CA Rajeev Khandelwal
New Delhi
Mobile : 98998-41100
DESIGNER INCOME TAX RETURN FORMS
There is good news for the taxpayers who were getting restless for
the new income tax forms. The Income tax department has once again
come out with brand new forms for filing IT returns. I would like to
take the liberty to call these forms `Designer Forms' as these have
been designed by none other than IIM Ahmedabad. These days we very
often read that the demand for CAs is going up and they are a very
busy lot. Probably, for this reason this onerous task was assigned
to their less burdened (?) brethren in IIM Ahmedabad. A more
stronger reason seems to be to make use of their marketing skills,
which definitely is not the domain of chartered accountants.
Finally, the IT department has realized that like a normal business
concern, even it has to market its products. Therefore, an effort
has been made to make the forms more attractive for people to come
forward and file their returns. It would not be a bad idea to
involve leading designers like Rohit Bal, Ritu Beri etc. who can
come out with eye catching and latest forms.The department feels
that the use of Tax Return Preparers (TRPs) would lead to better
TRP ratings. Read on to assess the chances of success (or failure)
of these initiatives.
Assessment Year specific forms
Last year when income tax return forms were revised, ordinary
mortals like me felt that the major changes had taken place and next
year a few minor changes might be made here and there. How wrong
hundreds of professionals and taxpayers like me were. But it is only
we who are to be blamed. The forms clearly mentioned that they were
for A.Y. 2006-07 only. To clear any doubts, the press release of
28th April, 07 opens with the classic words `The Forms for Return of
Income are assessment year specific'. The new forms are applicable
for A.Y. 2007-08 only. When one does not know about the next moment,
is it not foolish to assume that INCOME TAX RETURN FORMS ARE
FOREVER (Sounds like a James Bond Movie).
Imported Forms
The new forms don the title "INDIAN INCOME TAX RETURN'. I wondered
if the return I was filing till now was of some other country like
the USA, UK or Australia. Or was there any doubt that our income tax
return forms might be used by nationals of other countries by
mistake. How costly, such mistake could be for them. Then I
thought, why always critisize some one's efforts. Lets' look at the
brighter side. Immediately, my heart was filled with patriotic
fervour and I felt vande matram (of A R Rehman) being played in the
background. But suddenly, my sixth sense provoked me to probe the
issue further. I searched for the income tax return form for
taxpayers in the USA. The form which I got was Form 1040 for
individual taxpayers and its heading read "U.S. (Individual) INCOME
TAX RETURN" and my patriotism vanished in thin air and I had all the
sympathy in the world for our beloved Bhappi da . The year 2006 is
also prominently displayed on the US form which explains why the
forms have to be assessment year specific. In our culture, children
are known by their parent's name and therefore father's name was
asked for in case of individuals. Following the US tradition, the
same is conspicuous by its absence in the new forms. It is very
likely that in future we might move to the US concept of the
calendar year being the assessment year.
Bhala Uska Form Mere Form se Saral Kaise ?(How his form is simpler
than mine?)
The new forms are conceptually new and a one- to -one comparison
with old forms is not possible. To quote the FM `To be charitable,
it was euphemism to call the earlier form Saral'. Accordingly, the
earlier forms like 2D which were introduced during the NDA regime
and even the recent 2F have been given a quiet burial. The FM was
concerned that the assessees had to attach a lot of schedules and
other documents to the IT return. To make the forms really Saral,
all that information has been included in the forms only and so the
forms are annexureless. The removal of the controversial Cash Flow
Statement is being widely publicized as a carrot to the assessees.
But the people at large are unaware of the stick in the form of
furnishing of much more detailed information. To give a few
examples :
· Balance sheet and Profit and Loss account are now much more
detailed.
· Information regarding investment in public issue of shares
of Rs. 1 lac or more, property of Rs. 30 lacs or more, payment of
credit card bills of Rs. 2 lacs or more in a year and other items
to be furnished in Annual Information Return (AIR) have to be
additionally furnished by assessees in their returns also.
· In case of donations, the name, address of donee and amount
of donation has to be mentioned in a separate schedule irrespective
of the amount of donation. Even a donation of Rs. 11/- or 101/- has
to be mentioned in it.
· The `Other Information' last year was more or less as per
Form 3CD. Changes have been made in it also. One wonders if we shall
have a new Form 3CD once again.
