The Income Tax Department has proposed to introduce a common ITR form for all taxpayers by merging all existing forms of return of income except ITR-7 The move is aimed at easing the process of filing an income tax return by the Central Board of Direct Taxes (CBDT).
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), as per the draft proposal by CBDT on November 1, 2022.
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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,” the CBDT mentioned.
The CBDT, the apex decision-making body in matters of income and corporate tax, 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:
“The proposed draft ITR takes a relook at the return filing system in tandem with international best practices,” the CBDT further said.
(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.
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 the CBDT.
