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Draft Common ITR Form By CBDT Will It Help In Simplifying The Return Filing Process?

Every year, millions of people around the world have to file their income tax returns. Putting together an income tax return requires a lot of information and calculations. In order to simplify the process, the CBDT has released a draft Common Income Tax Return Form. In this form, taxpayers fill out their income tax information with an easy-to-use template that simplifies the filing process.

Let’s see if a new form is required. Is there anything wrong with the current situation? Is there anything else I need to know about the form?

In the present system, taxpayers are required to file their Income Tax Returns in ITR-1 to ITR-7 based on their type and nature of income. A second problem with the current ITR is that taxpayers are mandated to go through all the schedules, regardless of whether that particular schedule is applicable. The result is that ITRs take longer to file.

The proposed draft ITR takes a relook at the return filing system in tandem with international best practices. The consolidated ITR will eliminate the need for taxpayers to file separate income returns, as well as alleviate the confusion taxpayers face due to the different forms. However, the current ITR-1 and ITR-4 will continue to be used. Consequently, these taxpayers will have the option of filing either their existing return (ITR-1 or ITR-4) or the proposed common ITR, as per their convenience.

It aims to simplify the process of filing returns and reduce the amount of time that individuals and non-business taxpayers spend filing their ITRs. It will not be necessary for the taxpayers to view schedules that do not pertain to them. With an improved arrangement, logical flow, and increased scope of pre-filling, it intends to provide users with smart schedules designed in a user-friendly manner. In addition, it will reduce the compliance burden on taxpayers by facilitating the reconciliation of third-party data with the data to be reported in the ITR.

The scheme of the proposed common ITR is as follows:

  • Basic information (comprising parts A to E),
  • Schedule for computation of total income (Schedule TI),
  • Schedule for computation of tax (schedule TTI),
  • Details of bank accounts, and
  • A schedule for the tax payments (schedule TXP) is applicable to all taxpayers.

Other information in relation to draft Common ITR Forms are as follows:

1. The ITR is customized for the taxpayers with applicable schedules based on certain questions answered by the taxpayers (wizard questions).

2. The questions have been designed in such a manner and order that if the answer to any question is ‘no’, the other questions linked to this question will not be shown to him.

3. Instructions have been added to assist in the filing of the return containing the directions regarding the applicable schedules.

4. The proposed ITR has been designed in such a manner that each row contains one distinct value only. This will simplify the return filing process.

5. The utility for the ITR will be rolled out in such a manner that only applicable fields of the schedule will be visible and wherever necessary, the set of fields will appear more than once. For example, in the case of more than one house property, the schedule HP will be repeated for each property. Similarly, where the taxpayer has capital gains from the sale of shares taxable under section 112A only, applicable fields of schedule CG, relating to 112A, shall be visible to him.

While combining all ITR forms, the government considered including additional questions for better data reconciliation and increased compliance.

A few of the significant fields which have been added to the proposed Common ITR Form are

1. The details of the lender of the housing loan and

2. Details requesting information for taxation of income from Virtual Digital Asset (VDA) and

3. Additional disclosures in respect of Exempted Income

4. Additional disclosures in respect of Maturity proceeds received from the Insurance Company under Section 10(10D)

5. Details related to Portfolio Management Services/Buyback of shares

Once the common ITR Form is notified, after taking into account the inputs received from stakeholders, the online utility will be released by the Income-tax Department. In such a utility, a customized ITR containing only the applicable questions and schedules will be available to the taxpayer.

Author – CA Mridul Gupta, MRIDUL GUPTA & CO, Chartered Accountants in Practice from Delhi and can be contacted at office@camridul.in).

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Experienced Chartered Accountant with a demonstrated history of working in the financial services industry, skilled in Statutory Audits, Income Tax, GST Compliances, Auditing, Financial Accounting and Financial Reporting. View Full Profile

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