No proposal to withdraw Form 2F: Revenue Sec

New Delhi, Jun 10: The government has clarified that there was no proposal to drop the new Income Tax Form, Form 2F, to be effective from August 1, 2006, but said it could be modified in the next assessment year based on the feedback received from different parties.

"Form 2F to replace the From 2E(Naya Saral) at existence in present will be optional till July one,2006, the last day for filing Income Tax Return for salaried class," Revenue Secretary K M Chandrasekhar told source yesterday.

"Both the Forms can be used till them", he said.

In this regard, the Revenue Secretary denied media reports that the newly introduced Form 2F has been dropped.

Mr Chandrasekhar said for the assessment year 2006-07, a salaried taxpayer has the option to choose from a number of Forms available.

He can thus use Form 2 or Form 3, or Form 2D, or Form 2E or Form 16AA or the new Form 2F, if the taxpayer files his return by the due date, July 31, 2006.

After this date, the Form 2E will be discontinued, he said.

However, the salaried taxpayer will continue to have the option of filing his return in either Form 2 or Form 3 or Form 2D or Form 16 AAA or the new Form 2F.

Mr Chandrasekhar also clarifed that the cash flow statement in Form 2F, which has created much of the controversy, was only optional, but a salaried assessee stood to benefit if made use of it.

He said the Central Board of Direct Taxes(CBDT) was getting a lot of information about individual assessees through the Annual Information Report (AIR). Based on this he could be served notices to explain certain expenditure items.

However, if the cash flow statement is filled up by the individual assessee then this would obviate the need for sending such notices.

Mr Chandrasehkhar said the new form in fact was friendly to all nature of assessees, particularly salaried persons, though unfortunately an impression has gained ground that it would hurt the salaried taxpayers.

The Revenue Secretary was hopeful that more and more assessees would switch over to the new Form when they understand the logic that went into its making.

Mr Chandrasekhar said the new form had been introduced after a lot of consultations with chartered accountants and others, but the government will be receptive to the suggestions recieved from various interested parties. As the introduction of a Form requires a notification to be issued, in the next year modifications could be carried in Form 2F.

Mr Chandrasekhar said Income Tax Forms are assessment year specific and are required to be notified for every assessment year. Therefore, the new Form 2F will have to be reviewed for the year 2007-08. While re-notifiying the government will take into account all suggestions that it recieves from various quarters. The Revenue Secretary justified the introduction of Form 2F, which has four pages but no annexures. He said Form 2E, which comprised one page, had several drawbacks.

First, the one page has been achieved by limiting the spaces in between to fill in the particulars under different items. Inevtably, this space is not adequate and people have to use additional sheets.

Second, the Form requires annexures to be filed which may run into several pages. Besides, all the TDS certificates have to be filed along with Form 2E. Therefore, in practice, this return runs into several pages.

Third, the Department will require the taxpayers to switch over to the electronic filing and Form 2F is electronic friendly, whereas the existing Form 2E is not because of the annexures.

Form 1(13 pages) is for corporate taxpayers.

Form 2 (11 pages) is for non-corporate taxpayers who have a business or profession and not are claiming exemption under section 11 (applies to charities). This can be used by salaried taxpayers.

Form 2D (one page), 'Saral', a version of Form 2. However, this would have to be accompanied by annexures which may run into several pages. This can also be used by salaried taxpayers.

Form 3 (eight pages) is for non-corporate taxpayers who have no business or profession.

Form 3A (11 pages) is for Charitable Institutions and others who claim exemption under section 10 or 11.

Form 16 AAA is for salaried taxpayers whose income from salary does not exceed Rs 1.5 lakhs.

Mr Chdandrasekhar said the new form(Form 2F) was easy to fill because the spaces were elaborate and the process of calculating an income from a source has been explained in detail, enabling the assessee to compute income without much problem.

UNI