INDIA BUSINESS WORLD - JUNE 2006
THE MONTH THAT WAS...

SARAL GIVES WAY TO 4-PAGE I-T FORM

  SARAL (simple) days of filing income-tax (I-T) returns are over. I-T Department notified a new fourpage I-T returns form, which will record expenditure details of assessees, besides capturing their income statements.

Tax-payers will also be required to furnish a ‘cash-flow statement' under schedule 5 of the new form, ‘2F'. The cash flow statement will capture details of an assessee's bank account including cash balance, both in the beginning and the end of the year.

Details of “other receipts” including exempt income, loans and gifts received during the year, will have to be mentioned under the schedule 5. “This form is applicable with immediate effect. However, to allow sufficient time to taxpayers to familiarise with this return form, the existing one-page Saral form-2E can also be used up to July 31, 2006,” revenue secretary KM Chandrasekhar said. He also mentioned that filing cash flow statement for assessment year 2006-07 is optional. It will, however, be mandatory from 2007-08.

The purpose of cash-flow statement is to verify information collected from the third part sources through annual information returns (AIR) with outgoings during the year, he said. Officials in the IT department argue that any mismatch in income and expenditure, captured in the form, would help them to pin down tax evaders. Officials ruled out any possibility of intrusion by taxmen into housholds of assessees through the cash-flow statement. They clarified that tax payers are required to provide only lump sum amount of household expenses. The new system would “substantially reduce the possibility of scrutiny assessment or any other kind of intrusive investigation,” an official said.

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