ITR Last Date: Must Know About Income Tax Return Filing Rules

New Delhi:

The central government has made major changes in the last financial year regarding the income from foreign bank accounts.

The Central Board of Direct Taxes (CBDT) had notified the new Income Tax Return (ITR) form for the financial year 2021-22 (Assessment Year (AY 2022-23)) on 1st April 2022. It will provide additional information regarding Foreign Retirement Account. New column has been included in all ITR forms where individuals are required to provide income earned on foreign retirement accounts, and any income which is required to be furnished under section of the Income Tax Act, 1961. Tax exemption has been claimed under 89A.

As per the earlier ITR forms, a non-resident was required to report foreign assets and liabilities only if he/she entered Schedule FA (Foreign Assets) of Income Tax Return (ITR), says Archit Gupta, CEO of Taxation Matters Company Clear Tax. ) kept by him outside India at any time during the relevant accounting period or the auditing period.

However, the accounting period is still not defined.



The calendar year of the accounting period also changed


The new ITR form has made a change in this.

Under this, the accounting period has been replaced with the calendar year ending on December 31, 2021.

For example, a tax payer is required to give details of all foreign assets held between April 1, 2021 and December 31, 2021, while filing ITR for AY 2022-23. Under Section 89A of the Income Tax Act, 1961 Details about whether the said Foreign Retirement Benefit Account was in the notified country or not is also to be provided.

A payer can also claim tax relief under section 89A on this particular income.

New changes from 1st April 2022

The Finance Act, 2021 has added a new section 89A to the Income Tax Act.

It came into force on April 1, 2022.

The idea behind introducing this was to correct the loopholes in the taxation of income of Indian residents earned from foreign retirement funds in a notified country.

Some countries withdraw tax from such funds on receipt/receipt basis, whereas in India tax on income has to be paid on an accrual basis.

No longer the problem of difference in taxation period


Due to difference in taxation period, NRI taxpayer faces difficulties in claiming credit of taxes paid in foreign jurisdiction.

Now, under section 89A, the individual is given the option to tax income from retirement benefit accounts maintained in other notified countries, in the year in which the foreign country would charge the individual's income to tax at the time of withdrawal or redemption. .



Option to avoid double taxation


Section 89A is applicable to Indian residents who earn income from a Foreign Retirement Benefit Account maintained in a notified country.

It is an option to avoid double taxation in situations where income from foreign retirement benefit account has to be paid tax in the notified country at the time of withdrawal or encashment as well as taxed on an accrual basis in India .



The CBDT had notified the new rules.


It needs to be noted that as per the Central Board of Direct Taxes (CBDT), the countries notified for Section 89A of the ITA include the US, UK, Canada and Northern Ireland.

CBDT has also notified Rule 21AAA and Form 10-EE for Non-Resident Indians (NRIs) to claim relief under section 89A relating to income from overseas retirement benefit accounts.