NEW DELHI: Facing a furious backlash against the proposal to seek details of foreign travel and bank accounts of taxpayers in the 14-page new income tax return forms, the government on Saturday moved swiftly to contain the damage and decided to put the new form on hold.
"The finance minister spoke to me from Washington and discussed the matter. It was decided that the whole matter will be reviewed. The effort will be to simplify the forms," revenue secretary Shaktikanta Das told TOI. Finance minister Arun Jaitley is in Washington to attend the IMF-World Bank meetings.
Tax authorities had made several additions to the income tax return form for the assessment year 2015-16 seeking details about foreign travel, foreign assets and income from any source outside the country, and details of all bank accounts held in India at any time during the previous year. A taxpayer would have to submit details of any foreign trip undertaken including the expenses borne.
The new form also sought details of any bank account opened or closed during the previous year, including those where a taxpayer has signing authority. The form — which goes against the efforts to make I-T returns "saral" — also sought information related to immovable property, financial interest in companies and details of trusts created outside the country.
In case of domestic bank accounts, taxpayers were required to provide the name of the bank, IFSC code of the branch and also mention whether it is a joint account.
The news of the additions to the IT return form met with an avalanche of criticism, with ordinary taxpayers and experts questioning the move.
Taxpayers were worried about the extra effort needed to fill in the details and experts said it would add to paperwork and harassment. The effort over the years has been to simplify the tax return forms to make life easier for ordinary taxpayers but the latest additions to the IT return forms would have diluted those efforts.
"The government has been proactive and quick in deciding to review the forms," Das said.
Tax experts said it would have been a nightmare for taxpayers who make frequent foreign trips to provide details of expenses and slammed the move to introduce this provision in the form.
Sources said the move to include the new information was part of the recommendations of the Special Investigation Team probing the black money issue and authorities had decided to modify the IT return forms as a fight against the black money menace.
The NDA government has been battling with the legacy issue of retrospective taxation and trying to put a lid on "tax terrorism" which it has said was unleashed by the UPA government.
Tax experts said there is a need to simplify the forms and bring in more clarity to ensure that taxpayers are not harassed.
"It needs to be ensured that assessees do not face an onerous task in completing the tax returns, especially in the case of the small tax payer. Details sought on travel expenses incurred out of own sources - other than those incurred by the employer or sponsor is a case in point. It may be difficult to retrieve this level of detail especially since most individuals would not have retained such data for past travel and where the trips are frequent," said Tapati Ghosh Partner at Deloitte Haskins & Sells LLP.
"The government may also consider prescribing a threshold limit for foreign assets such that it is simple for the individual to collate and at the same time easy for the government to administer. To ensure that there is clarity with respect to the details being requested, terms used should suitably be defined and examples of disclosures that are required may be provided in the instructions or in the form of FAQs to remove ambiguity," she said.
"The finance minister spoke to me from Washington and discussed the matter. It was decided that the whole matter will be reviewed. The effort will be to simplify the forms," revenue secretary Shaktikanta Das told TOI. Finance minister Arun Jaitley is in Washington to attend the IMF-World Bank meetings.
Tax authorities had made several additions to the income tax return form for the assessment year 2015-16 seeking details about foreign travel, foreign assets and income from any source outside the country, and details of all bank accounts held in India at any time during the previous year. A taxpayer would have to submit details of any foreign trip undertaken including the expenses borne.
The new form also sought details of any bank account opened or closed during the previous year, including those where a taxpayer has signing authority. The form — which goes against the efforts to make I-T returns "saral" — also sought information related to immovable property, financial interest in companies and details of trusts created outside the country.
In case of domestic bank accounts, taxpayers were required to provide the name of the bank, IFSC code of the branch and also mention whether it is a joint account.
The news of the additions to the IT return form met with an avalanche of criticism, with ordinary taxpayers and experts questioning the move.
Taxpayers were worried about the extra effort needed to fill in the details and experts said it would add to paperwork and harassment. The effort over the years has been to simplify the tax return forms to make life easier for ordinary taxpayers but the latest additions to the IT return forms would have diluted those efforts.
"The government has been proactive and quick in deciding to review the forms," Das said.
Tax experts said it would have been a nightmare for taxpayers who make frequent foreign trips to provide details of expenses and slammed the move to introduce this provision in the form.
Sources said the move to include the new information was part of the recommendations of the Special Investigation Team probing the black money issue and authorities had decided to modify the IT return forms as a fight against the black money menace.
The NDA government has been battling with the legacy issue of retrospective taxation and trying to put a lid on "tax terrorism" which it has said was unleashed by the UPA government.
Tax experts said there is a need to simplify the forms and bring in more clarity to ensure that taxpayers are not harassed.
"It needs to be ensured that assessees do not face an onerous task in completing the tax returns, especially in the case of the small tax payer. Details sought on travel expenses incurred out of own sources - other than those incurred by the employer or sponsor is a case in point. It may be difficult to retrieve this level of detail especially since most individuals would not have retained such data for past travel and where the trips are frequent," said Tapati Ghosh Partner at Deloitte Haskins & Sells LLP.
"The government may also consider prescribing a threshold limit for foreign assets such that it is simple for the individual to collate and at the same time easy for the government to administer. To ensure that there is clarity with respect to the details being requested, terms used should suitably be defined and examples of disclosures that are required may be provided in the instructions or in the form of FAQs to remove ambiguity," she said.
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