Inputs on draft common income tax return

Mr. Vipul Agarwal, IRS
Director (TPL-I)

Central Board of Direct Taxes

Department of Revenue,

Ministry of Finance

Government of India

New Delhi

Sir,

Re : Inputs on draft common income tax return

Ref : CBDT’s letter dated 1 November 2022 (F No. 370133/16/2022-TPL)

This has reference to your above referred letter seeking inputs from stakeholders and the general public on draft common income tax return form which is proposed to substitute ITR-1 to ITR-6 (although ITR-1 and ITR-4 will be retained as optional). We note that the object is to have a single and smart utility where the taxpayer is required to answer some questions which apply to him and based on the responses, only those schedules will be opened and required to be filled which are relevant to the taxpayer. It is intended that this will increase the ease of compliance since the utility will not open up multiple schedules which are not relevant to a particular taxpayer.

We appreciate the CBDT’s initiative to have public consultation on the new common return form and are happy to provide our inputs thereon.

Our broad suggestions are as follows :-

1. We support the initiative to make ITR filing a simpler and easier process through pre-filled returns and intuitive utility. However, the present utility and ITR do not permit filing of explanatory notes to furnish reasons and make disclosures in support of various claims made in the ITR. Para 6(v) of CBDT Circular No. 9/2006 dated 10 Oct 2006 clarifies that these can be furnished pursuant to the first notice issued u/s. 143(2). However, we believe that opportunity should be provided to furnish the notes along with return itself either in free text form or as pdf attachment. This is because very few returns are selected for scrutiny based on annual selection criteria announced by CBDT. The disclosure as part of return helps the taxpayer to defend itself in penalty proceedings u/s. 270A. It also helps the Tax Department to avoid selecting the case for scrutiny or reassessment if proper explanation is available as part of the return itself.

2. The online utility for common ITR to be released by the Income-tax Department should be made available well before the first due for filing ITRs for AY 2023-24 (i.e 31 July 2023).

3. The Income-tax Department should also make available a “sandbox” utility to enable the taxpayers to file dummy returns on test basis and such returns should be processed in the same manner as current process for intimation u/s. 143(1) with clear indication that it is strictly for trial and testing purposes. This will help both taxpayers and the Tax Department to familiarise themselves with the new utility and identify the bugs in the system.

Our inputs on the individual items in the common ITR are attached herewith.

We trust the above inputs will assist the Tax Department to improve the utility and facilitate smooth and seamless filing of the income tax returns. We shall be pleased to explain our inputs and suggestions in person or a virtual meeting.

Thanking you