The Central Board of Direct Taxes (CBDT) is preparing to introduce significant changes to the Income Tax Return (ITR) forms in the coming assessment years. The move aims to curb tax evasion by collecting more detailed information about taxpayers’ income and spending patterns, including expensive vacations and luxury purchases.

Why Is the ITR Form Being Updated?

According to an ET report citing a senior official, the proposed ITR form changes are meant to:

• Track mismatches between income and expenditure.

• Identify taxpayers who underreport income or claim fake deductions.

• Improve the system’s ability to catch tax evasion through lifestyle indicators, like luxury travel and high-end spending.

What Will Be New in the Updated ITR Form?

Some of the proposed changes may include:

• More detailed disclosures on tax exemptions, deductions, and relief claims.

• Possible mandatory declaration of high-value personal expenditures, such as luxury travel or expensive purchases.

• Enhanced cross-verification with other data points like Annual Information Statement (AIS).

These steps aim to match the declared income with the visible lifestyle and spending patterns.

When Will the New ITR Form Be Rolled Out?

The fully revamped ITR forms are likely to be introduced in the next financial year, not for the current filing cycle. However, the CBDT may still add some additional information requirements to this year’s ITR forms.

AIS and TCS System Also Being Upgraded

The Annual Information Statement (AIS), which includes financial details like:

• Bank interest

• Dividends

• Tax Collected at Source (TCS)

...is also getting an upgrade. Many of these fields will now come pre-filled to make the ITR filing process easier, while also allowing the IT department to detect discrepancies.

Additionally, the TCS coverage has been widened to include:

• High-value luxury purchases

• Expensive services This means your lifestyle spending will play a larger role in the department’s risk assessment of your income declarations.

What This Means for You

Taxpayers will need to be more careful about:

• Reporting complete and accurate income.

• Avoiding false deductions or underreporting.

• Tracking and declaring big-ticket expenses that may raise red flags.

This marks a shift towards a more data-driven, transparent tax regime where your travel, shopping, and luxury habits might be under scrutiny.