The Telegraph
Since 1st March, 1999
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Congress gets its token rollback, but on tax
Saral makes a comeback

New Delhi, June 8: Under pressure from the Congress, the Centre today rolled back one of its “progressive” economic decisions ' a new tax form that sought to record the individual taxpayer’s actual expenditure and cash inflow.

The government’s capitulation came a day after it managed to stall, at least for now, the party’s demand for a review of the petrol price hike.

The new four-page tax form, 2F, will be around for just this year and taxpayers may ignore it altogether if they send in their annual tax returns by end-July.

They can continue using the older “New Saral” form 2E, which asks for less information but requires a large number of documents to be attached.

If a taxpayer files returns after July, he will have to use the 2F but may disregard a schedule that asks about his cash flows ' that is, for information on investments made, expenses incurred, loans secured and gifts received together with the opening and closing balance of bank statements.

The rollback came days after Sonia Gandhi made it clear to Prime Minister Manmohan Singh and finance minister P. Chidambaram that she felt the criticism of the new Saral form within the Congress should be heeded. Party members were worried that taxpayers might see the new form as intrusive.

With a slashing of petrol prices also expected after some time, this could mark a turning point in the tug-of-war between the Congress’s political interests and the government’s programme of economic reforms.

Till now, it has been opposition from the Left that has led to economic decisions being stalled or reversed ' as happened with the plans to sell stock in blue-chip PSUs, hike the FDI cap in insurance or open up the retail sector.

“The (2F) form, which is for just this assessment year, may be modified in the light of feedback next year,” revenue secretary K.M. Chandrasekhar said.

He said the income-expense statement in the new form was meant to end the income-tax department’s current practice of “fishing” for defaulters.

This practice, he said, was perhaps more intrusive as it forced people to come and explain their costly purchases before a tax official and prove they were legitimate.

The information they would have provided in the new format would have saved them all this trouble, he said.

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