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Stick to Saral, forget 2F: House panel
November, 29th 2006

The new Saral is not saral, it is instead kathin (difficult). The new income tax return form 2F, introduced by the finance ministry this year, has drawn criticism from the Parliamentary Standing Committee on Finance.

The committee has opined that the new tax return form was cumbersome and lengthy and has asked the government to stick to the previous one.

Overall, the committee remains unconvinced about the reason and justification for introducing the new Form 2F, particularly the need for a cash flow statement, the committee said it its report tabled in Lok Sabha on Tuesday.

However, the ministry, has said it was open about all suggestions on the form. On the likelihood of the revenue department reconsidering the Form 2F, it has said it will take into account all suggestions received from all quarters, on the design of 2F when the form is renotified. The form will have to be renotified for assessment year 2007-08 as per provisions of the Income Tax Act.

The government had notified the new 4-paged form on June 1, 2006. While it came into effect immediately, it was not made mandatory. The assessees had the choice of filing their returns on the Saral also for assessment year 2006-07. The department said the new form had been brought to overcome difficulties in the earlier form like lack of space, requirement of attachment of annexures, inadequate explanatory instructions, difficulty in matching information collection through third party returns.

The panel said the department should update the earlier return Form 2E by providing more space or columns in it, instead of introducing another Form.

The income tax department is supposed to accept the disclosures made by taxpayers in balance 98% of returns, the committee said it was absolutely unnecessary to include cash flow statement in return forms.

The committee are of opinion that once the income is taxed, utilisation of the taxed income by the assessee should not be the concern of the income tax department. Therefore, the government must do away with the provision of cash flow statement in Form nos 2F and 3 altogether, the report said.

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