Income tax returns

Income tax returns

Subject: Economy

Context:

The Central Board of Direct Taxes (CBDT), under the Finance Ministry, released a draft common ITR form

Details:

• Currently, there are seven types of ITR forms which are filed by different categories of taxpayers.
• According to the proposal, all taxpayers, barring trusts and non-profit organisations, can use the common ITR form, which also includes a separate head for disclosure of income from virtual digital assets.
• It proposes to introduce a common ITR by merging all the existing returns of income except ITR-7.
• The current ITR-1 and ITR-4 will continue giving  an option to taxpayers to file the return either in the existing form (ITR-1 or ITR-4), or the proposed common ITR.

Concept:

Income Tax Return (ITR):

• Income Tax Return (ITR) is a form which a person is supposed to submit to the Income Tax Department of India.
• It contains information about the person’s income and the taxes to be paid on it during the year.
• Information filed in ITR should pertain to a particular financial year, i.e. starting on 1st April and ending on 31st March of the next year.
• The Income Tax Department has prescribed 7 types of ITR forms – ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6, ITR-7 and the applicability of the form will depend on the nature and amount of income and the type of taxpayer. ITR Form 1 (Sahaj) and ITR Form 4 (Sugam) are simpler forms, for small and medium taxpayers.
  • ITR-1 SAHAJ-For individuals being a resident (other than not ordinarily resident) having total income upto Rs.50 lakh, having Income from Salaries, one house property, other sources (Interest etc.), and agricultural income upto Rs.5 thousand
  • ITR-2 is filed by people with income from residential property i.e. For Individuals and HUFs not having income from profits and gains of business or profession
  • ITR-3 For individuals and HUFs having income from profits and gains of business or profession
  • ITR-4 Sugam–For Individuals, HUFs and Firms (other than LLP) being a resident having total income upto Rs.50 lakh and having income from business and profession
  • ITR-5-by Limited Liability Partnerships i.e. for persons other than- (i) individual, (ii) HUF, (iii) company and (iv) person filing Form ITR-7
  • ITR-6–by the businesses
  • ITR-7 is filed by trusts.

The Central Board of Direct Taxes

• It is a statutory authority functioning under the Central Board of Revenue Act, 1963.
• The officials of the Board in their ex-officio capacity also function as a Division of the Ministry of Finance dealing with matters relating to levy and collection of direct taxes.
• The Central Board of Direct Taxes (CBDT) is a part of the Department of Revenue in the Ministry of Finance, Government of India.
• It provides essential inputs for policy and planning of direct taxes in India and is also responsible for administration of the direct tax laws through the Income Tax Department.
• It is India’s official Financial Action Task Force unit.
• The Central Board of Revenue as the Department apex body charged with the administration of taxes came into existence as a result of the Central Board of Revenue Act, 1924.
• Initially the Board was in charge of both direct and indirect taxes. However, when the administration of taxes became too unwieldy for one Board to handle, the Board was split up into two, namely the Central Board of Direct Taxes and Central Board of Excise and Customs in 1964.
• The CBDT Chairman and Members of CBDT are selected from Indian Revenue Service (IRS), a premier civil service of India, whose members constitute the top management of Income Tax Department.