The I-T department has requested more information on tax deductions, including donations to political parties, the PAN and Aadhaar of disabled dependents if you are claiming deductions under section 80DD, details on high-value policies, and so forth, in the updated ITR forms that were made available on February 2.
The goal is to prevent fraudulent tax deductions. Individual taxpayers received a plethora of notifications from the IT department last year, essentially asking them to defend the tax benefits they had claimed.
“The means to claim tax exemptions and deductions have been made more stringent. Additional information has been sought to check false claims by individuals and companies for several areas such as political party donations and capital gains exemptions, etc,” stated Paras Savla, partner at KPB & Associates.
Political parties donations
“Details of political party donations include not just contribution amount and its break-up in the form of mode of payment but the specific transaction number linked to bank transfer will have to be furnished. Earlier only the amount claimed for deduction under Section 80GGC was required,” stated Raju Shah, an Ahmedabad-based chartered accountant.
Life insurance policies
There is now a specific section in ITR-2 and ITR-3 where individuals who have received yearly bonuses under life insurance plans must report the specifics of bonus payments they received during the fiscal year.
You must also disclose whether any proceeds from a high-premium life insurance policy are subject to taxation. Should such be the case, the excess must be reported on the separate schedule under “other sources of income.” When a life insurance policy’s annual premiums surpass 10% of the total guaranteed, the maturity proceeds obtained from the policy are subject to taxes. Furthermore, in accordance with the declarations made in the Budget 2022 and Budget 2023, revenues from unit linked insurance policies (Ulip) with yearly premiums exceeding Rs 2.5 lakh and endowment policies with annual premiums of Rs 5 lakh and more will be taxable.
Disabled dependents- UDID number
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From now on, in addition to the amount claimed under Section 80DD, you must also provide specifics such as the nature of the impairment, the information of the dependent (your relative), and their PAN and AADHAAR. The benefit of this deduction is Rs 1.25 lakh, or Rs 75,000.
The acknowledgement number, the UDID number (unique identifying number for individuals with disabilities), and the date of submission of Form 10-IA (certificate of the medical authority for certifying disabilities) are also required.
Employee Stock Options (ESOPs) status
Workers at certain start-ups may be able to postpone paying taxes on shares granted to them at a discounted rate or as employee stock options (ESOPs).
In addition to the tax amount and the relevant year, you will also need the PAN of the qualified startup and the Department for Promotion of Industry and Internal Trade (DPIIT) registration number in order to be eligible for these tax benefits under the ESOP.
Virtual assets details
“Apart from just claiming the capital gains, one also needs to mention the quarter-wise break-up of the investments,” added Savla.
The Schedule OS has been modified to reflect the winnings from online games, which are subject to Section 115BBJ charges.The recently adopted Annual Information Statement (AIS), which contains all the information recorded about an individual from a tax standpoint, has been the initiative’s mainstay.
