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Home » IANS » I-T dept plans active reporting of high value transactions for enhancing tax base

I-T dept plans active reporting of high value transactions for enhancing tax base

By IANS
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New Delhi, Aug 14 (IANS) The government may have eased tax compliance measures through its ‘transparent taxation’ initiative but it proposes an extensive drive to enhance the country’s tax base by aggressively pursuing reporting of high value expenditure that qualifies persons to disclose their income and pay taxes.

Accordingly, if a person makes payment to hotels of over Rs 20,000, or pays life insurance premium over Rs 50,000 or purchases white goods, jewellery, marble or paintings, or consumes electricity above Rs 1 lakh per annum, all the expenses would be reported to the income tax department by the entity receiving the payment.

“These measures have been introduced so that the country’s tax base gets expanded. Only about 6.5 crore people file returns and just about a third or less pay taxes. Some of the transactions were being tracked by the department earlier as well and few more would be done now,” said a tax expert from one of the four big audit and consultancy firms, asking not to be named.

The long list of expenses qualifying for proper reporting, also includes payment of property tax exceeding Rs 20,000, business-class airline travel (whether domestic or foreign), deposit of over Rs 50 lakh in current accounts and Rs 25 lakh in non-current accounts, payment of educational fee of over Rs 1 lakh per annum, health insurance premium above Rs 20,000 and share transactions with Demat account, as per a communication from the income tax department.

All such expenses would be reflected in an individual’s tax account statement called Form 26 AS. It would help in calculating tax liabilities properly while also allowing the department to bring more people into the tax net who so far have evaded the system.

The difference in reporting from earlier is that it has brought several non-financial sector transactions as well for reporting. So even a normal fee payment to an educational institution or a premium payment for health would go through the taxman’s lens for compliance issues.

Some of the reporting transactions were announced in the Budget but its actual implementation will start now. Though the limits on bank deposits have been hiked, it is mandatory upon a person to file a tax return if bank transaction exceeds Rs 30 lakh or for businesses having a turnover of over Rs 50 lakh and payment of rent above Rs 40,000.

But to prevent the reporting of identified transactions from becoming a harassment tool in the hands of authorities, the tax department proposes to have limited physical interface on the matter and would verify transactions against a PAN number with the return online. Taxpayers would also be informed if they need to rework their returns online.

Though the country’s tax base has expanded from a level of 3.31 crore in 2013-14 to 6.48 crore in 2019-20, it still remains very small compared to other countries considering the size of India’s population. Only around 1.5 crore individual taxpayers actually pay taxes.

Further, around 1 crore individuals disclosed income between Rs 5-10 lakh and only around 50 lakh individual taxpayers have disclosed income above Rs 10 lakh while the number of persons declaring annual income above Rs 5 crore is just over 8,000.

–IANS

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(This story has not been edited by Newsd staff and is auto-generated from a syndicated feed.)
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