As per News sources, the Income Tax Department is revamping ITR Forms to Target High-Value Expenses and Undisclosed Income
The Central Board of Direct Taxes (CBDT) is making changes in the income tax return (ITR) forms to solve the problem of unreported income and identify those entities whose spending is higher than their declared income.
The updated ITR forms will ask for detailed information on the deductions, exemptions, and reliefs claimed to prevent people from using fake deductions to hide income. The forms may also ask for details about your high spending, such as expensive holidays, to spot the cases where income is underreported.
The aim is to make the ITR form easier to file while preventing tax evasion for those having undeclared income. Along with an enhanced annual information statement (AIS), this step is expected to help data analytics in identifying suspicious cases. AIS gives detailed information about taxpayers, including how much interest they have earned in a particular Financial year, taxes collected at sources (TCS), etc. Most of these data are now auto-filled to smooth the return filing process. The department has added a detailed list of purchases of luxury items to spot expenses and identify unreported income.
More Scrutiny for Old Tax Regime
Those opting for the old tax regime may now need to submit more details on exemptions.
Delay in Notification of ITR Forms
The fully revamped ITR forms are likely to be enforced from the next Financial year. However, the department plans to include some of the new disclosure requirements in the current assessment year (AY).
The officials explain the reason behind the revamped ITR forms, saying that the department is moving towards a data-based approach to catch tax evasion in a simpler and non-intrusive way. Last month, the Income Tax Department started a drive to review cases where tax exemption claims were more than the deductions allowed under the Income Tax Act.