Wider radar to stop tax dodge
In a move to widen the tax base and plug evasion, the government plans to bring transactions such as hotel bills over Rs 20,000, education fee of over Rs 1 lakh and purchase of jewellery, white goods, marble or painting over Rs 1 lakh under the scanner of the income tax department.
The government has proposed to expand the list of reported transactions to include domestic business class air travel or foreign travel, cash deposit of Rs 10 lakh or more in non-current accounts, sale of foreign exchange above Rs 10 lakh, payment of property tax above Rs 20,000 per year, life insurance premium above Rs 50,000 and health insurance premium above Rs 20,000, mygov.in said in a tweet on Thursday which has been subsequently removed.
As part of the multiple reforms to improve tax compliance, faceless assessment and the ease of filing returns, the government has proposed to reduce the threshold of various transactions for tax disclosure.
Tax experts said to bring more transactions under the scanner would require an amendment of the Income Tax Act. Section 285A is an enabling section, which empowers the CBDT to prescribe various transactions for reporting to the I-T department.
Noted tax advocate Narayan Jain said, “This has been done with the objective of widening the tax base but monetary limits need to be revisited and should be reasonably increased so that compliance becomes easier. In the case of financial transactions or payments above Rs 50,000 and up to Rs 2 lakh, furnishing of PAN should be enough.”
“Taxpayers claim deduction for medical insurance and life insurance premium. So, it may be illusory to cover the same for the purpose of reporting or for mentioning in Form 26AS. Again, in most of the cases, the property tax paid is claimed as deduction for computing income from house property. The taxpayer charter assured of minimising compliance cost but these reporting measures are likely to substantially increase the compliance cost,” he added.
The government has also proposed to deduct TDS at higher rates for those who do not file income tax returns. There is also a proposal for compulsory filing of ITR by those having bank transactions above Rs 30 lakh, all professionals and businesses having turnover of more than Rs 50 lakh and payment of rent above Rs 40,000.
More transactional categories in the reporting imply an enhanced flow of information to tax authorities, but will put the onus on taxpayers to comply voluntarily. When implemented, it will also be reflected in Form 26AS, the consolidated annual statement showing tax deductions/ collections and advance tax against an individual’s PAN.