The finance ministry on recently revised the tax
return forms for different classes of tax payers, dropping the prying questions
on foreign travel details &balances in bank accounts that were asked in the
forms proposed last May (2015) month.
Simplified forms..!
According to a ministry statement, the
“simplified forms” would bring relief not just to Indian citizens, but also
expatriates, who have been spared the obligation of reporting overseas assets
acquired before their stint in India, provided these do not yield any income in
the year concerned.
This is significant because expatriates who have
lived long enough in India and qualify as ‘residents & ordinarily
residents’ would have been subjected to prosecution under the recently
introduced black money law for non-reporting of overseas assets in their tax
returns if the earlier proposals were implemented.
Central govt introduced foreign asset reporting
requirement from the financial year 2011-12.
To the great relief of those who have income from
more than one house property. But, do not have income from business or
/profession or /capital gain, the department will introduce a new form called
ITR 2A which does not have detailed sets of questions on capital gains.
Besides, the forms for both ITR 2 and ITR 2A
would now contain only three (3) pages & other information would be sought
only in schedules which are to be filled only if applicable.
The fact that the return form proposed earlier
was of 14 pages had been intimidating most taxpayers.
Only passport number mention..!
Details of foreign travel like the countries
visited, the number of times visited and the amount spent abroad from own
resources in the cases of residents, are dropped from ITR2.
The finance ministry statement said that only
passport number, if available, would be required in ITR-2 and ITR-2A.
Tax payers have time till August 31, 2015 to file
returns as per the revised forms. The e-filing software would be ready on the
tax department’s website by 3rd week June, 2015.
 |
| Mr. Amrpal Chadha, Tax Partner, EY |
That the ministry has proactively come up with
clarifications and extended the deadline for filing returns is reassuring for
taxpayers, said Mr. Amrapal Chadha, Tax Partner, EY.
The Undisclosed Foreign Income & Assets
(Imposition of Tax) Act, 2015 — the Black Money law—provides for 3 to 7 years’
rigorous imprisonment for wilful attempt to evade taxes and 6 months to 7
years’ rigorous imprisonment for failure to file return of foreign assets &
bank accounts.
Sources in the government, however, told FE that
the tax authority is likely to obtain the same information from other sources
to check evasion.
The attempt is to make return forms less
intrusive and simultaneously to tap third-party sources, which would yield
information of not just tax return filers, but also of people who do not file
& are likely to be the real tax evaders.
For this, the tax department could approach the
ministry of external affairs that runs the consular, passport & visa
division, said sources. Foreign travel data of individuals are already
available with the government as date of birth, passport number and address of
the traveller are captured at the time of travel.
Finding the permanent account number (PAN) of an
assessee and querying about expenses incurred abroad, if need be, is not a
difficult task for the tax department.
In the case of bank accounts, tax payers would
not be required to furnish the balance amount at the end of the fiscal as was
required in the returns forms issued in April.
Instead, only the IFS code and the account
numbers of all the current and savings accounts are enough. Details of dormant
accounts are not required either.
Also, those who have any of the tax exempt income
specified in the elaborate section 10 of the Income Tax Act can file the four
(4) page ITR 1 called Sahaj, although it may not be specifically provided for
them. ITR 4S called Sugam, a presumptive business income tax return, is being
simplified.
Finer details of the new reporting requirement
would be known when the returns are brought out.
“The government is clearly listening to tax payer
feedback & is making an earnest attempt at simplifying the returns,” said
Mr. Rahul Garg, who leads the direct tax practice in PwC India.
The return ITR 2 brought out last month had
expanded the depth of foreign asset and income reporting as well.
 |
| Rahul Garg, Direct Tax, PwC India. |
In the case of immovable property abroad, for
example, the number columns to give additional information was increased to 10
from three (3) in the return for 2014-15 assessment year, giving the impression
that the department was relying more on its interrogation skills rather than on
any real investigation on the ground.
Similarly, the scope of foreign bank account
details to be disclosed in the return for 2015-16 assessment year was widened
to include the interest accrued in those accounts and the amount offered to tax
in India.
In the return for the year before, assessees were
asked to disclose only the name of the account holder, account number, bank
address and the peak balance.
Also, in the case of financial interest in a
foreign entity, reporting requirement has been expanded to include the nature
of interest, date since it has been held, the income accrued, its nature and
the amount offered to tax in India.
The same is true in case of trusts set up outside
India. The finance ministry statement is silent on whether these would be
retained.
Sources said these details could anyway be sought
from other countries under bilateral treaties and information exchange
agreements in specific cases of evasion, a better option than subjecting all
tax payers to the same compliance burden.
Back to basics..!
** ITR 2 drops questions on foreign travel
details
** New ITR 2A asks no questions on capital gains
** Expats need to report only income-yielding
foreign assets
** Bank balance at the end of fiscal not required
** Taxpayers to get time till August 31 for
filing returns for AY2015-16
** Statement silent on foreign asset break-up to
be reported
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