Filing Saral gets more difficult

Salaried taxpayer will have to disclose expenditure details.

Filing income tax returns is all set to become more cumbersome for salaried taxpayers as they will have to disclose a host of new details, including the number of dependents, income from residential property and household expenditure.

Using a new tax return form, 2F, which will replace the Naya Saral (form 2E), the government now intends to also seek details of a taxpayer's cash balance, bank balance, estimated total receipts from loans, gifts and donations, car loans, total investments in gold jewellery and household expenses.

On their part, revenue department officials said the information was being sought to reduce the likelihood of "intrusive investigation" by tax officials.

Tax experts said the objective was to reconcile a person's spending with his income, given that India is still by and large a cash economy.

"The objective of the exercise is to reconcile a taxpayer's bank withdrawals with his expenditure," Krishan Malhotra, partner, RSM & Co, told Business Standard.

Ravi Prakash, principal consultant, PricewaterhouseCoopers, said taxpayers would now be required to furnish details of their income from house property, including rent of the earlier year realised this year and taxes paid to the local authorities.

Also, taxpayers who had earned non-taxable long-term capital gains would have to mention their details.

Finance ministry officials added that cash flow statements furnished in the new return form would help the department reconcile an individual's expenditure with information collected through the Annual Information Return. (AIR).

The AIR captures information on seven kinds of transactions such as purchase and sale of house property of over Rs 30 lakh, investment in mutual funds and purchase of RBI bonds, among others, from third-party sources.