Common Income tax return (ITR) kind: Will CBDT proposal simplify taxpayers’ job?

Income tax return: In a bid to make taxpayers’ job simpler, the Central Board of Direct Taxes (DBDT) has proposed frequent revenue tax return (ITR) kind for all taxpayers. The CBDT has proposed to merge all ITR kinds besides Form-7. At current, taxpayers are required to furnish their revenue tax returns in ITR-1 to ITR-7 relying upon the kind of particular person and nature of revenue. The present ITRs are within the type of designated kinds whereby the taxpayer is mandatorily required to undergo all of the schedules, regardless of the actual fact whether or not that exact schedule is relevant or not, which will increase the time taken to file the ITRs.

On frequent ITR kind proposal, the CBDT mentioned, “The proposed draft ITR takes a relook at the return filing system in tandem with international best practices. It proposes to introduce a common ITR by merging all the existing returns of income except ITR-7. However, the current ITR-1 and ITR-4 will continue. This will give an option to such taxpayers to file the return either in the existing form (ITR-1 or ITR-4), or the proposed common ITR, at their convenience.”

The scheme of the proposed frequent ITR kind is as follows:

(a) Basic data (comprising elements A to E), Schedule for computation of complete revenue (Schedule TI), Schedule for computation of tax (schedule TTI), Details of financial institution accounts, and a schedule for the tax funds (schedule TXP) is relevant for all taxpayers.

(b) The ITR is personalized for taxpayers with relevant schedules based mostly on sure questions answered by the taxpayers (wizard questions).

(c) The questions have been designed in such a way and order that if the reply to any query is ‘no’, the opposite questions linked to this query is not going to be proven to the taxpayer.

(d) Instructions have been added to help the submitting of the return containing the instructions concerning the relevant schedules.

(e) The proposed ITR has been designed in such a way that every row comprises one distinct worth solely. This will simplify the return submitting course of.

(f) The utility for the ITR might be rolled out in such a way that solely relevant fields of the schedule might be seen and wherever needed, the set of fields will seem greater than as soon as.

See CBDT tweet under:

In a significant step in direction of ease of compliance, CBDT proposes to introduce a standard ITR by merging all present ITRs besides ITR-7. Draft frequent ITR Form is offered on https://t.co/fDrSV3LQ9P
Inputs could also be despatched by way of electronic mail at dirtpl4@nic.in & dirtpl1@nic.in, newest by 15.12.2022. pic.twitter.com/imKz61YXmH

— Income Tax India (@IncomeTaxIndia) November 1, 2022

Will it make taxpayers’ job simpler? Alok Agrawal, Partner at Deloitte India mentioned, “The Government has made it easy for taxpayers by getting some relevant details auto-populated into the ITR. Recent announcement on common ITR may further help taxpayers, but the extent to which this will simplify the tax filing process will be fully known once the utility is released by the Department. Another measure which may help taxpayers is by simplifying the text of disclosure requirements on the ITR forms, eg by using some examples which can be understood by laymen who don’t understand various Section number references.”

Vinit Khandare, CEO and Founder, MyFundBazaar mentioned, “Aiming to seamlessly reduce the time for filing returns by individuals and taxpayers, ITR intends smart design schedules in a user-friendly manner with the effective arrangement and a logical flow. With a relevant questionnaire, the information provided by the taxpayer would be more concise and accurate, allowing the taxpayer to analyse the details shared with the tax department’s records to ensure credibility. Ultimately, CBDT intends to ease filing, reducing unnecessary data with the proposed common ITR – envisioning an efficient automated tax-filing process.” Common ITR kind: Major options of CBDT proposal Highlighting the most important options of the frequent ITR kind, Archit Gupta, Founder & CEO at Clear listed out the next:

1] Disclosure of revenue in relation to Virtual Digital Asset as enterprise revenue and the tax on them;

2] Determination of tax residential standing in particulars;

3] Determination of tax audit applicability in particulars; and

4] Disclosure of pass-through revenue in particulars.

However, the taxpayer must be cautious whereas answering the query which is able to customise the ITR Utility as incorrect solutions can disable sure schedules which can be relevant for him.

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