What is the Common ITR Form?

The Central Board of Direct Taxes (CBDT) has proposed a common income tax return (ITR) form for all taxpayers, announced in the budget 2023 by FM, to simplify the process of submitting an ITR.

It is proposed to merge all ITR Forms except ITR Form-7. Applicable onwards AY 2024-25.

According to the CBDT,

  • The common ITR form focuses to provide a better user interface (UI), includes, smart design and logical flow.
  • Only the relevant fields of any particular schedule will be visible as per requirement. For example, let’s say a taxpayer has only capital gains as income, then only the schedules of fields that relate to capital gains will be shown and not the others.
  • It will also facilitate the reconciliation of third-party data available with the ITD and the data reported in the ITR.
  • The data arrangement will be improved over the existing flow, as well the “scope of pre-filling” of data will be expanded.

Hence, it intends to ease the procedure and reduce the time taken in filing ITRs with the common ITR Form.

At present, there are seven types of ITR forms meant for different categories of taxpayers based on the source of income, residential status, etc. The existing forms are mandatory for taxpayers to go through every schedule, whether it applies or not.
Thus, several taxpayers are confused about choosing the right ITR form applicable to them and redoing the tax filing if an incorrect tax form is selected. And sometimes fill in the section not applies to them. Hopefully, a common ITR form will eliminate such challenges.

The proposed common ITR form will be merged of all ITR forms except Form-7, which is relevant to charitable organizations, business trusts, and investment funds, among others. However, the taxpayer has the choice to submit the existing form ITR-1 or ITR-4 (if applicable) or common ITR form at their convenience.

CBDT said, "The proposed draft ITR takes a relook at the return filing system in tandem with best international practices.

The scheme of the proposed common ITR is as follows:

(a) All taxpayers must provide basic information,
computation of total income, total tax liability, tax credits, and details of bank accounts.

(b) The ITR is customized for taxpayers with applicable schedules based on the taxpayers’ responses to certain questions.

(c) The questions have been designed in such a way and in such an order that if the taxpayer answers ‘no’ to any question, the other questions linked to that will not be displayed to the taxpayer.

(d) Instructions regarding the applicable schedules have been to assist with the filing of the return.

(e) The proposed ITR has been designed in such a way that each row contains only one distinct value, which will simplify the filing process.

(f) The utility for the ITR will be rolled out in such a manner that only applicable fields of the schedule will be visible and the set of fields will appear more than once if necessary.

Hence, following the above structure will make the compliance process easy. What are your thoughts on the same?

@Muskan_Balar Is this Common ITR Form applicable from AY 2024-25?

Hi @akash_jhaveri,

It is expected that the proposed common ITR form will be applicable from financial year (FY) 2023-24 and assessment year (AY) 2024-25.

Hope it helps.