With a 26 per cent increase in tax collection, the government is set to launch the next round of tax administration reforms that are likely to cut down on the number of forms available for filing income tax returns (ITR). This change will bring convenience to tax payers and reduce the time taken for filing returns.
There is a jump in direct and indirect tax collections in 2022 due to clear signs of revival of the economy after the pandemic and government efforts to plug tax leakages. In the coming days, the government may take more strict action against the tax evaders. Also on stricter tax norms for e-commerce and online service providers apart from online gaming.
India is all set to host the leaders of G-20 countries next year. Along with this, taxation in the digital economy, ensuring fair share of taxes to developing countries and taxation of cryptocurrencies will also be on the agenda. Rationalization of long-term capital gains tax structure is also expected to bring about parity in holding periods among similar asset classes. Currently, long-term capital gains on shares held for more than a year are taxed at 10 per cent.
Long-term capital gains tax of 20 per cent is levied on sale of immovable property and unlisted shares held for more than two years and loan instruments and jewelery held for more than three years. Some changes in the new tax regime are expected to happen next year as well, as the government seeks to make the exemption-free tax regime more attractive to individual income tax payers.
The tax authorities are working on creating a common ITR form for most taxpayers. However, for individual taxpayers the forms (ITR-1 and 4) will continue. Taxpayers filing ITR-1 and ITR-4 will have the option to choose whether they want to file their tax returns either the proposed common ITR form or the existing form. At present, there are seven types of ITR forms available for different categories of taxpayers.