Lavish holidays? Get details ready for new ITR form

New Delhi: The Central Board of Direct Taxes (CBDT) is revamping income-tax return forms to tackle the issue of underreporting of income and identify those with disproportionate expenditure relative to their income.

The new Income-Tax Return (ITR) forms will seek more details on exemptions and reliefs claimed for ensuring that fraudulent deductions are not used to suppress income. The forms may also seek more expenditure details such as expensive holidays that can help identify cases of underreporting of income.

Officials said while the completely-revamped ITR forms may be implemented from the next fiscal year, the department is planning to incorporate some of the proposed disclosures in ITRs for the current assessment year (AY) itself.

"There is a need to revamp tax return forms which are easier to file and at the same time must make evasion difficult for those who are not declaring their real income," a senior official told ET.

The new ITR forms will be released soon. This measure along with improved annual information statement (AIS) is expected to assist data analytics flag suspect cases.

AIS is a statement that provides complete information about a taxpayer for a particular fiscal year, including interest earned, dividend income or tax collected at source (TCS). Most of these details are now prefilled to simplify tax return filing.

The department has already expanded the scope of TCS, adding a long list of purchases of luxury items to capture expenses and identify unreported income.

"The work is on and we are trying to capture some of the details in the current year only," the official said, explaining the reason for the delay in release of ITR forms.

CBDT had in the last three years notified ITR forms by April 1. It is expected to notify the ones for the current AY soon.

Those under the old tax regime may now be required to furnish more details on exemptions.

Explaining the need for the revamp, the official said the department is shifting from scrutiny to data-based, non-intrusive ways to expand the tax base, where demands can be backed with details, transaction records and specific instances of evasion.

Last month, the tax department initiated a verification drive in respect of cases where tax exemption claims exceeded deductions allowed under the Income Tax Act.

The department had sent communications to taxpayers for wrongful HRA claims or non-submission of TDS on rent paid (Tax Deducted at Source), and other claims such as tuition fees and medical expenses, and asked them to file updated returns.