The Central Board of Direct Taxes (CBDT) through its Notification No. 94/2023 dated 31/10/2023 has introduced changes to the ITR-7 form to accommodate the taxable income of individuals eligible to file the ITR-7 form under the tax rates applicable to AOP, which aligns with the slab rates applicable to individuals.
The CBDT has issued the Income-tax (Twenty-Seventh Amendment) Rules, 2023, to implement this modification.
Previously, taxable income was subject to a flat tax rate of 30% in accordance with section 115 BBI. The amendment will be effective from April 1, 2023, meaning any Income Tax return filed on or after this date will filed adhering to the new provisions.
According to the recent circular released by the CBDT, the updated ITR-7 utility was made available on November 17, 2023. Consequently, trusts with taxable income below or above Rs 2.50 lakh can now benefit from the individual slab rates and avail of tax exemption up to the basic exemption threshold.
If the income of an assessee eligible for ITR-7 exceeds 15% collection and no ITR Form 9A or Form 10 is filled for the excess income, it will no longer be subject to the flat tax rate of 30% under section 115 BBI.
The assessee is now entitled to avail the benefits of the basic exemption limit and the individual IT slab rates.
This amendment is effective from April 1, 2023, and applies to the assessment year 2023-24, which pertains to the previous year 2022-23. The notification stated that no individual will face any adverse consequences as a result of the retrospective application of these rules.