Local Authority for AY 2023-2024

Returns and Forms Applicable for Local Authority for AY 2023-2024

Disclaimer: The content on this page is only to give an overview / general guidance and is not exhaustive. For complete details and guidelines, please refer Income Tax Act, Rules and Notifications.

As per Section 2(31) Person for the purpose of Income Tax Act includes inter alia a Local Authority.

For the purpose of section 10(20) which provides for exemption of income of Local Authority subject to certain conditions, the expression Local Authority means—
(i) Panchayat as referred to in clause (d) of Article 243 of the Constitution; or
(ii) Municipality as referred to in clause (e) of Article 243P of the Constitution; or
(iii) Municipal Committee and District Board, legally entitled to, or entrusted by the Government with, the control or management of a municipal or local fund; or (iv) Cantonment Board as defined in Section 3 of the Cantonments Act, 1924 (2 of 1924);

1. ITR-5

This form can be used by a person being a:

Firm
Limited Liability Partnership (LLP)
Association of Persons (AOP)
Body of Individuals (BOI)
Artificial Juridical Person (AJP) referred to in clause (vii) of Section 2(31)
Local Authority referred to in clause (vi) of Section 2(31)
Representative Assessee referred to in Section 160(1)(iii) or (iv)
Cooperative Society
Society registered under Societies Registration Act, 1860 or under any other law of any State,
Trust other than Trusts eligible to file Form ITR-7
Estate of Deceased Person
Estate of an Insolvent
Business Trust referred to in Section 139(4E)
Investment Fund referred to in Section 139(4F)

Note: However, a person who is required to file the Return of Income u/s 139(4A) or 139(4B) or 139(4D) shall not use this form.

2. ITR-7

Applicable for Persons including Companies who are required to furnish returns u/s 139 (4A) or Section 139 (4B) or Section 139 (4C) or Section 139 (4D)

139(4A) –
Income derived from Property held under Trust wholly / in part for charitable or religious purposes

139(4B) –
Chief Executive Officer of every Political Party

139(4C) –
Various entities like Research Association, News Agency, etc. mentioned in Section 10

139(4D) – University, College or other Institution referred in Section 35

Note: The category of persons whose income is unconditionally exempt under various clauses of Section 10, and who are not mandatorily required to furnish their return of income under the provisions of Section 139, may use this form for filing return (for instance - Local Authority)

Forms Applicable

1. Form 26AS - Annual Information Statement

Provided by

Details provided in the form

Income Tax Department (It is available on e-Filing Portal:

Tax Deducted / Collected at Source

Note: Information (Advance tax/SAT, Details of refund, SFT Transaction, TDS u/s 194 IA,194 IB,194M,TDS defaults) which were available in 26AS will now be available in AIS mentioned below.

2. AIS - Annual Information Statement

Provided by	Details provided in the form
Income Tax Department (It can be access in services menu after logging on to Income Tax e-Filing portal)	Tax Deducted / Collected at Source SFT Information Payment of taxes Demand / Refund Other information (Like; Pending/Completed proceedings, GST Information, Information received from foreign government etc)

Path to Access AIS: Go to e-filing portal > login > Services > AIS

3. Form 3CA-3CD

Submitted by:	Details provided in the form
Taxpayer who is required to get their accounts audited by an Accountant u/s 44AB. To be furnished one month before the due date for furnishing the return of income under sub-section (1) of section 139	Report of Audit of Accounts and Statement of Particulars required to be furnished u/s 44AB of the Income Tax Act, 1961

4. Form 3CB-3CD

Submitted by	Details provided in the form
Taxpayer who is required to get his accounts audited by an Accountant u/s 44AB. To be furnished one month before the due date for furnishing the return of income under sub-section (1) of section 139	Report of Audit of Accounts and Statement of Particulars required to be furnished u/s 44AB of the Income Tax Act, 1961

5. Form 16A – Certificate u/s 203 of the Income Tax Act, 1961 for TDS on Income other than Salary

Provided by	Details provided in the form
Deductor to Deductee	Form 16A is a Tax Deducted at Source (TDS) Certificate issued quarterly that captures the amount of TDS, Nature of Payments and the TDS payments deposited with the Income Tax Department.

Tax Slabs for Local Authority for AY 2023-24

For the AY 2023-24, a Local Authority is taxable at 30%.

Surcharge, Marginal Relief and Health and Education cess

What is Surcharge?

Surcharge is levied on the amount of income tax at following rates if total income exceeds specified limits:

12% if taxable income exceeds ₹ 1 crore

What is Marginal Relief?

Marginal relief is available from the surcharge in the following manner:

In case Net Income exceeds ₹ 1 crore – the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of ₹ 1 crore by more than the amount of income that exceeds ₹ 1 crore

What is Health and Education cess?

Health and Education cess – @ 4% shall also be paid on the amount of income tax plus surcharge (if any).

Exemption / Income not included in total income u/s 10(20):
The income of a Local Authority which is chargeable under the head Income from House Property, Capital Gains or Income from Other Sources or from a trade or business carried on by it which accrues or arises from the supply of a commodity or service (not being water or electricity) within its own jurisdictional area or from the supply of water or electricity within or outside its own jurisdictional area.

Investments / Payments / Incomes on which I can get Tax Benefit

Tax deductions specified under Chapter VI-A of the Income Tax Act

Section 80G

Deduction towards donations made to certain funds, charitable institutions, etc.

Donation are eligible for deduction under the below categories:

Subject to qualifying limit

100% of donation made

50% of donation made

Without any limit

100% of donation made

50% of donation made

Note: No deduction shall be allowed under this section in respect of donation made in cash exceeding ₹ 2000/-.

Section 8GGA

Deduction towards donations made for Scientific Research or Rural Development.

Donation are eligible for deduction under the below categories:

Research Association or University, College or other Institution for

Scientific Research
Social Science or Statistical Research

Association or Institution for

Rural Development
Conservation of Natural Resources or for afforestation

PSU or Local Authority or an association or institution approved by the National Committee for carrying out any eligible project

Funds notified by Central Government for:

Afforestation
Rural Development

National Urban Poverty Eradication Fund as setup and notified by Central Government

Note: No deduction shall be allowed under this section in respect of donation made in cash exceeding ₹ 2000/- or if gross total income includes income from Profit / Gains of Business / Profession.

Section 80JJA

Deduction in respect of Profits and Gains from Business of Collecting and Processing of Biodegradable Waste (subject to certain conditions)

100% of profits for 5 AYs where the Gross Total Income of an Assessee includes any Profits and Gains derived from the Business of Collecting and Processing or treating of Biodegradable Waste

Section 80JJAA

Deduction in respect of Employment of New Workers / Employees, applicable to Assessee to whom Section 44AB applies (subject to certain conditions)

30% of additional employee cost for 3 AYs, subject to certain conditions