• Notification Date: 27-12-2022
• Notification No: N/A

Bid to Reduce IT Return Forms

The government is about set to unveil the next set of reforms in tax administration by pruning the number of forms available for filing Income Tax Return (ITR) to improve taxpayers’ experience and reduce the time taken to file returns. 

Both direct and indirect tax collections have been buoyant in 2022 a clear indication of the revival of the economy after the pandemic and also as a result of government efforts to plug tax leakages. The government may also look at stricter tax deduction norms for e-commerce and online service providers, besides online gaming, as there is a need to tighten the rules for reducing tax evasion. 

Taxation of the digital economy, ensuring developing countries get their fair share of taxes, and global coordination for taxation of crypto currencies would be one of the priority areas as India is all set to host the leaders of G-20 countries next year. 

Rationalisation of long-term capital gains tax structure is also expected to bring parity in the holding period between similar asset classes. At present, shares held for more than one year are charged with a 10 percent tax on long-term capital gains. Gains arising from the sale of immovable property and unlisted shares held for more than 2 years and debt instruments and jewellery held for over 3 years attract 20 percent long-term capital gains tax. 

A few changes in the new tax regime are also expected next year as the government wants to make the exemption-free tax regime more attractive to individual income tax payers. The government wants to get rid of the complex old tax regime by establishing a new system, devoid of exemptions and deductions in the longer run. Moving in that direction the government in Union Budget 2020-21 gave the option to taxpayers to choose between the old regime with various deductions and exemptions and the new tax regime that offered lower tax rates without exemptions and deductions. Even after two years of it coming into effect, the new tax regime has not taken off and the I-T department is now considering some tinkering with it so that more taxpayers shift to it. 

The gross collection of direct taxes (before adjusting for refunds) till December 17of current fiscal year stood at Rs 13.63 lakh crore. The amount is 26 percent higher than that over the same period of 2021-22 on robust growth in advance tax payment and TDS deductions.