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New ITR Forms - Old Wine in Old Bottles!

Published on Thu, Jun 25,2015 | 18:43, Updated at Thu, Jun 25 at 18:43Source : CNBC-TV18 

On 15th April, 2015, the CBDT issued a Notification No. 41/2015/ F.No.142/1/2015-TPL for amending Rule 12 of the Income-tax Rules, 1962 vide Income-tax (Seventh Amendment) Rules, 2015. Through this notification, new ITR forms were notified. The new forms raised a lot of dust and storm in India. The forms were perceived to be invasive of the privacy of tax payers and it was felt by most people that the CBDT had gone overboard in asking for information relating to bank accounts, foreign trips, passport etc. This caused tremendous embarrassment to the Modi government and in particular to the Finance Minister Mr Arun Jaitley. After a lot of public debate, finally, the Finance Minister prevailed upon the CBDT to hold back the newly notified forms. The due date for filing of returns was extended to 31st August. This was done on 31st May. It was announced that the new and simplified forms and the utility for e-filing would be made available in the 3rd week of June.

On 22nd June, the CBDT has issued another Notification No. 49/2015/ F.No.142/1/2015-TPL once again for amending Rule 12. This time, the Income-tax (8th Amendment) Rules, 2015 have been notified. Through this notification, the CBDT has notified new tax return forms – SAHAJ (ITR-1), ITR-2, ITR-2A and SUGAM (ITR-4S).

Thus, more than 2 months after the earlier new forms were notified, the CBDT has now notified revised new forms. Unfortunately, for reasons best known to the CBDT and the Finance Ministry, the ITR forms applicable to companies, partnership firms, businessmen and professionals as also to Trusts have not yet been notified. The year (for which the returns are now to be filed) ended on 31st March. It has been the constant complaint of several tax officers that the time given to tax payers to file the returns is very long and that allowing them so much time after the end of the year provides the unscrupulous tax payers with a window to manipulate the accounts and thereby distort the true income and tax liability. That being the case, one fails to understand why the CBDT, year after year, fails to notify the return forms well in time. And in particular, this time, considering the loud hue and cry and the criticism that the government received, one was hoping that all the return forms would have been notified together. Unfortunately, the authorities have other plans.

Coming back to the four forms that have been notified, its old wine in old bottles. Just a few new bubbles have been added and the label on the bottle has been redesigned. First of all, the ITR-1, ITR-2 and ITR-4S are virtually the same. Form ITR-2A is a new form. But, in essence, it is similar to Form 2 but much shorter. The tax department’s spokespersons seem to keep on harping on one particular matter – the form has been shortened and schedules have been included. This makes no sense. Whether it is the form or the schedules, ultimately, the tax payer will have to fill everything. How does the bifurcation make life simpler for tax payers? And how does it have any impact on the overall length?

Further, the eligibility criteria for selecting which form to fill are also complicated. The following tables will tell you why…


Further, even as late as 3rd week of June, we have yet to get in our hands the ITR forms that companies, partnership firms, businessmen/professionals will have to file. What is the CBDT doing? Why does it take them so long to come out with the forms? And why do they need to change the form every year? It is interesting to note that the new forms that have been notified bear clearly the heading that says that these forms are only for A.Y. 2015-16. In the past, I don’t remember seeing ITR forms with the year pre-printed in them. The forms were generic and remained same for years together. We could use the blank forms for several years. Gone are those days.

Then, there is the issue of the amendments to the forms. The much talked about details of foreign visits are no longer required to be given in the ITR forms. Only the passport number has to be provided in case of individuals. And that too, “where available”. Similarly, a new field has been added in the forms for giving the Aadhaar Card number. For this, first we have to answer the question – “Do you have Aadhaar Number?” If the answer is in affirmative, then the number has to be provided. It is not clear as to why this number is being asked for. It is also not clear as to what would be the consequences if a tax payer who has got the Aadhaar Card or a Passport but does not provide the number in the ITR Form. If this happens, would such a tax payer be liable to prosecution under section 277 of the Income-tax Act, 1961 and, if convicted, be punishable with rigorous imprisonment and fine? After all, in the Verification section, the tax payer is certifying that “the information given in the return and schedules thereto is correct and complete”.

A lot of dust was also kicked up in April when the new forms were notified and it came to light that the details of bank balances in all the accounts held by the tax payer were to be given in the forms. Now, in the new forms, the balances are not to be given. Only the Account Number, IFS Code, Name of the Bank and type of account (Savings or Current) are to be mentioned. This information is not to be provided in respect of “dormant accounts”. For this purpose, the instructions say that “dormant” means an account which is not operational for more than 3 years. It is not clear as to which 3 years are to be taken into consideration. I would presume it is 3 financial years including the F.Y. 2014-15.

All in all, in my opinion the Finance Minister had an opportunity to make a point. If press reports are to be believed, he had telephoned the CBDT chairperson while in the US and told her to hold onto the new forms notified in April. It was at his behest that the complicated and cumbersome forms were not rolled out. The Modi government claims to be and is perceived to be business friendly. That being the case, the FM had a golden opportunity to really simplify the forms. It is in this context that I feel that he has lost an opportunity. The fact that the newly notified forms are not really new and the fact that all the forms are not yet notified show that nothing much appears to have changed in the corridors of the Finance Ministry. The bureaucrats have once again proved a point.

P.S.: ITR – 1 is called “SAHAJ” and ITR – 4S is called “SUGAM”. Sahaj means “Innate” or “Simple” and “Sugam means “Easily traversable” or “Easily accessible” or “Easy”. If one looks at these two forms and ignores the few issues mentioned above, then, from a certain angle, the forms do appear “simple”. I am only wondering if a layman would agree with that statement. I am, for tax purposes, not a layman.


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