Understanding Tax Deduction at Source (TDS)
Understanding Tax Deduction at Source (TDS) Tax Deduction at Source (TDS) is a mechanism where income tax is automatically deducted from payments made to a person during specified transactions. This…
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Starting April 1, 2024, MSME Registration and Recognition Status Required for New ITR-5 & ITR-6 Filing.
Intending to simplify tax procedures and promote transparency, the Income Tax Department has implemented substantial revisions to income tax return (ITR) forms, taking effect from April 1, 2024.
Intending to simplify tax procedures and promote transparency, the Income Tax Department has implemented substantial revisions to income tax return (ITR) forms, taking effect from April 1, 2024. These changes cover a range of requirements designed to streamline business tax compliance and strengthen reporting standards.
1. Streamlining Business Tax Procedures
Acknowledging the necessity for simplified tax processes, the income tax department has eased the criteria for presumptive taxation as per Section 44AD of the Income Tax Act, 1961. This measure seeks to reduce the tax burden on businesses by incorporating a new section in ITR forms 5 and 6 for reporting cash turnover or gross receipts.
The cash turnover threshold has been increased to Rs. 3 crores, given that cash receipts remain below 5% of the total turnover or gross receipts from the preceding year.
2. Enhanced Requirements for MSMEs in ITR-6 Submission
Companies utilizing ITR-6 to submit income tax returns are now confronted with extra prerequisites, which encompass the necessity to provide the Legal Entity Identifier (LEI), MSME registration number, and details justifying tax audits as per Section 44AB of the IT Act.
The revised form also mandates the disclosure of proceeds from online games under Section 115BBJ of the IT Act and the inclusion of virtual digital assets.
3. Rigorous Reporting Standards for Companies Pursuing Refunds
Companies aiming for refunds exceeding Rs. 50 crores are subject to stringent reporting standards, demanding the Legal Entity Identifier (LEI) provision. Furthermore, ITR-6 mandates the inclusion of acknowledgment numbers and Unique Document Identification Numbers (UDIN) for tax audit reports under Section 44AB of the IT Act and transfer pricing reports under Section 92E of the IT Act.
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