At present, taxpayers are required to furnish their income tax returns in form ITR 1 to ITR 7, depending upon the legal classification of the taxpayer and the nature of the income. “The current ITRs are in the form of designated forms wherein the taxpayer is mandatorily required to go through all the schedules, irrespective of the fact whether that particular schedule is applicable or not. This increases the time taken to file the ITRs and in turn, may create avoidable difficulties for taxpayers,” the CBDT mentioned in the draft.
Mentioning the advantage of a common ITR form, CBDT said, “The taxpayers will not be required to see the schedules that do not apply to them.” The proposed draft ITR takes a relook at the return filing system in tandem with international best practices.
Sujit Bangar, Ex-IRS officer and founder of Taxbuddy.com – an ITR filing website says, “The CBDT has sought to release the single ITR form for all taxpayers irrespective of the type of person or the sources of income. However, the ITR 7 (applicable to charitable trusts) shall stay. Also the ITR-1(Salaried individuals) and ITR – 4 (Presumptive tax regime) shall be optional with the new ITR form. This is a very significant step in promotion of voluntary compliance. This entails that filer just needs to fill only the relevant details asked through analysis of her own responses. Irrelvant information and schedules are neither to be seen nor to be shown. It will be a great help to taxpayers, if sparsely used schedules like transfer pricing, rarely claimed deductions and provisions like clubbing are kept separately and finished with a single question asked in the beginning.”
The scheme of the proposed common ITR is as follows:
As per the draft proposal issued by the CBDT, the proposed common ITR form will have:
(a) 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 for all the taxpayers.
(b) The ITR is customised for the taxpayers with applicable schedules based on certain questions answered by the taxpayers (wizard questions).
(c) 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.
(d) Instructions have been added to assist in the filing of the return containing the directions regarding the applicable schedules.
(e) 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.
(f) 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.
The taxpayers only need to answer questions that apply to them and fill the schedules linked to those questions where the answer has been given as ‘yes’. The new proposed form will save time and energy for the taxpayers.
Sharing the details of the proposed single common ITR form, Sandeep Jhunjhunwala, Partner, Nangia Andersen LLP said, “The new form is customised for taxpayers with applicable schedules based on wizard questions. Contemporary reporting requirements such as pass-through income or loss under various heads, income from virtual digital assets, declaration and details of Business Connection, Permanent Establishment and Significant Economic Presence in India for non-residents and details of foreign equity and debt interest held remain key highlights of the new common ITR form.”
“The proposed draft of the new ITR form is designed to facilitate suitable reconciliation of third-party data available with the Income-tax Department vis-à-vis data to be reported in ITR, to reduce the compliance burden on taxpayers,” he added.
“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 customised ITR containing only the applicable questions and schedules will be available to the taxpayer,” the CBDT mentioned.
The CBDT has asked the stakeholders to send inputs on the draft common ITR form electronically to the email address email@example.com with a copy to firstname.lastname@example.org by December 15, 2022.