Money Guru: Filing ITR just got easier! Find out from the experts what benefits taxpayers will get from the Common Form?

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Money Guru: Filing income tax returns will soon be easier. As per the new update, very soon all types of taxpayers can file their ITR through a single common form. That means everyone has only one form. This will save people from the hassle of choosing the right income tax form for them. Comments on the new form have been sought from all stakeholders till December 15. We talk to tax experts Sunil Garg and Mukesh Gupta about what could be special about this new format and what benefits people are going to get.

General return form

  • Common return form will come soon
  • CBDT proposed to have only one form
  • Suggestions were sought from stakeholders till December 15
  • The objective is to simplify the return filing process
  • People will feel comfortable in filing taxes
  • ITR-1 and 4 i.e. Sahaj and Sugam are active
  • ITR-7 will remain in the old form
  • Many details are pre-filled in the common ITR form

Now how many types of shapes?

  • ITR 1- Sahaj-Taxpayers with income up to 50 lakhs
  • ITR 2 – Income from Residential Property
  • ITR 3 – Income from business, profession
  • ITR 4-Sugam-Individuals, Companies with income up to 50 lakhs
  • ITR 5&6-LLP for Companies and Businesses
  • ITR 7- For Charities and NGOs

Common ITR Form – What is the Use?

  • It helps in preventing tax evasion
  • Application of artificial intelligence in new form
  • The new form will automatically validate the AIS information
  • AIS- Annual Information Report
  • The new form is user friendly
  • It is easy to file return by yourself without help

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Increased tax collection

  • The government had a budget estimate of Rs 27.5 lakh crore for FY 22-23
  • Tax collection in excess of government assessment
  • India is strong despite the global economic slowdown
  • Reduction in tax evasion cases after implementation of GST
  • It will help reduce government deficit
  • Government can spend more funds on development

Will capital gains tax rules change?

  • Changes in capital gains tax rules are possible
  • The holding period rules are subject to change
  • 12-24 months holding period on shares, debentures, bonds etc.
  • 36-48 months holding period for house, flat, land
  • LTCG and STCG currently have different tax slabs
  • Listed stocks 12 months

What is the difference between listed and unlisted stocks?

  • Listed Shares – Shares listed on a stock exchange
  • Unlisted Shares – Shares that are not listed on a stock exchange
  • Tax rules are different for listed and unlisted stocks
  • Capital gain on sale of listed shares after 12 months
  • Capital gain on sale of unlisted shares after 24 months

What are the tax rules for listed and unlisted shares?

  • Capital gains tax is applicable on sale of listed shares, funds
  • Listed shares – long term capital gain, then deduction of `1 lakh
  • There is no discount on sale of unlisted shares
  • Unlisted shares attract 20% LTCG rate
  • The holding period for unlisted shares is 24 months

Tax on sale of bonus shares

  • The company issues bonus shares to shareholders at zero par value
  • The entire amount is taxable on sale of bonus shares
  • There is also no benefit of indexation in selling bonus shares.
  • Shares redeemed are not taxed to the shareholder
  • The company itself collects 20% tax on the buyback.
  • Tax on the difference between the redemption amount and the allotment price

Tax rules on ESOP shares

  • ESOP is taxed twice
  • ESOP-Employee Stock Ownership Plan
  • Tax on the difference between the market price and the quota price
  • The employee must pay taxes to the ESOP
  • Capital gains tax on the difference between the sale price and the market price when the shares are sold

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