Last Updated on July 6, 2019 at 10:16 am
The finance ministry wants pre-filled income tax returns from AY 2020-201 onwards as announced in the budget yesterday. At first sight, this is appealing and convenient, but will it result in a host of new problems?
The finance minister in her budget speech said, “Pre-filled tax returns will be made available to taxpayers which will contain details of salary income, capital gains from securities, bank interests, and dividends etc. and tax deductions. Information regarding these incomes will be collected from the concerned sources such as Banks, Stock exchanges, mutual funds, EPFO, State Registration Departments etc. This will not only significantly reduce the time taken to file a tax return but will also ensure the accuracy of reporting of income and taxes”.
Existing provisions of section 285BA of the IT Act will be modified to accommodate the new agencies for furnishing financial transactions.
The good part is that it will reduce tax evasion. Many who did not report capitals gains will be forced to do so now. The bad part is, we will now have to deal with form 16 like reports from stock exchanges, mutual funds, EPFO, NPS (?) etc. This is nothing short of a nightmare as these could often have errors.
🔥Secure your future with our Robo-advisory tool trusted by over 3,500 investors and advisors. From effortless retirement planning to funding your children’s biggest dreams, turn your financial goals into reality. 🔥
Subscribe for money management solutions via email! (Link takes you to our email sign-up form) Join 32,000+ readers in our community.
👉 New Tool Alert! NaviPlan: A Privacy-Focused Multi-asset Tracker and Goal Planner 👈
just the lone form 16 from the employer is often a pain to deal with. Remember the mismatch notices two FYs ago? This year we have the delay in generating F-16. I think the IT department should first correct what it can first and then worry about pre-filled returns.
For instance, it should first get rid of Excel and Java utilities and have an online-only return filing procedure. No ITR1, or 2 or 3 or 4 business. There should only be one form with step by step or stage by stage inputs set up with future inputs changing as per past inputs.
Then existing capital gains statements should be made easy to understand for first time users. Otherwise, no one will bother to check the numbers (unless they are seriously off). We could then graduate to pre-filled IT returns.
This will require data from so many agencies that invariably the deadline for filing will be extended each year! Pre-filing is a step in the right direction, however, all institutions have to be in step for this to work. I have my doubts, but hope I am proven wrong.
What do you think? Also, check out why I think it is not a bad budget