Filing of returns difficult with new ITR forms

By Dr Suvrokamal Dutta

Replacing a single page ‘Saral’ form with ITR forms is set to make filing of returns difficult. The new series of ITR forms, from 1 to 8 is not at all assesses-friendly and voicing the same is Income Tax Bar Association.

Saral was used by all types of assesses except companies. Now, there are different types of forms for different categories of assesses. “Each of these forms have a large number of columns and require much more information pertaining to income sources than what was required earlier,” pointed out OP Tiwari, president of the association.

As per the institute of chartered accountants, Rs 1,000 per hour has been fixed as the fee to be charged by a CA who helps in filling the tax forms. Where Saral used to take five to ten minutes, new forms will take close to 3 hours and the fee will go up accordingly. A common man and a small businessman, who cannot fill it on his own, will be hit hard by all this.

The association demanded that these forms be made optional and Saral should be kept in circulation. This will help the assesses file returns on time and without difficulty. There are currently 3.5 crore assesses, the number has doubled in the last three years or so, and association said, the almost 10 times increase in revenue collection was because of simple forms. But, now these forms would discourage people from filing returns.

The association was also of the opinion that in case of doing away with the documents to be attached with these forms, there will be an increase in corruption as there is no evidence to be attached for corroboration of facts.

The new forms seek detail like cash inflow and outflow transactions, which are something a common man does not necessarily keep track of. “The department at least should have given an year to create awareness on this,” said tax experts.

“The new forms are valid only for an year only, it is nothing but a simple wastage of stationery. Moreover, storing them as information will be difficult,” said another expert from the association. Although new ITR forms are enclosure free, there is a clause, which needs “reading between the lines” as it maintains if you want refund, attach documents and keep them properly with you, said an expert from the association.

While, on one hand finance ministry is going to introduce a new simplified Income Tax code before the end of calendar year 2007, replacing the existing Income Tax Act 1961, why cannot it postpone the introduction of complicated forms, said the association.

PAN to check tax evasion in India

By Vipin Agnihotri

Permanent Account Number (PAN) is fast emerging as a tool for Income Tax department in India to check tax evasions. There are many transactions where quoting of PAN has been made mandatory. And number of economic activities requiring mention of the same is expected to go up.

“These transactions have been added over from time to time and there is always a possibility that new activity will be brought in the fold. PAN is a means to make transactions transparent. It has made the work of the department more focused and made easy zeroing in on people in case of discrepancies,” pointed out Anjani Kumar, Income Tax Commissioner in an exclusive interview with The Indian Street.

Quoting of PAN is essential while buying or selling an immovable property with a value pegged at Rs five lakh and more. Same holds true for sale and purchase of vehicles, as defined in Clause 28 of Section 2 of the Motor Vehicles Act. It, however, does not over two wheelers.

Depositing money also needs a PAN be it a time deposit, exceeding Rs 50,000 with a banking company covered under Banking Regulation Act or a deposit of more than Rs 50,000 in post office savings bank. Payment and deposit in cash exceeding Rs 50,000 and contract of more than a lakh rupees for sale or purchase of securities as defined in Securities Contracts (regulation) needs PAN as well.

Besides, opening an account or applying for credit card with a banking company, applying for telephone connection, paying hotel and restaurants’ bills exceeding Rs 25,000 and paying more than Rs 25,000 for foreign travel also necessitates quoting of PAN.

Apart from this, payment of Rs 50,000 or more- to a mutual fund for purchase of its units, to a company for acquiring shares issued by it, to a company or an institution for acquiring debentures or bonds issued by it or to RBI for acquiring bonds issued by it needs mention of PAN.

“If, somehow, a person does not talk of PAN but successfully transacts, he/she has strict punishment under IT act. And we came to know of same through our central information commission that has annual reports from all dealers, contractors and others involved in economic transactions,” added Kumar.

In case a person does not have a taxable income and hence no PAN, there are forms wherein a person can declare the particulars of transaction specified above. Similarly, minors can quote PAN of parents or guardian. For all those indulging in transaction of any sort involving money, there is no escaping PAN; its need is ever increasing. And happily, getting it is not difficult, given one furnishes the required document relevant to one’s identity and proof of residence and deposits a nominal fee.