New Delhi

As India embarks on its journey towards a digitally empowered economy, the government is actively exploring transformative measures to simplify the Income Tax Return (ITR) filing process. These changes aim to streamline tax compliance for individuals and businesses, enhance efficiency, minimize errors, and foster transparency in the tax system. Let's explore the potential advancements in ITR filing and how upcoming budget measures can alleviate compliance burdens.

A significant innovation on the horizon involves leveraging advanced technologies such as Artificial Intelligence (AI) and Machine Learning (ML). These technologies could automate the pre-filling of tax returns with precise data sourced from Form 16, bank statements, and other financial records. This automation would significantly reduce manual errors and streamline the filing process.

The introduction of simplified ITR forms is also anticipated, designed to be intuitive and user-friendly. This initiative would particularly benefit small taxpayers and senior citizens who find current forms complex. Additionally, to simplify compliance for salaried individuals with only TDS-deducted income, treating Form 16 generated on the IT portal as equivalent to filing an ITR would eliminate the need for manual filing, offering a smoother and less time-consuming experience.

Further enhancements in the e-verification process and wider adoption of digital signatures are expected. These measures would enhance security and efficiency, enabling taxpayers to submit returns electronically without physical documentation. Moreover, with the increasing prevalence of smartphones, a dedicated mobile app for ITR filing could be launched, providing taxpayers with a convenient platform for filing, refund tracking, and receiving timely updates.

To enhance taxpayer support, the government should enhance help and support systems on the e-filing portal. This could include comprehensive FAQs, chatbot assistance, and live support options to address queries and guide users effectively through the process.

Potential Budget Measures to Ease Compliance:

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The upcoming budget has the potential to introduce several measures aimed at simplifying tax compliance:

• Increased Exemptions & Deductions: Consideration of higher exemption limits and enhanced deductions would lighten the tax burden on individuals, simplify filing, and increase disposable income.

• Rationalised Tax Rates: Streamlining tax rates could simplify understanding of tax liabilities, encourage compliance, and reduce the need for complex tax planning.

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• Frictionless GST for Businesses: Simplifying GST compliance, especially for SMEs, may include reduced filing frequencies, user-friendly GST return forms, and clear guidelines on input tax credits.

• Incentivising Digital Transactions: Introducing incentives for businesses adopting digital payments could promote a cashless economy, potentially through tax rebates or deductions for digital infrastructure expenses.

• Investment in Taxpayer Education: Allocating resources to taxpayer education programs would empower taxpayers with knowledge to fulfil obligations and effectively utilize available tools.

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• Enhanced Data Security: Strengthening cybersecurity infrastructure could safeguard taxpayer data in a digital environment, ensuring confidentiality and trust.

By implementing these innovations and supportive budget measures, the government aims to revolutionize tax compliance in India. These changes, if implemented promise a more efficient tax system, increased taxpayer participation, and compliance, thereby fostering economic growth and stability.