The number of registered users on tax filing websites as well as the number of tax filers has more than doubled in the last five years. To boost this number further, finance minister Nirmala Sitharaman proposed to make it mandatory for individuals, with a particular lifestyle and expenditure, to file income tax return (ITR). “Even if one has a taxable income lower than the basic exemption limit but maintains a better social status, he will have to file ITR," said Neha Malhotra, executive director, Nangia Advisors (Andersen Global), a chartered accountancy firm.
The proposals include mandatory filing of ITR if a person deposits more than ₹1 crore in a year in his or her current bank account. A person travelling abroad or paying for foreign trips of others, priced above ₹2 lakh, needs to file ITR, and so does a person who pays an electricity bill of more than ₹1 lakh a year. Also, a person who claims exemption under Sections 54 and 54F (reinvestment of long-term capital gains or LTCG from a property sale), where income before exemption is more than the minimum exemption limit, will have to file ITR.
The finance minister also emphasized on the need to make tax filing easier and faster. “Interchangeability of PAN and Aadhaar, pre-filled tax forms, e-assessments, is in line with the objective to ease tax administration and create greater transparency," said Parizad Sirwalla, partner and head, global mobility services, tax, KPMG in India.
The ITR form will come with pre-filled information of income earned, tax paid, deduction claimed and so on. “Pre-populated tax forms will be made available to taxpayers with information from Form 26AS and other financial transactions, and from government bodies such as banks and EPFO linked to their Aadhaar and PAN," said Malhotra. Data related to LTCG, where tax has been deducted at source, will also be part of the pre-filled information.
It has been proposed that a person without a PAN will also be able to file ITR using the Aadhaar number.