Currently, taxpayers are required to file income tax returns in ITR-1 to ITR-7 depending on the type of person and nature of income. The existing ITRs are in the form of designated forms where the taxpayer is compulsorily required to go through all the lists, irrespective of the fact whether that particular list is applicable or not, which increases the time required to file the ITR.
The proposed draft ITR reviews the return filing system in tandem with international best practices. It proposes to introduce a common ITR by merging all existing income returns except ITR-7. However, the current ITR-1 and ITR-4 will continue. This will enable such taxpayers to file returns either in the existing form (ITR-1 or ITR-4) or in the proposed joint ITR, as required. The scheme of the proposed common ITR is as follows:
Basic Information (containing parts A to E), Schedule for Calculation of Total Income (Schedule TI), Schedule for Calculation of Tax (Schedule TTI), Details of Bank Accounts and Schedule of Tax Payments (Schedule TXP) apply to all taxpayers. The ITR is customized for taxpayers with relevant plans based on certain questions answered by the taxpayer (guide questions).
The questions have been designed in such a way and in order that if the answer to any question is “no”, the other questions associated with that question will not appear to the taxpayer. Instructions have been added to facilitate the filing of returns containing instructions regarding the relevant schedules. The proposed ITR has been designed so that each line contains only one distinct value. This will simplify the process of submitting a return.
The ITR tool will be run in such a way that only the relevant schedule fields are visible and wherever necessary, a set of fields will appear more than once. As is clear from the above, the taxpayer will have to answer the questions that concern him and fill in the lists related to those questions to which the answer was given “yes”. This will increase the ease of compliance. Once the common ITR form is notified, after taking into account the inputs received from the stakeholders, the online tool will be released by the Income Tax Department.
The draft Common ITR, based on the above scheme, has been uploaded on www.incometaxindia.gov.in for inputs from stakeholders and general public https://incometaxindia.gov.in/news/common-itr.pdf. A sample ITR illustrating the step-by-step approach to filing an ITR and two customized sample ITRs for a firm and a company have also been provided for illustration. Inputs to the draft ITR form may be sent electronically to the email address dirtpl4[at]nic[dot]in with a copy to dirtpl1[at]nic[dot]in no later than 15 December 2022.
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