The Income Tax Department regularly updates its guidelines and clarifications to assist taxpayers in accurate and compliant filing of Income Tax Returns (ITRs). For Assessment Year 2024-25, several FAQs have been issued to address common issues faced by taxpayers while filing ITR Forms 1 to 6. These FAQs aim to clarify doubts and provide clear instructions to ensure that taxpayers can file their returns correctly and avoid common pitfalls, such as defective return notices. Below is a comprehensive list of these FAQs, along with solutions and examples, to guide taxpayers in their filing process.
FAQs Issued by the Income Tax Department for AY 2024-25
1. Reporting Tonnage Tax Income Under MAT Provisions (ITR-6)
- Issue: How should tonnage tax income be reported under MAT provisions, given that MAT does not apply to such income?
- Solution & Example: This income should be reported under SI. No. 6k – Others to ensure it is excluded from the MAT calculation. For example, if a shipping company reports tonnage tax income, it should be declared in SI. No. 6k to prevent its inclusion under MAT.
2. Mandatory Disclosures for Foreign Companies (ITR-6)
- Issue: Is it necessary for foreign companies to fill SI. No. 62 if income is offered under sections like 44AE/44B?
- Solution & Example: Foreign companies must disclose receipts and profits under these sections at SI. No. 62 and select "Yes" in SI. No. B of Audit information. For instance, if a foreign company is under section 44B, its income must be reported in SI. No. 62.
3. Filling Financial Statements for Non-Presumptive Income (ITR-6)
- Issue: Are full financial statements mandatory for companies with non-presumptive income?
- Solution & Example: Yes, companies with non-presumptive income must complete the manufacturing/trading/profit & loss account/balance sheet as applicable. For example, a company with regular business income needs to fill out the entire financial statement section in the ITR.
4. Reporting Income Chargeable to Special Rates (ITR-3, 5 & 6)
- Issue: Can income subject to special tax rates be shown only in Part-B-TI?
- Solution & Example: Such income must be reported both in Part B-TI and the relevant income schedules. For example, if a taxpayer has long-term capital gains, they should report it in both the specific income schedule and Part B-TI to ensure correct tax calculations.
5. Carrying Forward Unabsorbed Depreciation After Due Date (ITR-3, 5 & 6)
- Issue: Is it possible to carry forward unabsorbed depreciation if the return is filed after the due date?
- Solution & Example: Yes, unabsorbed depreciation can be carried forward by reporting it under Schedule UD. However, other business losses cannot be carried forward if the return is filed late. For instance, if a taxpayer files late but has unabsorbed depreciation, it can still be carried forward as long as it is correctly reported in Schedule UD.
6. Adjusting Brought Forward Loss Against Current Year Income (ITR-3, 5 & 6)
- Issue: Can brought forward losses from returns filed after the due date be adjusted against current year income?
- Solution & Example: Only House Property Loss, Unabsorbed Depreciation, and Section 35(4) Allowance can be adjusted if the return is filed late. For instance, a taxpayer with unabsorbed depreciation can adjust it against current income, but other business losses cannot be adjusted.
7. Precautions to Avoid TDS Restriction Notices (37BA) (ITR-6)
- Issue: What precautions should be taken to avoid notices restricting TDS credit?
- Solution & Example: Taxpayers should ensure gross receipts shown in Form 26AS are accurately disclosed in relevant schedules, and TDS is claimed in the correct year. For example, if a taxpayer's gross receipts match those in Form 26AS, it will prevent discrepancies and potential defective return notices.
8. Claiming TDS/TCS Credits for Other PANs (ITR-3, 5 & 6)
- Issue: What precautions should be taken when claiming TDS/TCS credits for other taxpayers?
- Solution & Example: Taxpayers must ensure that the other taxpayer has provided the claimant’s PAN details in their return. For instance, if a company is claiming TDS credit on behalf of another taxpayer, it must verify that the PAN details are correctly reflected in both returns to avoid mismatches.
9. Entering Quarterly Breakup in Schedule CG (ITR-3, 5 & 6)
- Issue: How should the quarterly breakup in Schedule CG be entered?
- Solution & Example: The quarterly breakup should match the rate-wise capital gain income in Schedule BFLA. For example, if a taxpayer has capital gains from equity sales in a specific quarter, they must ensure these gains are reported in the relevant quarter’s breakup in Schedule CG.
10. Filing ITR 1 or 4 with Special Rate Incomes (ITR-1 & 4)
- Issue: Can ITR 1 or ITR 4 be filed if there are special rate incomes?
- Solution & Example: No, taxpayers with special rate incomes must file ITR 2, 3, 5, or 6 to disclose these incomes. For example, a taxpayer with income from lottery winnings must file ITR 2 instead of ITR 1 to accurately report this income.
11. Carrying Forward Current Year Losses (ITR-2, 3, 5 & 6)
- Issue: Can current year losses be carried forward without adjustment?
- Solution & Example: Losses must be set off against current year income in Schedule CYLA before they can be carried forward. For instance, if a taxpayer has business losses, these must be adjusted against current year income before any remaining losses can be carried forward.
12. Claiming Deductions under Section 80DD/80U (ITR-1, 2, 3, 4)
- Issue: Can deductions under Section 80DD or 80U be claimed without submitting Form 10IA?
- Solution & Example: No, Form 10IA must be e-filed to claim these deductions. For example, if a taxpayer is claiming deductions for a dependent with a disability, they must submit Form 10IA electronically to validate their claim.
13. Adjusting Brought Forward Losses Against Presumptive Income (ITR-3, 5 & 6)
- Issue: Can brought forward losses be set off against presumptive income under Sections 44BB or 44BBB?
- Solution & Example: No, losses cannot be adjusted against presumptive income. For example, a contractor operating under Section 44BB cannot use past losses to reduce their presumptive income for the current year.
14. Disclosing Income from Virtual Digital Assets (VDA) (ITR-3, 5 & 6)
- Issue: How should income from Virtual Digital Assets (VDAs) be disclosed in the ITR?
- Solution & Example: VDA income should be reported in Schedule VDA and must align with the TDS reported under Section 194S in Form 26AS. For example, if a taxpayer has income from cryptocurrency, they must ensure it is disclosed in Schedule VDA and matches the TDS figures in Form 26AS.
15. Disclosing Lottery and Game Winnings (ITR-3, 5 & 6)
- Issue: How should income from lottery and game winnings be disclosed?
- Solution & Example: Such income should be reported in SI. No. 2(ai) of Schedule OS, and it must match the TDS under Section 194B in Form 26AS. For instance, if a taxpayer has lottery winnings, they should report it in SI. No. 2(ai) and ensure it aligns with the TDS entries in Form 26AS.
Conclusion
These FAQs provide clear guidance on common issues faced during the filing of ITRs for AY 2024-25. Taxpayers are encouraged to follow these solutions and examples closely to ensure accurate and compliant filing. By addressing these common challenges, taxpayers can reduce the risk of receiving defective return notices and ensure a smoother filing experience.
