Common Income Tax Return Form

A single income tax return (ITR) form was proposed for all taxpayers. The draft of the proposed form was unveiled recently by the Central Board of Direct Taxes (CBDT) to receive public inputs until December 15.

How many kinds of ITR forms are there?

There are 7 kinds of ITR forms used for different categories of taxpayers. These are:

  1. ITR-1 (Sahaj) is for small and medium tax payers having income up to Rs.50 lakh earned from salary, one house property or other sources (interests etc.)
  2. ITR-2 is filed by people with income from residential property
  3. ITR-3 is for people having income from profits obtained by business or profession
  4. ITR-4 (Sugam) is filed by individual, Hindu Undivided Families and Firms having a total income of up to Rs.50 lakh from business and profession
  5. ITR-5 and 6 are filed by limited liability partnerships (LLPs) and businesses respectively
  6. ITR-7 is filed by trusts and non-profit organizations

What are the changes made in the draft ITR form?

The common ITR form can be used by all taxpayers except trusts and non-profits. It merges all existing ITR forms except ITR-7.

Under this new format, taxpayers will be given the option to either use the common form or existing forms ITR-1 or ITR-4. However, other old tax forms (ITR-2, ITR-3, ITR-5 and ITR-6) are not part of this new format and their users only have the option of using the common form.

How will the new ITR format benefit taxpayers?

  • The proposed form will be customized for taxpayers based on the questions answered by them.
  • This will reduce the time taken file the income tax returns.
  • It will be beneficial especially for individuals and non-business type tax payers.
  • Its user friendly design of schedule has better arrangement and logical flow. This increases scope of pre-filing of taxes.
  • IT Department will be able to compare the third party data with the new form with ease, leading to the reduction of compliance burden on taxpayers.

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