The Income Tax Department is planning a significant overhaul of tax forms to streamline reporting processes and boost compliance with the upcoming Income-tax Act of 2025 effective from April 1. The proposed draft rules aim to simplify reporting for taxpayers, professionals, and institutions by introducing new form templates and eliminating outdated form numbers that have been in use for years. This restructuring is expected to minimize confusion and redundancies in filing procedures, according to experts.
The renumbering initiative will not only facilitate better alignment of reporting with real-time data matching and analytics but will also necessitate swift adaptation and system upgrades by employers, tax practitioners, registrars, and corporate systems. Key changes include consolidating or renumbering commonly used audit and international tax forms. For instance, tax audit reports currently submitted through Forms 3CA, 3CB, and 3CD will be merged into Form 26, while transfer-pricing audit reporting will transition from Form 3CEB to Form 48. Additionally, Minimum Alternate Tax (MAT) certification will shift from Form 29B to Form 66.
MAT, a 15% tax on book profits for companies with a tax liability lower than 15% of their book profit, will undergo this transition. Taxpayers seeking Tax residency certificates will now use Form 42 instead of the previous Form 10FA, with DTAA-related disclosures now consolidated into Form 41 from the earlier Form 10F. Moreover, core withholding and reporting forms have been renumbered, with lower or nil TDS applications now under Form 128 and salary TDS certificates under Form 130.
Furthermore, periodic TDS returns like 24Q, 26Q, and 27Q have been reassigned to Form 138, Form 140, and Form 144 respectively. TCS returns have been shifted from 27EQ to Form 143. Other changes include renumbering the annual tax statement (26AS) to Form 168, transforming the Statement of Financial Transactions from 61A to Form 165, and relocating foreign remittance declarations from 15CA to Form 145, along with the CA certificate for remittances moving from 15CB to Form 146. Experts anticipate that these modifications will simplify the process of filing returns, establish clearer valuation norms for income and perquisites, and enhance the standardization of the compliance framework.
