You are here: Rediff Home » India » Business » Business Headline » Report
Search: The Web
  Discuss this Article   |      Email this Article   |      Print this Article

New I-T return may mean headache
BS Economy Bureau in New Delhi
 · My Portfolio  · Live market report  · MF Selector  · Broker tips
Get Business updates:What's this?
June 03, 2006 15:21 IST

Tax experts contend that taxpayers need not be unduly worried as of now over the new four-page long return form '2F' effective from 1 June as the finance ministry has not yet withdrawn some of the other return form like 3 and 2D.

The new form seeks to capture details of an individual's cash flow, the number of dependents, the details of income from property and household expenses.

According to Ravi Prakash, principal consultant, PriceWaterhouseCoopers, salaried taxpayers can still use other return forms like Form 3 (the return form for those earning non-business income) or the one page Saral Form 2D (for those with income from business or profession and non-business income) to file their returns.

"A taxpayer has the option to use any of the return forms. The new form 2F that has been introduced with effect from 1 June, will now be another option available to taxpayers. Only Form 2E will be discontinued after 31 July, 2006," Prakash said.

Krishan Malhotra, partner, RSM & Co points out that the option to use any of the return forms will continue unless the finance ministry notifies that Form 2F will be the only return form for salaried taxpayers.

Tax experts pointed out that the new return form is more exhaustive, as it seeks to obtain not only details of the number of dependents but also details of the income from property such as rent, annual value and taxes paid to local authorities.

"Taxpayers will have to keep track of their daily expenditure, preserve receipts and total up their expenses under various heads in the cash flow statement," an expert said.

All this detail will also mean that people who managed to fill their forms on their own may now need professional help to prepare the returns.

The earlier Form 2E merely required taxpayers to submit a composite detail of income from property.

Also, while Form 2F cannot be used by individuals who earn taxable long-term capital gains, taxpayers who earn non-taxable long-term capital gain will have to mention the details of such gains in the form.

A major change in the exhaustive details to be provided under Schedule 5 of the return form is the "cash flow statement".

Taxpayers will be required to submit composite details of their cash balance, the balance in banks, other receipts by way of loans, gifts, donations and expenses by way of investment in, say, purchase of a car or gold among other things.

Finance ministry officials said an internal study had shown that up to 50 per cent of taxpayers in India declared an annual cash outgo of less than Rs 50,000.

"There is often a mismatch between the income mentioned and the outgo. Hence, filling Schedule 5 will substantially reduce the probability of scrutiny assessment or any kind of intrusive investigation," Revenue Secretary KM Chandrasekar said.

Powered by

 Email this Article      Print this Article

© 2008 India Limited. All Rights Reserved. Disclaimer | Feedback