Taxpayers are currently required to file income tax returns in ITR-1 through ITR-7, depending on the type of person and nature of income. The current ITRs are in the form of designated forms, which require the taxpayer to go through all of the schedules, regardless of whether that particular schedule is applicable or not, which increases the time required to file ITRs.
The proposed ITR draft reconsiders the return filing system in light of international best practices. It proposes to combine all existing income tax returns, except ITR-7, into a single ITR. The current ITR-1 and ITR-4, however, will remain in effect. Such that, taxpayers will be able to file their returns at their leisure in either the existing form (ITR-1 or ITR-4) or the proposed common ITR.
The proposed ‘Common ITR Scheme’ is intended to shorten the time it takes taxpayers to file their returns. The new scheme is designed in such a way that it can easily infiltrate tax payers’ ITR practises. The proposed common ITR scheme is as follows:
- All taxpayers must provide basic information (parts A through E), a schedule for computing total income (Schedule TI), a schedule for computing tax (Schedule TTI), bank account details, and a schedule for tax payments (Schedule TXP).
- Based on the answers to certain questions, the Combine ITR will be customized for taxpayers with applicable schedules (wizard questions).
- The questionnaire will be designed and ordered in such a way that if the taxpayer answers ‘no’ to any question, the other questions related to that question will not be shown to him or her. The tax payers automatically will be directed to the questions that will apply to their particular case by elimination of all the questions answered with ‘No’.
- As it will be a fairly new experience for taxpayers, Instructions regarding the applicable schedules will be added to help taxpayers with the filing of the return.
- The proposed ITR has been designed so that each row contains only one distinct value. This will make the process of filing returns easier. The IT utility will be rolled out in such a way that only relevant schedule fields are visible, and the set of fields will appear multiple times if necessary.
Some Pointers To Keep in Mind:
- As stated above, the taxpayer will be required to answer questions that apply to it and fill out the schedules associated with those questions where the answer is ‘yes.’
- A sample ITR demonstrating the step-by-step process for filing the ITR, as well as two customized sample ITs for firm and company, are also provided for illustration.
- Based on the above scheme, the draft of common ITR has been posted on http://www.incometaxindia.gov.in for feedback from stakeholders and the general public.
The Common ITR Scheme is an effort to curtail the efforts it requires for taxpayers to file their income tax returns. This will make compliance easier. The Income-tax Department will release the online utility once the common IT Form is notified, after taking into account the inputs received from stakeholders which are open for the public to send in up to 15th December 2022