The Hindu Business Line : Govt notifies new I-T returns form for assessment year 2006-07

Making it less taxing
Individuals/HUF having long-term capital gains from transactions in securities on which securities transaction tax (STT) has been paid could also use this form.
No annexures (including Form 16A) are required to be attached with this new return form.

New Delhi , June 2

Income-tax return filing just got easier for a salaried taxpayer, although such assessees would now have to go through a somewhat tedious procedure of preparing and submitting a cash-flow statement for the financial year for which income has to be reported.

The Finance Ministry has notified a new four-page return (Form-2F) for assessment year 2006-07 for resident individuals and Hindu undivided family (HUFs) who do not have profits and gains of business or profession or capital gains or agriculture income or more than one house property.

However, individuals/HUFs having long-term capital gains from transactions in securities on which securities transaction tax (STT) has been paid could also use this form.

To allow sufficient time to taxpayers to become familiar with the new return form, the Central Board of Direct Taxes (CBDT) has now said that the existing one-page Naya saral form 2E could also be used up to July 31, 2006. After July 31, the Naya saral Form 2E would be scrapped.

No annexures

The Revenue Secretary, Mr K.M. Chandrasekhar, said that the new form 2F would make return filing easier. He highlighted that one of the major advantages was that no annexures (including Form 16A) are required to be attached with this new return form.

On the schedule-5 of the new form (which specifies the cash flow statement), Mr Chandrasekhar said that for assessment year 2006-07 it is optional for the assessee to fill this schedule. The cash flow statement would, however, be mandatory from financial year 2006-07 (Assessment year 2007-08).

"The main reason why we are asking for such a cash flow statement is that the information collected from the third party sources through the Annual Information Return can be verified with the outgoings of the assessee during the year. This would substantially reduce the probability of scrutiny assessment or any other kind of intrusive investigation", Mr Chandrasekhar told reporters here.

To help honest taxpayer

Senior CBDT officials said the cash flow statement had been designed to help honest taxpayers. Apart from opening cash and bank balances at the beginning of the financial year, the cash flow statement requires an assessee to specify the amount of income received during the year and also the other receipts, if any, including exempt income, loans, gifts taken or received during the year by the assessee.

The outgoings that have to be specified in the cash flow statement are "expenses, investment, etc, on which deductions under Chapter VIA are claimed", outgoings by way of other investments such as gold and "other outgoings".

The assessee would also have to specify the closing cash/bank balance at the end of the financial year.

The Revenue Secretary, however, made it clear that the tax department was not looking for detailed household expenditure as part of the cash flow statement.