In line with the federal government’s course to simplify the tax submitting course of and improve the benefit of compliance, the earnings tax division has introduced in varied modifications within the course of by revamping the earnings tax portal, introducing the pre-filed ITR types, and so forth.
Going a step forward, the Central Board of Direct Taxes (CBDT), on 1 November 2022, launched the Proposed Draft Common Income Tax Return Form (Common ITR Form) and requested inputs from stakeholders and most people by 15 December 2022. The proposal has been made with the intent to make the return submitting course of user-friendly and align with worldwide greatest practices. Some of the important thing factors of the draft Common ITR Form, because it stands at the moment, are talked about beneath to grasp what this type is all about. However, based mostly on the stakeholders’/ public feedback, this will likely bear modifications.
Common ITR Form
CBDT has provide you with the proposal to merge all the prevailing ITR types aside from ITR 7 (relevant for belief, non-profit organizations, and so forth.). Also, the taxpayers can proceed submitting the tax return utilizing both the prevailing ITR 1 and ITR 4 types (as relevant) or the Common ITR Form, as per their comfort.
Common ITR Form is designed to customise the ITR kind to the taxpayer’s details, with the schedules relevant to the taxpayer, based mostly on sure questions (wizard questions) answered by the taxpayer. Further, the questions are framed in such a way that taxpayers are solely required to reply ‘yes/no’ and if the reply to any query is ‘no’, the linked follow-up questions won’t be exhibited to the taxpayer.
The Common ITR Form will proceed to ask for sure important particulars equivalent to primary info, schedule for computation of whole earnings (Schedule TI), schedule for computation of tax (Schedule TTI), particulars of financial institution accounts, and a schedule for the tax funds (Schedule TXP), that are relevant to all of the taxpayers. The different schedules can be seen and required to be crammed solely upon the wizard questions being answered ‘yes’ by the taxpayers.
While merging all of the ITR types, the federal government has additionally regarded into together with further questions for higher reconciliation of knowledge and elevated compliance. A number of of the fields which have been added within the proposed Common ITR Form are the main points of the lender of the housing mortgage and particulars requesting info for taxation of earnings from Virtual Digital Asset (VDA). Specific consideration has been given to VDA by inserting a brand new schedule whereby the taxpayers can be required to offer particulars of earnings from VDA, and value of acquisition incurred, if any.
Some advantages of the frequent ITR Form:
· As per the prevailing ITR types, taxpayers are required to pick out the right ITR kind relevant to them based mostly on the heads of earnings and earnings earned. To put this problem to relaxation and keep away from confusion among the many taxpayers, the Common ITR Form can be out there to all taxpayers (except for ITR 7) and thereby improve ease of compliance.
· Once the taxpayer solutions the wizard questions, the utility can be custom-made and solely the relevant schedules for questions answered as ‘yes’ can be seen. For instance, if the taxpayer has solely long-term capital positive factors (LTCG) from the sale of fairness shares, then relevant fields of schedule CG referring to solely LTCG shall be seen to him. This brings ease to the method of submitting returns.
· Instructions have been added containing the instructions concerning the relevant schedules to help within the submitting of ITR.
· It additionally facilitates elevated scope of pre-filling by the reconciliation of third-party information out there with the tax division vis-à-vis the information to be reported within the ITR, to make sure that all of the sources of earnings have been reported by the taxpayer and thereby decreasing the compliance burden on the taxpayers.
As it is a draft Common ITR Form proposed by CBDT, there could also be sure modifications/modifications when the ultimate kind is launched for tax submitting, upon receipt of inputs from stakeholders and the general public.
Amarpal S. Chadha is tax accomplice, EY India. Shanmuga Prasad, director, EY India, contributed to this text.
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