By Chetan Chandak
The tax authorities in the country are on a mission to widen the tax base of the country. Though advance tracking mechanisms have been put in place to lash out at tax evasion, a helping hand too has been offered to encourage first-time taxpayers with a promise of “no scrutiny” for first-time tax payers.
To ensure tax compliance, forms have been notified well in advance on March 31, 2017, offering a full four month window for individuals to plan and file tax returns by the deadline of July 31, 2017, where income from financial year 2016-17 would be accounted for.
Those having taxable non-business income up to Rs 5 lakh – which the income tax-department estimates at 2 crore tax payers – and deterring returns due to complicated forms have been offered a simple one-page form to file IT returns.
Thus, the number of ITR Forms to select from are only 7 versus 9 last year as old ITR-2, ITR-2A and ITR-3 have been replaced with ITR-2. The old ITR-4 is renumbered as ITR-3.
Those having an income up to Rs 50 lakh from salary, one house property and bank deposits can use ITR 1, while those individuals and HUFs having income from selling real estate, stocks, mutual fund units, gold etc or EPF/PPF withdrawals would have to use ITR 2 (non-business income).
The tax computation and tax deduction portions have been reduced in the new forms. Hence, one needs to carefully find the tax deduction sections as only Section 80C, 80D, 80G & 80TTA have been specified and the rest need to be mentioned in the “others” box.
Quoting of Aadhaar or the Enrolment ID of Aadhaar application form has been made mandatory for filing tax return from 1st July, 2017. Those who have data mismatch of Aadhaar versus the Permanent Account Number would have to correct the same.
Mandatory disclosures introduced last year, namely foreign trips and dormant bank accounts, have been removed. However, a new entrant is the column for cash deposits exceeding Rs 2 lakh between November 9 and December 30, 2016.
A separate section 10 (38) has been inserted to mention exempt Long-term Capital Gains Tax. Similarly, section 10 (34) needs to be used for exempt dividend disclosure from Indian companies. A special section 19 C has been introduced in Part B to mention the PAN of the buyer of the immovable property exceeding Rs 50 lakh.
The asset and liability schedule has been expanded for ITR 2 and 4 to include details of financial assets and address of immovable property.
Starting this assessment year, the wait would be shortened for those who are awaiting redressal in scrutiny assessment cases. This is because, in order to address the grievance of delay in issuance of refund in genuine cases which are routinely selected for scrutiny assessment, as per the Union Budget 2017-18 changes, it is specified that provisions of section 143(1D) shall cease to apply in respect of returns furnished for assessment year 2017-18 and onwards.
However, to avoid impact on recovery of revenue in doubtful cases, a new section 241A has been introduced for the returns furnished for assessment year commencing on or after 1st April, 2017, wherein the Assessing Officer can withhold the refund due under section 143(1) upto the date on which the assessment is made.
(The Author is Head of Tax Research, H&R Block India)