The income tax returns filing just got more complicated

The revamp of the income tax return (ITR) forms has become an annual ritual and over the years, with the salaried class bearing the brunt of the changes. While the one-page ITR-1 to be filed by the salaried has been showcased as the model of simplification of the return filing exercise, the fact is that successive tweaks to eligibility criteria for filing ITR-1 has made its applicability quite narrow. This year is no different. Already, you cannot file ITR-1 if you are salaried but own more than one house, if you have agricultural income above 5,000, have total income above 50 lakh, have capital gains or foreign income. Last year, persons who qualified as ‘not ordinarily residents’ under Income Tax Act, were excluded from ITR-1 eligibility. This year, those holding directorships in companies or unlisted shares cannot additionally file ITR-1. These changes mean that more and more assessees are forced to migrate to filing ITR 2 with each passing year. But with the net under ITR 2 getting wider, additional disclosure requirements have been adding to the number of pages in this return form, making filing a tedious exercise.

While ITR 2 was 13 pages long in 2016, it jumped to 16 in 2017. Last year’s new requirements added one more page. This year’s takes the page count to 21. Additional disclosures are sought under almost every head of income under ITR 2 this year, with even tax exempt income not being spared. Sadly, the less daunting ITR 2A — a good middle ground for salaried assessees who were not eligible for ITR-1 but at the same time did not have foreign assets/income or capital gains — was withdrawn in 2017, within two years of its introduction.

These moves seem retrograde given that the I-T Department has been ramping up its analytics and data mining capabilities. Besides, given that a ready trail is even otherwise available due to PAN/TAN/AIR disclosure in many transactions, not to mention compulsory Aadhaar-PAN linking, the need to call for more and more information in the tax return is hard to justify.