Simplified Laws Guide to Taxation and Legal Concern If one gets angry at the Petrol Bunk, it is due to the high prices but the anger is expressed on the executive. Likewise, the real pain is not due to filling the Return, but the quantum of taxes being paid! But filling up the forms has been made easy to reduce the frustration! Pre-filled ITR is one such move by the Government.
Background – In the past, the department used to verify the information gathered from different agencies such as Banks, Mutual Funds, Sub-Registrar, etc., with the ITR filed by the taxpayer. If they find any anomalies, then the taxpayer was questioned about the irregularity. For example, Ms. Kannika declared Income from Salary but forgot to offer tax on the sale of a flat worth Rs.40 Lakhs. After the return was filed, the department verified the information in the ITR viz-a-viz the data collected from the Sub-Registrar’s office. The verification is carried out after filing the returns. Hitherto, the tax department was not sharing the information gathered by them with the taxpayer till they verified the return.
Present System – The department felt that the taxpayer should know the ‘prized possession’ of information with them, before filing the Return, so that they can incorporate all the data and file the return. This process is Preventive in nature and helps the client in voluntary disclosure. According to me, this is an excellent initiative by the Government.
What type of information do the departments gather and from where?
Under the ambit of ‘Project Insight’, Compliance Management Central Processing Centre (CMCPC) collates the data from Banks, Mutual Funds, Stock Broker, Sub-Registrar, Vehicle Dealers, GST department, etc.
Today, the tax department possesses huge data, which should be sufficient to form an opinion about the financial position, dealings viz-a-viz the Income declared for tax purposes.
You may be surprised to know that in Form 26AS, one can view the Turnover declared with the GST department! All information regarding TDS done, interest credited by the banks, share transactions done through brokers, irrespective of the quantum of money are captured in the IT database.
What is Pre-filled ITR?
Logically, there is no point in keeping such data with the department unless it is put to use. It is also helpful if the relevant data is captured in ITR as pre-filled information. You would have experienced the pre-filling process in any online form, just by filling in your name, the other information like phone number, address, etc., gets auto-populated.
Similar features are introduced in ITR. It captures details such as Bank Account Number, Income from Salary, Interest, Profit from Shares Trading and Mutual fund transactions, TDS and taxes paid, etc. The taxpayer can verify the auto-populated information and make the changes if any.
Currently, a few features are enabled and other features may be incorporated this year. Only when it is implemented, we will know if the auto-populated data will ease the process or add to the pain.
What are the benefits of pre-filled forms?
The primary benefit is that the taxpayer will know what all information or transactions are already available with the tax department! (no more suspense thrillers!). This helps him to prepare and submit the return accordingly. Further, this pre-empts both errors by intention or by oversight.
I doubt a pre-filled form can reduce the filing time! Filling or verifying the filled data will consume a similar time and effort. So, instead of calling it a measure to improve ease of doing business, we can say that it will help in better compliance. Probably result in more taxes to the Government, as they are more than an equal partner in reaping the technological advancements in tax administration!
