treeviewThe first challenge a taxpayer encounters when submitting an Income Tax Return (ITR) is determining which ITR Form to use. A salaried taxpayer, for example, is intended to file ITR-1, however having more than one residential property, having any capital gain, and a variety of other factors preclude such an assessee from filing ITR-1.
With the Income Tax Department moving towards automation for ITR filing with each passing year, instead of making taxpayers study the conditions that qualify or disqualify a taxpayer from selecting an ITR Form from ITR-1 to ITR-6, the Department has now proposed a common ITR form, a draught of which has been released for consultation purposes.
With the Income Tax Department moving towards automation for ITR filing with each passing year, instead of making taxpayers study the conditions that qualify or disqualify a taxpayer from selecting an ITR Form from ITR-1 to ITR-6, the Department has now proposed a common ITR form, a draught of which has been released for consultation purposes.
Taxpayers who are eligible to file ITR-1 (Sahaj) and ITR-4 (Sugam) will be able to choose any of the two ITR Forms directly or utilize the single ITR Form.
However, when adopted, taxpayers who are entitled to submit ITR-2 (ITR for capital gains) and ITR-3 (ITR for Business Returns) would have no choice but to utilize the standard ITR.
The introduction of the pre-fill option for taxpayers was made possible by the launch of the new Income Tax Portal in 2021. With the introduction of the Annual Information Statement (AIS), taxpayers and the Department now have access to precise information on each taxpayer’s income and financial behavior.
However, any change in the filing procedure confuses the taxpayers.
“Frequent modifications in the filing system make filing onerous for taxpayers, who must relearn the e-filing process.” “It also implies that the flow introduced by the department last year will have to undergo additional adjustment,” said Archit Gupta, Founder & CEO, of Clear, adding, “Right now, there are too many options that a taxpayer needs to make: ‘Should I utilize the old tax regime or the new tax regime?’ ‘Should I continue with ITR-1 / ITR-4 or utilize common ITR?'”
“Because they are most comfortable with the prior administration, taxpayers should maintain the status quo of past decisions,” Gupta added.
Because the taxpayers’ replies will be used to determine the relevant ITR Form and the application of the Tax Regime, they should be extra cautious while completing their income tax returns.
“We believe taxpayers will now need to be more cautious when answering yes/no questions and thoroughly understand the repercussions,” Gupta added.
“We also feel that additional streamlining of questions would assist taxpayers in effectively self-filing,” he added.
“Cleartax had launched auto ITR form selection 10 years ago,” Gupta said of Cleartax’s contribution. Our consumers already view just the schedules that are relevant to their income. Certain schedules are auto-populated, therefore taxpayers should not be concerned while filing on Cleartax.”
“We’ll do our best to educate taxpayers about the new approach,” he continued.