Govt map to help you find way in 2F maze
The finance ministry will soon issue guidelines to help tax payers navigate through the new format annual tax returns.
By Subhomoy Bhattacharjee, TNN |
NEW DELHI: The finance ministry will soon issue guidelines to help tax payers navigate through the new format annual tax returns, even as it is open to suggestions like a threshold income limit for filing the 2F forms that will replace the single-page Saral.
The guidelines, written in an easy-to-understand style, would supplement the instructions already circulated with the forms that will become mandatory from next year.
The four-page tax statement has been criticised for asking people to give their annual cash-flow statement, basically a summary of their income and expenditure that many consider impractical.
But government officials point out that the movement to the new format would actually help the assesses. From last fiscal, the government has started collecting data on high-value transactions such as purchase of cars, costly electronics items and house from the sellers to track tax evasion. They said the current Saral provides no clues on how such purchases were financed. As a result, there was every likelihood of the tax department issuing unnecessary tax notices to honest tax payers.
The cash-flow statement in the new 2F form will take care of the problem. The officials said that for a typical salaried employee, such a statement would include her monthly salary and any other income such a interest on deposits and dividends on equities held.
Her expenditure figures would include purchase of consumer durables, a house or financial assets such as insurance policies and fixed deposits made in the previous year. The balancing sum would be for other household expenses.
Since there is no need to get the same attested, if the figures tally with the cash balances in her bank statements, the officials argued that this would weed out most tax payers from the radar of the department.
However, Ernst & Young partner Amitabh Singh said the tax department has not specified to what extent the assessee could sum up her expenses. He also said that for small-time salaried employee, the process would only add to her costs.
The officials said the tax department was also willing to modify the form on the basis of feedback. For instance, the columns on outgoings during the year could be dropped as the cash-flow statement was reasonably comprehensive.
A final decision on the fate of the new tax returns will, however, be taken after finance minister P Chidambaram returns to Delhi.
The new 2F form adds 28 columns to the existing Saral, which has 24 columns in a single page. But officials said the format has stretched to four pages only to give more space to the assessee to fill up the entries.
The guidelines, written in an easy-to-understand style, would supplement the instructions already circulated with the forms that will become mandatory from next year.
The four-page tax statement has been criticised for asking people to give their annual cash-flow statement, basically a summary of their income and expenditure that many consider impractical.
But government officials point out that the movement to the new format would actually help the assesses. From last fiscal, the government has started collecting data on high-value transactions such as purchase of cars, costly electronics items and house from the sellers to track tax evasion. They said the current Saral provides no clues on how such purchases were financed. As a result, there was every likelihood of the tax department issuing unnecessary tax notices to honest tax payers.
The cash-flow statement in the new 2F form will take care of the problem. The officials said that for a typical salaried employee, such a statement would include her monthly salary and any other income such a interest on deposits and dividends on equities held.
Her expenditure figures would include purchase of consumer durables, a house or financial assets such as insurance policies and fixed deposits made in the previous year. The balancing sum would be for other household expenses.
Since there is no need to get the same attested, if the figures tally with the cash balances in her bank statements, the officials argued that this would weed out most tax payers from the radar of the department.
However, Ernst & Young partner Amitabh Singh said the tax department has not specified to what extent the assessee could sum up her expenses. He also said that for small-time salaried employee, the process would only add to her costs.
The officials said the tax department was also willing to modify the form on the basis of feedback. For instance, the columns on outgoings during the year could be dropped as the cash-flow statement was reasonably comprehensive.
A final decision on the fate of the new tax returns will, however, be taken after finance minister P Chidambaram returns to Delhi.
The new 2F form adds 28 columns to the existing Saral, which has 24 columns in a single page. But officials said the format has stretched to four pages only to give more space to the assessee to fill up the entries.
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