Government introduces simpler income tax return forms
New Delhi: The government on Sunday introduced simplified income tax return forms, abandoning a previous attempt to seek detailed disclosures of foreign trips and bank accounts from taxpayers, even as it retained clauses to check evasion.
While taxpayers will not have to disclose details of all foreign travel undertaken by them and the expenditure incurred, they will still need to submit their passport numbers in the revised tax return forms, a finance ministry statement said. Taxpayers will also have to disclose all their bank accounts, but will be spared from having to mention the balances in their accounts.
Facing criticism from taxpayers—both companies and individuals—finance minister Arun Jaitley promised a simpler income tax return form to replace a 14-page form notified in April that would have made filing tax returns a tedious process. The older tax return forms had sought extensive details about foreign trips, bank balances and capital gains accruing to a taxpayer as the government sought to pursue tax evaders.
“The government is looking to proactively address the concerns of tax payers,” said Amarpal Chadha, a tax partner at EY. “At the same time, it is also looking to get the information it requires from the taxpayers without causing too much trouble to them.”
The Narendra Modi government is trying to check domestic black money as well as unaccounted wealth stashed overseas. It has managed to push through the black money bill in both Houses of Parliament to check black money stashed abroad, which requires compulsory disclosure of foreign assets and income and subjects evaders to stiff penalties and jail terms.
While the new forms will make filing returns a less tedious job, the data in them will be enough to help tax authorities track foreign travel and financial transactions.
To check tax evasion, the government has also introduced legislation aimed at amending the Benami Transactions (Prohibition) Act. It will help check creation of black money in India especially in real estate transactions. In addition, with the tax department seeding permanent account number (PAN) with Aadhaar—a unique identity number that is already linked to many bank accounts—the government may be able to effectively bring tax evaders to book.
The government said it will introduce a new simplified income tax return form ITR 2A for individuals who have income from more than one house property—residential asset—but no capital gains accruing to them.
“As a measure of simplification, it has been endeavoured to ensure that in Form ITR 2 and the new Form ITR 2A, the main form will not contain more than three pages, and other information will be captured in the Schedules which will be required to be filled only if applicable,” the statement said.
ITR 2 was required to be filled by individuals and Hindu undivided families having income from more than one house property and capital gains.
The government extended the last date for filing of returns by a month to 31 August. It also partially relaxed the requirement of listing all bank accounts and their balances.
While taxpayers will need to give details about their bank accounts and the account number for all the current and savings accounts held by them at any time during the previous year, they will not need to give details about dormant bank accounts that have not been operational for the last three years.
In a respite for non-residents, the government also removed the clause for them to mandatorily report their foreign assets.
“An individual who is not an Indian citizen and is in India on a business, employment or student visa (expatriate), would not mandatorily be required to report the foreign assets acquired by him during the previous years in which he was non-resident if no income is derived from such assets during the relevant previous year,” the government said.
