Finance Ministry Proposes A Significant Change in The Taxing System
The Finance Ministry has proposed a uniform income tax return (ITR) form for all taxpayers, which would represent a significant change in the taxing system. There are currently seven different ITR form types that are submitted by various taxpayer categories. All taxpayers will be able to file returns using the draft common ITR form, with the exception of trusts and non-profit organisations. The users will also be able to list their earnings from digital assets that are only virtual under a different heading. The Central Board of Direct Taxes (CBDT) has requested stakeholder feedback on the proposed new common ITR form by December 15 and is making it available to all taxpayers, with the exception of trusts and non-profit organisations. Depending on the type of person and nature of income, taxpayers are currently obliged to provide their income-tax returns in ITR-1 to ITR-7. The ITR-7 is applicable to investment funds, commercial trusts, charitable organisations, etc.
There are currently 7 different types of income tax return (ITR) forms that can be filed by various taxpayer groups. Many small- and medium-sized taxpayers frequently employ the streamlined ITR Forms 1 (Sahaj) and 4 (Sugam). People who are working, own a home, or have other sources of income and have an annual income of up to Rs 50 lakh are eligible to submit a Sahaj.Hindu Undivided Families (HUFs), companies, and individuals having a combined income from their enterprises and professions of up to Rs 50 lakh are eligible to submit an ITR-4. Individuals who receive income from residential real estate must file an ITR-2, those who receive income from a business or profession must file an ITR-3, businesses and LLPs must file an ITR-5, and trusts must file an ITR-6. According to the CBDT, under the finance ministry, ITR-1 and ITR-4 would still be offered, but taxpayers would still have the option of filing their income tax returns using the standard ITR form.
The new ITR form aims to make it easier for individuals and other non-business types of taxpayers to file returns and significantly cut down on the time required to do so. The taxpayers will not be given access to any schedules that don't concern them. It aims to create schedules that are intelligently designed, user-friendly, and have a better layout, logical flow, and wider variety of pre-filling. In order to lessen the compliance burden on taxpayers, it will also make it easier to properly reconcile third-party data that is available to the Income-Tax department with data that must be reported in the ITR. Taxpayers with appropriate schedules would receive their own unique ITR form that was based on their answers to a series of questions. The Income Tax administration would launch the online utility after notifying stakeholders of the unified ITR form and taking into account their opinion. A customised ITR with only the pertinent questions and schedules will be made available to the taxpayer in such a service.
The proposed draft of the new ITR form is designed to enable sufficient reconciliation of third-party data accessible with the Income-Tax department and data to be reported in ITR, thereby reducing the compliance load on taxpayers. The new common ITR form keeps highlighting crucial reporting requirements that are in effect right now, 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 specifics of foreign equity and debt interest.
Write a public review