House panel blasts finmin for making I-T returns tough

New Delhi, Nov 28 | Updated: Nov 29 2006, 05:30am hrs
The Parliamentary standing committee on finance has come out strongly in support of the countrys taxpayers by hitting out at the finance ministry for complicating income tax return forms.

In its report, the panel was especially critical of the new Form 2F introduced on June 1. The four-page long Form 2F will replace the earlier one-page Form 2E or Naya Saral for salaried individuals. The move to switch over to the four-page format had drawn flak from all quarters including chartered accountants.

The Parliamentary panel has, in fact, recommended that the ministry should try and reduce as well as reduce the number of forms to make filing of returns easier. The Form 2F is quite cumbersome and lengthy and is fit to be called kathin, instead of an improved version of the earlier Naya Saral Form, it said.

It has asked the ministry to revert to the earlier Form 2E, leaving adequate space for furnishing all details. The revenue department has cited lack of space in Form 2E as the main reason for introducing Form 2F.

The panel has also found that the Cash Flow Statement, a crucial part of all three I-T return forms introduced this year, as unjust to the salaried class, which pays its taxes honestly, but accounts for only 2% of the total returns filed.

The cash flow statement has created confusion as well as apprehension amongst taxpayers that they will have to keep on providing additional information to the tax authorities, the report says. It has recommended that the cash flow statement in Form Nos 2, 2F and 3 be done away with entirely. The division of taxpayers into six categories has also not found favour with the panel and it is of the opinion that all salaried assesses should be allowed to continue using Form 2D or 2E.

The ministry has also been criticised for making Online filing of returns mandatory, as all taxpayers in the country are not suitably equipped to file their returns online.