These few observations in the new form makes me think whether it is
a bigger euphemism to call the new forms `Saral'. Probably, this
has been envisaged and the word `Saral' has not been actually used
in any form as it would be like adding kerosene to fire.
Change in Numbering of Forms
For years, we have been following the same form numbers to refer to
particular IT return forms. To an enquiry for the type of form to
use, even if one were in deep sleep, one would answer Form 1 for
companies, 2 for business assessees etc. If a new form was born,
a `C' `D' etc. was perfuntorily added to its earlier siblings. Form
2C, 2D, 2E, 2F are notable examples. But this was obviously not
liked by the new consultants. They were appalled to find that Form 1
is for companies as this does not follow the natural numbering
system. Who knows, even the red brigade might raise flag against
it. Logically, simple returns should come first. Accordingly, the
numbering system of return forms has been completely revamped. The
new forms are as under :
Sl. No. Form No. Type of Return
1. 1 Return of Income for Individuals having income
from Salary & Interest only.
2 2 Return of Income for Individuals and HUFs not having
Income from Business or Profession
3 3 Return of Income for Individuals/HUFs being partners
in firms and not having proprietory business or profession.
4 4 Return of Income for individuals & HUFs having
income from a proprietory business or profession.
5 5 Return of Income and Fringe Benefits for firms, AOPs
and BOIs (Including Fringe Benefit Tax Return)
6 6 Return of Income and Fringe Benefits for Companies
(other than those claiming exemption under section 11
7 7 Return of Income and Fringe Benefits for Charitable/
Religious Trusts, Political Parties and other non-profit
organizations.
8 8 Return for Fringe Benefits.
9 V One page paper Verification Form where Return is
furnished electronically without digital signature.
The above numbering system might result in confusion and chaos in
some cases. It would no longer be sufficient to ask the assessee to
send across the signed Form 1. You have to specifically ask him to
send Form 1 for A.Y. 2007-08.
Change in Numbering of Schedules
Not only the form numbers, even the schedule numbering system has
undergone a change. Now schedules are not referred to as Schedule 1,
2, 3 etc. Instead abbreviations are now used. e.g. Schedule BP means
the Schedule of Income from Business and Profession and Schedule HP
means Schedule for Income from House Property. No doubt, it appears
to be more user friendly but it would be difficult to track if an
assessee intentionally or otherwise leaves out a schedule as the
same are not in a sequence.
Silver Lining in the Clouds
Some good measures have also been taken. The same are :
· Doing away with the paper filing of the complete return
where digital signature has not been used to e-file the return. Now
a single page summary is to be filed in such a case, which might
also be dispensed with in the time to come.
· The usual cover of high level secrecy is also being
undermined as the forms have been taken out of the bag a good 2
weeks before their official notification. People have been advised
to get familiar with the same and give their comments. This is a
welcome step. It is hoped that in due course the Budget exercise
shall also become more transparent and less secretive.
· The use of simple text (like Deduction in the case of an
undertaking operating a cold chain facility) in place of mere
reference to sections (like section 80-IB(11)) will also make the
forms more user friendly.
Inference
Since forms may undergo changes every year, each time you will feel
that the earlier form was much simpler. Just compare the new IT
return form for companies, Form 6 with the earlier Form 1 and you
will know what I mean. Even the department will get to taste its
own prescription but by that time it might be too late. The vast
changes being made again and again in the forms and consequently in
the electronic file structure would make yearly comparisons of data
very difficult. Two versions of Form 1 have been released and people
have been asked to choose one of them. On comparing the same, one
found that there is no difference in the content of the two forms!!!
The only difference is that one is a 3 paged khulla khualla
(spacious) form whereas other has been shrunk to 2 pages. Probably,
this was department's way to tickle our funny bone.
The change in the basic concept of form types and numbering is a
moot point and only time will tell how effective it will be. I
personally don't have anything against MBAs. But to ask them to
design IT forms and later on asking ICAI to offer its comments on
it is like selection of the Indian cricket team for the World Cup
2007 by the selectors (whom Mohinder Amarnath once called a bunch of
jokers) and then asking the coach to work out a winning strategy.
Blaming the coach for the disastrous results is like khisyani billi
khamba noche. (A cat who cannot catch mice, in frustration shall
scratch the pole.)
CAclubindia
