IT Dept Plans One Common Income Tax Return Form For All Taxpayers; Digital Assets Will Be Included?

The income tax department has come up with a user-friendly route to file income tax returns. The finance ministry has proposed to release a common ITR form for all taxpayers.

The Central Board of Direct Taxes has seeked comments from all stakeholders for the said proposal of new ITR filing format before December 15.

Under this new format, the taxpayers will have to individually list and disclose income from virtual digital assets under a separate section.

Here’s everything you need to know about the proposed new common ITR filing procedure.

Who Can File ITRs Through the New Format?

The new format of filing ITRs through a common ITR form can be opted by all taxpayers except trusts and non-profit organisations.

There are currently seven different types of ITR forms that are filed by taxpayers from different categories.

Here are the kinds of 7 ITR forms:

• ITR Form 1 (Sahaj): It is for people with income of no more than Rs lakh, receiving their income from either salary and/or one house property/other sources like interest and others.
• ITR Form 2: This is filed by the ones whose income comes from residential properties.
• ITR Form 3 is for the ones having income from profits gained in their businesses or professions.
• ITR 4 (Sugam) is for individuals, Hindu Undivided Families and companies having a total income of up to Rs 50 lakh.
• Similarly, ITR 5,6 and 7 are for LLPs, business companies and trusts, respectively.

The common ITR form will merge all of these ITR forms except the form ITR-7.

Benefits of the Common ITR Form

It will ease the process of filing income tax returns and reduce the time for individuals’ filing and non-business-type taxpayers considerably, CBDT mentioned.

“It will also facilitate the proper reconciliation of third-party data available with the Income-tax Department vis a vis the data to be reported in the ITR to reduce the compliance burden on the taxpayers,” the tax body added.

It will also have a user-friendly way of smart design of schedules with improved arrangement, logical flow, and increased scope of pre-filling, stated PTI.