Thursday, February 9, 2023

Taxing Times

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By Shivanand Pandit

Among seven Income Tax Returns pertaining to the present Assessment Year the Central Board of Direct Taxes has notified two forms namely, ITR-1Sahaj and ITR-4Sugam for the Assessment Year 2020-21. Fortunately this time the CBDT has been very prompt and quick in notifying the forms. Typically ITR forms are issued once the previous or financial year ends.

Indian residents whose total income does not exceed Rs 50 lakh have to file ITR-1 and  taxpayers earning income from business and profession taxable under presumptive taxation scheme and where the total turnover or gross receipts of business or profession does not exceed prescribed limits have to file ITR-4

As we all know it is normal in Uncle Sam’s country to disclose more information to tax authorities. However, now India is also getting used to the practice of revealing more information or data to the taxman. In the last few years, ITR forms have started requesting for more facts.

New ball game

Like every year, with an intention of effectual tax implementation and to curb revenue leakages, the CBDT has announced new disclosures and sought superfluous information from taxpayers in new income tax return forms. You may land in hot water if your spending patterns do not match with your tax declarations and depositions. Read on to get the clear picture of changes made.

The new ITR forms demand information on your foreign travel and payment of electricity bills. If you have expended more than Rs.200,000 on foreign travel or Rs.100,000 on electric bills in the current financial year (2019-2020) you will need to furnish these details. Disclosure of passport number is mandatory if you hold a valid Indian passport.

While revealing income from the salary you have to furnish details relating to Tax deduction and collection Account Number (TAN), name, address of the employer and exempt allowances as per the provisions of the Income Tax Act. While revealing ‘income from house property’ you have to furnish details of name, Aadhaar or Permanent Account Number (PAN) of the tenant and unrealized rent.

Taxpayers should provide particulars of cash and bank transactions relating to presumptive business in ITR-4. Details of partnership firm such as name, PAN and details of partners, if the assessee is a partner in a firm have to be revealed. You have to disclose additional wide-ranging details pertaining to deductions under Chapter VI-A of the Income Tax Act.

Is it a sensible move?

Now the prime question is whether seeking more information will bear fruit and improve the taxation segment. For instance, irrespective of the fact that whether you went abroad or not, you need to mention your Passport number, if you have a valid Indian passport. This will definitely augment the privacy and security concerns because our data protection law is not as robust as laws of developed countries like USA and the Personal Data Protection Bill is still under consideration.

Although the government is of the opinion that revealing additional facts result in improved scrutiny, largely the step will worsen the existing complicated state of tax filing and increase the burden on the taxpayers. The move will result in duplication because the tax department possesses most of the information collected through Annual Information Return. In addition, many people go from India to other nations for work and they are not able to respond to the notices sent by the tax department.

Nevertheless, giving out more information may make your life difficult and intricate, it is a hard reality you should adjust to the winds of change. Whether such information will be able to locate defaulters and induce them to file returns still remains to be witnessed.

— The writer is a financial and tax specialist, author, public speaker based in Margao, Goa

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