The Hindu Business Line : New Forms of rigmarole

Through Notification dated May 14, 2007, Rule 12 of the Income-Tax Rules, 1962, has been substituted by a new Rule 12 with consequential substitution of I-T Return Forms 1, 2, 2D, 2F, 3, 3A and 3B by new Forms numbered ITR-l to ITR-8, which are to apply for the assessment year (AY) 2007-08 only. Thus, the saving grace is that new cumbersome return forms are only for one year and are expected to change on the basis of feedback received after their use.

ITR-V is to be used where the data of the return of IT/FBT in forms ITR-l to ITR-6 and ITR-8 are transmitted electronically without digital signature. A separate acknowledgement has been prescribed for e-returns and non-e-returns. The returns are to be filed without any annexure.

Critique of the new forms

There was no need to use `Indian' before `Income Tax Returns', when this word is not used before the `Income Tax Act'/'Income Tax Rules'.

Very little time was given to send views/comments on the new forms. Hence, the exercise does not consider taxpayers' views.

The number of returns is large. ITR-I & ITR-2 could have been combined. Similarly, there was no need to have a separate return form (ITR-3) for partners in firms.

Most taxpayers in lower and middle income groups are likely to get confused from the mass of columns in the return forms.

Tax Returns Preparers (TRPs) may not be of much help in filling such return forms. Further, why TRPs should sign such returns has not been clarified. Tax Practitioners and CAs, who assist in filling the returns, do not sign these. Also, what would be the responsibility of the TRPs if returns are found to have incomplete or wrong information.

The space provided for giving information is too small for many situations. This implies that in many cases the taxpayers have to fill the returns of their own as per the columns prescribed.

In ITR-2, in Part-B, in column 2, it has been said that if there is loss from property, it should be mentioned as `nil'. Why?

ITR-6 relating to companies is not to be used by companies claiming exemption under Section 11 of the Act. What about Section 25 companies?

Which form is to be used by religious and charitable institutions?

The instructions for filling the forms are too exhaustive for the average taxpayers, whose number is substantial.

Much labour and time has been devoted to designing the new forms. But in doing so, the practical aspects and the composition of taxpayers' population has been lost sight of. Such detailed forms could be a strong disincentive for a large number of taxpayers to file returns. These would make compliance of the income-tax law complicated and cumbersome, when there is need for simplification. Hence, it is necessary to find a way out to make the filing of I-T returns simple. Perhaps, a policy followed in the case of shares giving the holders a choice to have them in demat or paper form can be followed for some time in the case of I-T returns also.

(The author is a former Chairman of CBDT.)

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