The Central Board of Direct Taxes (CBDT) proposed a new common Income-Tax Return (ITR) with a better focus on revealing income from crypto assets, foreign equity and debt instruments held by the resident Indians.

For Non-Resident Indians (NRIs), the draft ITR seeks comprehensive details from the nature of the business, Permanent Establishment (PE), business connection, the entity having a Significant Economic Presence (SEP) in India, along with the number of Indian users.

The SEP provision was delayed till 2022-23 when a multidimensional solution under OECD is considered, and all tax agreements will get edited automatically. The new proposed ITR is developed, including contemporary reporting requirements such as pass-through income or loss. CBDT sought industry stakeholders’ comments by 15th December based on the proposed changes in the tax form.

Taxpayers are obligated to furnish their Income-tax returns in Form ITR-1 to ITR-7, liable upon the taxpayer’s legal classification and nature of income. The new common ITR form is available parallel to the old forms in ITR-1 and ITR-4.

Taxpayers filing income returns in Forms ITR-2, ITR-3, ITR-5, and ITR-6 would not get an option to file the old forms once the new common form and related efficacy are notified.

The ITR protocol for Non-Resident Indians widens the SEP principle scope that was announced in the Finance Bill 2018-19 and the defined ‘business connection’ to include a download of data or software provision only if the aggregate payments from transactions exceeds a given amount, or if a multinational interacts with a prescribed number of users.