The Central Board of Direct Taxes (CBDT) has issued a draft proposal to introduce a common income tax returns (ITR) form for all taxpayers with an aim to simplify the current process of filing ITR.
Through an official notification on Tuesday, CBDT also suggested merging of all the existing ITR forms except ITR 7, though ITR 1 and ITR 4 will continue to remain in use.
As per the proposal of CBDT, taxpayers will have choice to choose the form for filing returns. They could either choose from the proposed common ITR form or the existing ITR 1 or ITR 4 forms.
Here's what CBDT says on Common ITR form for Taxpayers
Presently, taxpayers are required to furnish their Income-tax returns in ITR-1 to ITR-7 depending upon the type of person and nature of income.
So, 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.
However, the proposed draft ITR takes a relook at the return filing system in tandem with international best practices. It proposes to introduce a common ITR by merging all the existing returns of income except ITR-7. However, the current ITR-1 and ITR-4 will continue.
Advantages of Common ITR form as per CBDT
This will give an option to such taxpayers to file the return either in the existing form (ITR-1 or ITR-4) or the proposed common ITR, at their convenience.
The draft ITR aims to bring ease of filing returns and reduce the time for filing the ITR by individuals and non-business-type taxpayers considerably.
The taxpayers will not be required to see the schedules that do not apply to them. It intends the smart design of
schedules in a user-friendly manner with a better arrangement, logical flow, and increased scope of pre-filling.
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.