The Central Board of Direct Taxes (CBDT) has published/ notified an exposure draft of the proposed Common Income Tax Return (ITR) Form, likely to be applicable from AY 2023-24, for comments from Professionals, Taxpayers, and Stakeholders by December 15, 2022.
The draft version of the Common Income Tax Return (ITR) Form provided by the CBDT or Ministry of Finance, Government of India, for review and feedback is an attempt to reconsider India’s return filing procedure in light of global best practises. Except for ITR-7, it is planned to consolidate all existing ITR forms into a common/single ITR form. However, the current versions of ITR-1 and ITR-4 will remain in effect, giving concerned taxpayers the choice or option of filing their returns using either the current form (ITR-1 or ITR-4) or the proposed common ITR.
Currently, depending on the type of person and the nature of the income, taxpayers must file their income tax returns using one of seven distinct forms, numbered ITR-1 through ITR-7. The current Income Tax Returns (ITRs) are prescribed forms, and regardless of whether a particular schedule relates to them or not, the taxpayer is expected to read through all of the schedules. Even if the schedule is not applicable, this is the case. This causes the time required to submit ITRs to increase, which may result in problems for taxpayers that may have been avoided.
The Common draft ITR form has been created with the intention of greatly simplifying the filing process for taxpayers and reducing the time required for non-business taxpayers. Because it is not necessary, the taxpayers will not be forced to view the schedules that do not apply to them. With an improved architecture, logical flow, and increased opportunity for pre-filling information, it aims to achieve the intelligent creation of schedules in a way that is user-friendly. In addition, it will be simpler for the Income Tax Department to correctly reconcile data from outside sources with the data that must be entered in the ITR, lowering the compliance load on taxpayers.
An overview of the common ITR that has been proposed for the Indian Taxpayers is provided below:
(a) All taxpayers must submit the following data: basic information (parts A to E), a schedule for the calculation of total income (TI), a schedule for the calculation of tax (TTI), information on bank accounts, and a schedule for the payment of taxes (TXP).
(a) The ITR is tailored to each taxpayer and includes the necessary schedules depending on their answers to a series of questions (wizard questions).
(c) If the respondent provides a negative response to any one of the questions, he will not be shown any of the other questions that are related to that issue.
(d) Instructions that explain how to complete the required schedules have been added in order to make submitting the return easier.
(e) The newly proposed ITR has been designed so that each row would never include more than one unique value. As a result, the process of filing tax returns will be much simplified.
(f) The utility for the ITR will be released in a way that only the relevant fields of the schedule are shown, and the set of fields will appear more than once when necessary. This will happen once the utility is implemented. In the event that there are numerous dwelling units, for instance, the HP schedule will be repeated for each unit. Similar to this, the pertinent fields of schedule CG that pertain to section 112A must be made available to the taxpayer if they have realised capital gains from the sale of shares that are only subject to taxation under that provision.
We can conclude on this latest news from CBDT by saying that proposed ITR form will save the taxpayer time and effort, as well as relieve him of the added burden of going through all of the sections, as is required under the current ITRs. As a result, obtaining compliance will be much easier. However, the taxpayer will be required to respond to certain questions that apply to him or her. Based on whether or not the taxpayer answers “yes” to such questions, the Common ITR Form will automatically select the appropriate sections and schedules.
In Annexure A, you’ll find the draft ITR, which has been created using the aforementioned strategy. Also included are two customised examples of ITRs for the Firms and Companies which can be found in Annexures C and D, as well as an example ITR that walks readers through the process of submitting the ITR step by step in Annexure B. For illustrational purposes, these instances have been provided. The questions, schedules, and instructions specific to those items are all compiled in the document known as Annexure A.
The Income Tax Department will provide the online tool after considering the feedback from various stakeholders and once the common ITR Form is officially released. A taxpayer who makes use of such utility will have access to a personalised ITR that only contains the questions and schedules that are pertinent to their case.
Any feedback or ideas regarding the draft Common ITR Form may be sent via email to dirtpl4@nic.in by December 15 of 2022, with a copy forwarded to dirtpl1@nic.in.
CBDT Communication dt. 01/11/2022: Proposed Common ITR Form (Exposure Draft)
While I could see the general instruction on newly proposed common income tax return form, but could not find the link to form for submission of comments. Kindly advise where can I see it?
It’s a truly welcome initiative of CBDT to introduce a new ITR form by merging all the existing forms of ITR except ITR-7. Also, allowing taxpayers who use Form ITR 1 or Form ITR 4 to choose whether to file their return using the current form or the proposed common ITR form is appreciated. Hopefully, this will help improve the giant tax filing mechanism being followed in India.
The Common ITR Form introduced by CBDT seems to be the introduction of a new way to file income tax returns in India. The form can be used by both individuals and businesses. The proposed ITR form is quite simpler and easier to use than the existing forms, and it is expected to help reduce the burden of tax compliance for both individuals and businesses. The new form will also help the government collect data more effectively and efficiently. I hope the proposal gets through for the benefit of all.