provisions. Businesses are encouraged to stay abreast of these changes, understand their implications, and adapt their tax compliance processes accordingly. Timely adoption of these revisions will not only ensure compliance but also contribute to the overall efficiency and credibility of the tax reporting ecosystem.

SUMMARIZED TABLE OF THE KEY CHANGES IN ITR-6 FOR ASSESSMENT YEAR 2024-25:

No.	Change	Details
1	Legal Entity Identifier (LEI)	- Introduction of a column for LEI. - Entities seeking a refund of Rs. 50 crores or more must furnish LEI details.
2	Schedule 115TD for Accreted Income	- New schedule for reporting tax payable on accreted income. - Relevant for entities converting into a non-charitable form or facing specified situations.
3	Disclosure of CGAS in Schedule-CG	- Modification of Schedule -CG to capture detailed information on sums deposited in CGAS. - Additional details include date of deposit, account number, and IFS code.
4	Schedule 80GGC for Political Contributions	- Introduction of a new schedule requiring details of contributions made to political parties. - Detailed information includes date of contribution, contribution modes, and transaction references.
5	Schedule 80-IAC for Start-ups	- New schedule seeking additional details for deductions claimed under Section 80-IAC. - Information includes date of incorporation, nature of business, and deduction-related details.
6	Schedule 80LA for Offshore Banking Units	- Insertion of a new schedule seeking details for deductions under Section 80LA. - Information includes type of entity, authority granting registration, and deduction-related details.
7	Disclosure of MSME Payments Beyond Time Limit	- Addition of a column under Part A-OI to disclose sums payable to MSMEs beyond specified time limits.
8	Winnings from Online Games (Section 115BBJ)	- Introduction of Section 115BBJ to tax winnings from online games. - Amendment of Schedule OS to disclose income from winning online games.
9	Reporting Dividend Income from IFSC	- Amendment to Section 115A for reduced tax rate on dividend income from IFSC. - Schedule OS updated to reflect the change in tax treatment.
10	Company's Due Date for Filing Return	- New column introduced in ITR-6 requiring companies to provide due date for filing return.
11	Acknowledgement Number and UDIN for Audit Reports	- Requirement to furnish audit report's acknowledgement number and UDIN. - Enhances transparency and authenticity of audit-related information.
12	Micro, Small, or Medium Enterprise Recognition	- Mandatory disclosure of recognition status as a Micro, Small, or Medium Enterprise. - Inclusion of registration number as per the MSME Act, 2006.
13	Reason for Tax Audit under Section 44AB	- New details sought regarding circumstances necessitating tax audit under Section 44AB. - Includes reasons such as exceeding turnover limits and specific sections not following presumptive basis.

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Article Compiled by:-

Mayank Garg

(LegalMantra.net Team)

+91 9582627751

Disclaimer: Every effort has been made to avoid errors or omissions in this material in spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition In no event the author shall be liable for any direct indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information Many sources have been considered including Newspapers, Journals, Bare Acts, Case Materials , Charted Secretary, Research Papers etc.

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