Traditionally filing income tax return is regarded as a time taking process but the current government has introduced new changes in ITR form to break this myth. This change will be applicable on e-filing ITR for Financial Year 2016-17 and will come into effect from 1st April 2017. This is not a surprise announcement but it was already mentioned by Finance Minister during Union Budget 2017 announcements.
Changes in ITR-1 Sahaj Forms to Simplify the E-filing ITR Process
This step has been taken to ease the ITR filing difficulties of taxpayers with an income below INR 5 lakhs a year. This 1-page form will be applicable for all the individual salaried employee who earns less INR 5 lakhs a year. This change has been made for ITR-1 Sahaj Form for now as a large group of taxpayers uses this form to file ITR.
What are the changes introduced?
- Most of the sections of Chapter VIA for claiming deduction has been removed. Only the most used ones are kept there.
- There were 18 different columns under Section 80 in the current ITR-1 Form which has been minimized to fewer columns.
- After minimizing, only the Section 80C and 80D columns will remain in the new form.
- Other deductions under Section 80 can be claimed by selecting options while e-filing ITR.
- So, one can still claim a deduction of INR 1.5 lakhs under Section 80C and Mediclaim under Section 80D using this new 1-page form.
- This form will auto-fill the information for PAN, Aadhaar number, personal information tax information, and TDS.
Reasons behind this revolutionary step:
- First of all these changes will make e-filing ITR less lengthy and boring. A huge amount of taxpayers, e-file ITR once a year and it is very likely that they forget the filing rules by next year. So they need to do all the study again just to comply with the 3-4 page long form filing rules.
- The income tax rules also change every year and a long form can make taxpayers doing mistakes while filling it up. As a result, many taxpayers also forget to claim benefits for their investments and expenses.
- A lengthy form many times result in unclaimed tax refund, faulty IT returns and a poor tax planning as many taxpayers unknowingly skip the essential activities. So, a shorter form will be much more helpful for those taxpayers who file it once a year and have less connection with all year changing IT rules.
- Also, due to lengthy form filling process, many taxpayers skip the e-filing ITR process and number of such taxpayers is increasing year by year. Statistics says, from 2013 to 2015, such number of taxpayers has been increased from 1.22M to 5.90M. so, to increase tax filing number, the government has taken this initiative to make this process shorter and easier.
Changes in the Penalty Rule for Late Filing:
- Under the current system, if someone forgets to file ITR by 31st July but file it by 31st December then they will not have to pay any penalty fees. But now Government has introduced a new Section 234F, and as per this section, anyone who does e-filing ITR after 1st July but before 31st December will have to pay a penalty of INR 5,000.
- If anyone files it after 31st December, then the penalty will be INR 10,000 as provisioned under this new section.
- However, the amount of penalty for late e-filing ITR has been kept lower as INR 1,000 for the taxpayers below income slab of INR 5 lakhs.
- If any taxpayers under the income slab of INR 5 lakhs file ITR for the first time, then IT department will not scrutinize their ITR. They will scrutinize it only if IT department receives any information regarding suspicious high-value transactions.
- These penalty rule will be applicable from the assessment year 2018-19 and till then old penalty rules will be applicable.
- The previous rule has been amended as it had inspired a lot of taxpayers to be lazy to make e-filing ITR by the deadline as they still used to get the timeline up to 31st December.
In this article, we have provided all the information which has been released officially so far by the Government. We hope that these new rules will encourage new tax filers to file ITR for their income this year. However, if you still find tax filing services complicated then you can avail expert assistance for e-filing ITR from expert professionals but from now on you must make sure that you filed ITR for your earnings.