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One common ITR form for all: Will it actually help the taxpayers?


The finance ministry has proposed to come out with a common income tax return (ITr) form for all taxpayers. Currently, there are 7 types of ITR forms which are filed by different categories of taxpayers. “It proposes to introduce a common ITR by merging all the existing returns of income except ITR-7. The draft ITR aims to bring ease of filing returns and reduce the time for filing the ITR by individuals and non-business-type taxpayers considerably,” the CBDT said.

Archit Gupta, Founder & CEO, Clear said the income tax department is moving towards automation for ITR filing with each passing year.

“Earlier the pre-fill option was introduced for taxpayers and in the recent past AIS has been introduced. Allowing taxpayers and the department detailed information related to every taxpayer’s income and financial activity,” Gupta said.

All taxpayers, except trusts and non-profit organisations, can file returns with the proposed new common ITR form, on which the Central Board of Direct Taxes (CBDT) has invited stakeholder comments by December 15.

The CBDT, under the finance ministry, said that ITR-1 and 4 would continue, but individuals would also have the option to file returns of income in the common ITR form.

Taxpayers filing ITR-2 (ITR for capital gains) and ITR-3 (ITR for Business Returns) will now have to compulsorily file the common ITR, once it is notified and implemented, said Gupta.

Will it actually help the taxpayers?

Archit Gupta said frequent changes in the filing system make filing onerous for taxpayers, who have to re-learn the process to e-file. It also means the flow introduced last year by the department will have to undergo more change.

He further explained that right now in the transition period right now, there are too many decisions that a taxpayer has to make: “Should I use the old tax regime or new tax regime?” “Should I use common ITR or continue with ITR-1 / ITR-4?”

“We feel taxpayers will now need to be more careful while answering yes/no questions and be fully aware of the implications. We also believe that further simplification of questions will help taxpayers self e-file successfully,” said Gupta.

7 types of income tax return (ITR) forms

ITR Form 1 (Sahaj) Sahaj can be filed by an individual having income up to 50 lakh and who receives income from salary, one house property/other sources (interest etc).

ITR-2 is filed by people having income from residential property

ITR-3 by people having income as profits from business/ profession,

ITR Form 4 (Sugam) are simpler forms that cater to a large number of small and medium taxpayers. 

ITR-5 is filed by LLPs 

ITR- 6 is filed by businesses respectively

ITR-7 is filed by trusts.

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