Income Tax Return: The new Income Tax Act will come into effect on April 1st this year. Prior to this, the government will release new ITR forms. This will inform taxpayers about the changes. Experts say the government may simplify the new ITR forms.
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Income Tax Return: The new income tax forms for the financial year 2025-26 are expected to be released soon. Over the past few years, the government has attempted to simplify ITR forms. Experts say there is scope for further simplification of ITR forms. ITR-1, ITR-2, and ITR-3 are expected to be simplified, especially for individual taxpayers.
What is ITR-1 and what changes could it make?
The ITR-1 form, also known as Sahaj, is for individual taxpayers whose source of income is salary, those who own a house, and those who earn income from other sources like interest. Although it is the simplest ITR form, it requires taxpayers to make numerous disclosures.
Prabhakar KS, Founder and CEO of Shri Tax Chambers, said that a salaried taxpayer or senior citizen has to check multiple pages of disclosures, but most are not meant for that. He believes that the new ITR-1 could include a radio button option at the outset. Taxpayers can specify whether they have dividend income or income under another specific head. If the taxpayer selects “No,” the non-applicable sections related to quarterly dividends could be automatically skipped.
What is ITR-2 and what changes can it make?
The ITR-2 form is for individuals and Hindu Undivided Families (HUFs) who do not have income from business or profession but have other sources of income such as capital gains and foreign assets. It contains more disclosures than ITR-1. When printed, it is over 40 pages long.
Experts say that radio button options could also be provided in ITR-2. Taxpayers could be given the option to indicate whether they have authorized a representative, have investments in unlisted shares, or have any specific disclosures. If taxpayers select “No,” they will not need to check or view sections that are not relevant to them.
Experts say that reporting foreign income presents numerous challenges. Many taxpayers face significant penalties under the Black Money Act. Sometimes, even minor mistakes result in significant penalties. Experts say that reporting could be simplified. A minimum threshold could be established for reporting foreign income.
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