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ITR filing: CBDT proposes to introduce one common ITR form for all taxpayers; know details

Nov 1, 2022

The Central Board of Direct Taxes (CBDT) has proposed to merge all the existing ITR forms except ITR 7. However, the current ITR 1 and ITR 4 will continue, it said.

In a bid to ease the process of filing an income tax return (ITR), the Central Board of Direct Taxes (CBDT) has issued a draft proposal to introduce a common ITR form for all taxpayers. The apex body has proposed to merge all the existing ITR forms except ITR 7. However, the current ITR 1 and ITR 4 will continue. The income taxpayers will get an option to choose which form they want while filing their tax returns — the proposed common ITR form or the existing form (ITR 1 or ITR 4).

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," CBDT mentioned.

"The proposed draft ITR takes a relook at the return filing system in tandem with international best practices," it further added.

Mentioning the advantage of a common ITR form, the apex decision-making body said, "The taxpayers will not be required to see the schedules that do not apply to them."

The scheme of the proposed common ITR is as follows:

(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.

So 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, said CBDT.

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, CBDT mentioned.

CBDT has asked the stakeholders to send inputs on the draft common ITR form electronically to the email address This email address is being protected from spambots. You need JavaScript enabled to view it. with a copy to This email address is being protected from spambots. You need JavaScript enabled to view it. by December 15, 2022.

[The Economic Times]

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