Filing ITR to be a tiring task for equity/MF investors doing SIP, STP, SWP

Filing ITR to be a tiring task for equity/MF investors doing SIP, STP, SWP:

Filing Income Tax Returns (ITRs) is a relatively easy task for salaried individuals having total income up to Rs 50 lakh, income from one house property, and income from other sources like interest income, as they need to file the simple ITR-1, provided such a taxpayer is not a director of any company, has not invested in unlisted shares and/or don’t have any income from business or profession.

However, apart from non-fulfillment of any of the above conditions, if a salaried individual redeems his/her equity share(s) – be it a listed share – and/or equity-oriented mutual fund (MF) unit(s), he/she will have to file ITR-2, provided the taxpayer doesn’t have any income from business or profession.

Not only ITR-2 excel utility has 28 pages compared to just 8 pages in ITR-1, but from this year, instead of filling the consolidated capital gain (CG) amount, investors need to fill Schedule 112A for each transaction amounting to a long-term capital gain (LTCG) from the sale of equity share in a company or unit of equity-oriented fund or unit of a business trust on which STT is paid under Section 112A of the Income Tax Act.

The Schedule 112A page was introduced in July last year during the peak of tax filing session for the Assessment Year (AY) 2019-20 with almost half of the taxpayers already filed their return of income. As a result, Schedule 112A was optional last year, and investors were allowed to provide consolidated LTCG on the CG page.