The finance ministry suggested on Tuesday creating a simple single-income tax return form for all taxpayers that would require revenue from virtual digital assets to be disclosed under a distinct heading.

The Central Board of Direct Taxes (CBDT) has requested stakeholder feedback on the proposed new common ITR form by December 15; however, trusts and non-profit organizations may not use it to file returns.

Various taxpayer categories currently submit 7 different types of income tax return (ITR) forms.


income tax return


ITR Forms 1 (Sahaj) and 4 (Sugam), which are less complex forms, are used by many small- and medium-sized taxpayers. An individual with income up to Rs 50 lakh who earns income from a salary, one property, or other sources may submit a Sahaj (interest, etc).

Hindu Undivided Families (HUFs), businesses, and individuals with a combined income of up to Rs 50 lakh from their businesses and professions may file an ITR-4.

ITR-2 is submitted by individuals with income from residential real estate, ITR-3 by those with income from a business or profession, ITR-5 and ITR-6 by businesses and LLPs, respectively, and ITR-7 by trusts.

ITR-1 and ITR-4 would still be used, according to the CBDT, which is part of the finance ministry, but people would also have the choice to submit their income tax returns in the standard ITR format.

“It suggests combining all current income tax returns—aside from ITR-7—to create a single, unified ITR. The proposed ITR aims to make filing returns simpler and significantly shorten the time required by individuals and non-business types of taxpayers, “claimed the CBDT.


income tax return


The schedules that do not pertain to the taxpayers will not be made available to them. It will include user-friendly schedules that are cleverly designed with improved organization, a logical flow, and more pre-filling options.

The CBDT stated that the change “would also assist the proper reconciliation of third-party data accessible with the Income-tax Department vis-à-vis the data to be provided in the ITR to decrease the burden of compliance on the taxpayers.”

Based on the taxpayers’ responses to a series of questions, the proposed ITR would be tailored for them and include the pertinent schedules.

The Income Tax Department will launch the online utility after notifying stakeholders of the common ITR form and taking into account their opinion.


income tax return


The CBDT stated, “In such a scenario, the taxpayer will be sent with a customized ITR comprising only the necessary questions and schedules.”


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As soon as the new common form and associated utility are made known, taxpayers who file income tax returns using Forms ITR-2, ITR-3, ITR-5, and ITR-6 would no longer be able to do so, according to Sandeep Jhunjhunwala, a partner at Nangia Andersen LLP.

Modern reporting requirements, such as pass-through income or loss under various heads, income from virtual digital assets, declaration and details of Business Connection, Permanent Establishment, and Significant Economic Presence in India for non-residents, and details of foreign equity and debt interest held, continue to be the new common ITR form’s main highlights, according to Jhunjhunwala.