New I-T form to stay: Revenue Secretary

NEW DELHI: The government has clarified that there was no proposal to drop the new Income Tax Form--Form 2F--to be effective from August 1, 2006, but said it could be modified in the next assessment year based on the feedback received from different parties. 

"Form 2F to replace the From 2E (Naya Saral) at existence in present will be optional till July 1,2006, the last day for filing Income Tax Return for salaried class," Revenue Secretary K M Chandrasekhar said on Friday.

"Both the Forms can be used till them", he said.  In this regard, the Revenue Secretary denied media reports that the newly introduced Form 2F has been dropped.

Chandrasekhar said for the assessment year 2006-07, a salaried taxpayer has the option to choose from a number of Forms available. He can thus use Form 2 or Form 3, or Form 2D, or Form 2E or Form 16AA or the new Form 2F, if the taxpayer files his return by the due date, July 31, 2006.

After this date, the Form 2E will be discontinued, he said. However, the salaried taxpayer will continue to have the option of filing his return in either Form 2 or Form 3 or Form 2D or Form 16 AAA or the new Form 2F.

Chandrasekhar also clarified that the cash flow statement in Form 2F--which has created much of the controversy--was only optional, but a salaried assessee stood to benefit if made use of it.

He said the Central Board of Direct Taxes (CBDT) was getting a lot of information about individual assessees through the Annual Information Report (AIR). Based on this he could be served notices to explain certain expenditure items. 

 However, if the cash flow statement is filled up by the individual assessee then this would obviate the need for sending such notices.  Chandrasehkhar said the new form in fact was friendly to all nature of assessees, particularly salaried persons, though unfortunately an impression has gained ground that it would hurt the salaried taxpayers.

The Revenue Secretary was hopeful that more and more assessees would switch over to the new Form when they understand the logic that went into its making.   

Chandrasekhar said the new form had been introduced after a lot of consultations with chartered accountants and others, but the government will be receptive to the suggestions received from various interested parties. As the introduction of a Form requires a notification to be issued, in the next year modifications could be carried in Form 2F.