New I-T form must from next year

But cash flow statements to remain optional.

Form 2F, the new income-tax return form for salaried individuals, notified on June 1, will become compulsory for assessment in the year 2007-08.

However, the cash flow statement, required under Schedule 5 of the new form, will continue to remain an optional liability for the 2007-08 assessment year.

Revenue Secretary KM Chandrasekhar, however, added that the new form could be modified next year, taking into account taxpayer feedback. "We will look at the utilisation of this form and evaluate feedback before deciding if any changes are needed," he added.

Allaying fears over the new form, Chandrasekhar, along with Central Board of Direct Taxes Chairperson MH Kherawala and Joint Secretary (Tax Policy) Arvind Modi, said the form had been notified for only one year.

"All options are open. We can notify it in the same format or allow the use of other forms for some more time. We are only trying to put in place a simpler, computer-friendly, electronically processable form," Chandrasekhar said.

Explaining the rationale behind the form, which took well over 18 months to finalise and does away with all annexures, including Form 16A providing details of tax deducted at source by the employer, the revenue department brass stressed on the fact that the new form was necessary in order to move towards electronic filing.

"With that we cannot have annexures and we need something that is information technology friendly", Chandrasekhar said.

Pointing out that Form 2F and 2E (Naya Saral) are virtually identical, Modi said the need to revise the single-page Naya Saral arose from a number of issues, including the lack of space to fill in details, the fact that all deductions under Chapter VI-A were not provided for, the absence of provision for adjustment of house property loss in earlier years and the need for more space for bank account particulars.

"We got a lot of feedback from taxpayers pointing out issues like these. That is why we decided to revise the design of Naya Saral," he added.

Officials took pains to clarify that the new form, 2F, was not longer than required.

"We have increased the space and spread out the items. Because it is four-pages, it does not mean it is very long. The length of the form is irrelevant," they said.

They added that the new form did away with the requirement for enclosing any statements showing the computation and TDS certificates, among other things. Only Form 2E (Naya Saral) is proposed to be replaced by Form 2F. All other forms continue to be in force, in particular Form 16AA which applies to the salaried class.