New income tax bill 2025 would lead to more litigations, says Dr Saumya Aggarwal of SRCC

The Income Tax return (ITR) filing season is currently on. Taxpayers are scurrying around to file their returns well in time before the deadline ends on September 15. Some are using the services of tax experts, whereas others prefer to go the DIY way – a practice highly lauded by academic Dr Saumya Aggarwal, assistant professor at Shri Ram College of Commerce (SRCC), University of Delhi.

In a telephonic conversation with Mint, she shares her views on the mistakes commonly made by taxpayers, expectations from the revised New Income Tax Bill, and the key reasons why taxpayers are recommended to file their tax returns on their own.

Edited excerpts

At the time of filing of income tax return, what common mistakes do taxpayers make?

ITR-1 can also be used to report capital gains if exempt up to ₹1.25 lakh. Earlier, taxpayers had to use ITR-2. But now, if your income is up to ₹50 lakh in a year, you can use ITR-1 even while reporting capital gain.

While filing a return, taxpayers must make sure to report their assets outside India. The don't ask in ITR-1 but in ITR-2, there is one schedule where one needs to disclose jewellery and movable assets, etc.

Then one must disclose exempted income (e.g., capital gains when re-invested and agricultural income). There is no harm in disclosing it, especially in co-ownership (whether you own 10 percent of a fixed asset). Since you have submitted your PAN, the transaction got captured by the I-T department.

This year, the I-T department extended the deadline till Sept 15 for filing of ITR. Is this advisable to wait till next month for filing of return?

I have already filed my tax return two weeks ago. And it is recommended to file soon, since the portal can get slow towards the end, and taxpayers would then have to face hassles.

If you miss filing the return (because of a slow website on the last day), you would be liable to pay interest under section 234A for the late filing. Also, if you have incurred losses in a capital gain account, they will not be allowed to carry forward if the return is not filed within the due date.

A new income tax law has been passed. Do you think this would lead to lower tax litigation in its aftermath?

In the new income tax law, there are no major changes. Only sections and chapters have come down in number. There are no major changes, but the law has been rewritten in simple language.

One advantage is that the students will study less, and CAs will be able to practice with fewer provisions. But the confusion still prevails. For example, challenges still remain, including rebate under 87A - whether it should be given in the special income scenario like STCG under section 111A or LTCG under section 112. 

There is still a lot of work required. I believe the litigation will only increase, and confusion will continue for the next few years until both the tax regimes (old and new) are merged.

How is the new Income Tax Act 2025 better than the current tax law?

They are trying to make it simple, but it is still not. We carried out one research work last year to explore the popularity of the new tax regime, for which we interviewed several tax experts.

The research concluded that the new tax regime is simple because there are no deductions. But two parallel systems (old and new tax regimes) are leading to complexities.

Moreover, some deductions should be allowed to mobilise savings among the middle-class investors. For instance, 80D (medical insurance premium), contribution to PPF, term insurance, and deduction to disability (80DD and 80U) should be restored.

At the time of filing of income tax return (ITR), it is recommended to use the income tax calculator, which is given on the e-filing portal.

In the era of AI, is this recommended to file a return on your own, or do you think taxpayers should always use the services of an expert?

They should file a return on their own. You can discuss anything with an expert. The utility is Java-based and quite simple. You only need to answer some questions. The excel utility could still be complicated. For someone in the age group of 20-40, it is not difficult to file. 

Even students in colleges are learning how to file ITR. We teach them at the graduation. It is not difficult at all to file with ITR-1 and ITR-2. But for business income, one can use the services of a CA.

Additionally, if you make a mistake, you can revise the return any number of times. Besides, there are a lot of online tutorials available that help you file the return.

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