The month of July is associated with the time for filing returns of income by individual taxpayers. The government has recently notified new forms for filing income tax returns. These forms replace the old ones. Any person planning to file her return for the year ended 31 March 2007 (relevant to income tax assessment year 2007-08) will have to use the new forms

All the new return forms have a common prefix – ITR. Although the amendment in the Income Tax Rules, 1962 mentions that the new forms apply for the assessment year 2007-08 and subsequent years, the notes at the end of the new forms say that the forms are applicable only for assessment year 2007-08.

Perhaps, the government may change the forms yet again. The new forms are now mandatory for assessment year 2007-08. Old forms can be used for earlier assessment years.

Finance minister P. Chidambaram believes that the return forms in India are the simplest in the world. But does that make our tax returns simple? Old saral was a simple one-page form while the new forms – eight in number – are between two and 20 pages. This excludes the long list of instructions attached to each of these.Taxpayer and trigger scrutiny assessment. Some observations on the forms:

The process is simple for only a small segment of taxpayers deriving income only from salary and interest – they need to fill the simplest of the lot, form ITR-1.

The old saral was more like a summary sheet, wherein the taxpayers had to give their income information through one-liners. Now, taxpayers need to read the instructions carefully as they are required to fill small details, which were annexed earlier.

For instance, ‘Schedule S’, which seeks salary details of the individual, requires the employer’s PAN and other details to be provided in the return. If the employee has worked under more than one employer, then only the details of the last employer are to be filled in. Obviously, the salary income earned from all the employers is to be grossed and disclosed in the return.

Capital gains now call for the computation giving amounts of cost of the asset, cost of improvement, if any, and any other direct expenditure on transfer of the asset. In case of sale of more than one capital asset – short-term or long-term – a combined computation of all the assets is to be provided.

Since the new return is now annexure-less, the details of TDS certificates, Forms 16 and 16A, are to be given under Schedules TDS 1 and TDS 2 respectively, which provide space for only two entries each. In case the rows are not sufficient, one is expected to attach a table in the same format to the return.

Similarly, in case of income from house property, details of up to only two house properties can be filled in. In case of more than two properties, the details are to be furnished in a separate sheet. After all, not all returns will be annexure-less.

The most important part of these returns, is the disclosure of the details attracted by the annual information return. Since the AIR is filed by institutions like banks, companies, mutual funds registrars and transfer agents, any discrepancy between the information given by the taxpayer with that in the AIR can fall seriously on the.