Finance Minister has announced new forms for filing returns for this fiscal year. Eight different types of forms have been introduced including four for non-corporate assesses. The old income tax return form-Saral-will now make way for what is being referred to as the Income Tax Return (ITR) form.

I am sure you would be interested in knowing major changes in both the forms and what is it that the income tax payer needs to get ready for? For starters, it is possible that the taxpayer may have to get ready to submit more details with respect to his sources of income and how he has been spending his money. All this comes under the broad heading called the Annual Information Return (AIR). In all, the AIR captures seven kinds of transactions among which are credit card payments of Rs 2 lakh or more in a year, property purchase or sale of Rs 30 lakh or more, purchase of mutual funds of Rs 2 lakh or more or investing over Rs 1 lakh in an IPO (initial public offer) or a rights issue.

Assess is not to attach any document with the return of his income and the return form specifically states that any the receipt clerk has been authorized to detach any document attached with the return. But has the Indian mind set changed? Last year, corporate assessee were to compulsorily file their return online and nothing to be attached, but now many of them have been getting notices to submit all those paper supporting documents which they were to attach with their return. Then why does not department accept all these documents in the very first place? Has this, therefore, become more detailed a process? For assessee’s paper work and their dependence on consultants is definitely going to increase. For instance, it could well be necessary for the taxpayer to keep his credit card statements for a year.

This year it is optional for assessee to choose whether he wants to file electronic or manual return, but the department is gradually moving to make it mandatory to file returns electronically.

It is not correct to say that the news returns are simple. While ITR1 is definitely simple, but as you move from ITR2 to ITR 4 , the returns are definitely longer and cumbersome. For example, in ITR4, it is 20 pages long and you have to fill almost all details of Profit and Loss account and Balance Sheet.

Of course, with new returns, tax evasion will now be difficult but higher compliance rate calls for lower taxation rate regime, for which I feel Government is not willing to introduce.

Summary of Important differences between Saral and new forms are:

SARAL: Saral was what was used and individuals used different, easy-to-understand forms such as Form 2,2D, 2F
NOW there are various new ITR forms depending on which category the taxpayer falls into. For instance, a salaried taxpayer who earns only interest income will use the ITR-1 form while those investing in mutual funds and shares will have to use the ITR-2 form
SARAL: Less emphasis on big-ticket transactions. Required less detail under the different heads of income
NOW Very different this time around. There are seven transactions which will be tracked and these include, among others, credit card payments in excess of Rs 2 lakh per annum or investments in bonds or debentures of s 5 lakh or more. All these come under the purview of the Annual Information Return (AIR)
SARAL fairly simple process involving relatively less paperwork
NOW Paperwork will increase as the number of forms has gone up. For a salaried taxpayer with an investment income, it will entail six pages and 15 schedules