The quest for simpler tax returns began over a decade ago and the finance minister in 1998-99 in his budget speech recognised that the cumbersome nature of I-T forms coupled with complex procedures is a serious deterrent to an honest individual in becoming an assessee.
The finance ministry recently unveiled Saral II, the new avatar of the erstwhile ITR 1 for certain classes of individuals, purportedly to simplify tax payments. But, is the form really saral (simple)?
The quest for simpler tax returns began over a decade ago and the finance minister in 1998-99 in his budget speech recognised that the cumbersome nature of I-T forms coupled with complex procedures is a serious deterrent to an honest individual in becoming an assessee.
Following that, Saral made its debut for all non-corporate tax payers. However, over the years, owing to various requirements, the whole structure of the form changed; defeating the very purpose of its creation.
It was only in 2009 that the importance of a simple and user-friendly form was revisited and the finance minister in his last budget speech announced a two-page Saral II, which was notified recently.
On a first look, Saral II is quite user friendly. The earlier ITR form could be used only by individuals having salary/ pension or interest income.
Individuals with income under the head ‘House Property’ were required to fill in a different form, which was more complex owing to detailed information required. The new form comes as a relief for at least those individuals who have income from one house property. Now, all incomes under the head ‘Income from Other Sources’, except for a few, can be filled in the new Saral form.
Therefore, it is particularly beneficial for individuals having salary income, income from one house property, and income from other sources.
But this segregation doesn’t quite suffice — a closer look reveals a large section of tax payers not eligible for it. For example, if a taxpayer were to earn taxable capital gains, which is a common income element for most salaried people, it would make him ineligible to use Saral II.
Similarly, someone who relies on rental income from more than one house property will also be out of the ambit.
The following are not eligible for Saral II:
- Winnings from lottery;
- Income from race horses;
- Taxable capital gains;
- Income from more than one house property;
- Brought forward losses from previous years under house property;
- Business income.
A careful thought needs to be given as to the consistency and direction in which the exchequer expects an assessee to comply with the tax return filing exercise year after year, leaving aside the challenges to comply with the onerous tax provisions.
Is the taxpayer not being burdened with the annual exercise of understanding and complying with the new formats of tax return forms whether or not they are any more saral than the last?
Besides, given that the new Saral II is applicable to limited categories of individuals, the return-filing exercise continues to be “not so saral” for other non-corporate assesses.
The writer is associate director, Ernst & Young. Views are
personal. Basant Gadhyan, a senior tax professional with E&Y contributed to this story.
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