Budget has announced several steps to widen the tax net, mainly by tracking expenditure rather than just income declaration
You may have so far avoided filing income tax returns due to various reasons. But, not for long. The Union Budget 2019 has proposed to make return filing compulsory for persons who have done these three things even if they don’t have taxable income on paper.
These conditions are such that it may be difficult for somebody with significant income to side-step them. What are these conditions? According to Finance Minister Nirmala Sitharaman, if you have deposited more than Rs 1 crore in a current account in a year, or have expended more than Rs 2 lakh on foreign travel or more than Rs 1 lakh on electricity consumption in a year, you have to file returns.
“It is proposed to make return filing compulsory for persons, who have deposited more than Rs. 1 crore in a current account in a year, or who have expended more than Rs. 2 lakh on foreign travel or more than Rs. 1 lakh on electricity consumption in a year or who fulfils the prescribed conditions, in order to ensure that persons who enter into high-value transactions also furnish return of income,” the Finance Minister said in her maiden budget speech.
While you may have not deposited Rs 1 crore in a current account in a year, but the Rs 2 lakh expense tab on foreign travel is a very common situation. Rs 2 lakh translates to less than $3,000.
“This is similar to the earlier scheme of mandatory filing of returns on fulfillment of certain criteria but which was subsequently withdrawn,” points out Suresh Surana, Founder of RSM Astute.
The government has also proposed to provide that a person whose income becomes lower than the maximum amount not chargeable to tax due to a claim of rollover benefit of capital gains shall also be required to furnish the return. This move will ensure that the tax department’s net will be thrown wide.
The Finance Minister has proposed to provide interchangeability of PAN and Aadhaar to enable a person who does not have PAN but has Aadhaar to use Aadhaar in place of PAN under the Act. So, if you had Aadhaar but no PAN, you can no longer stay under the radar. The Income Tax Department shall allot PAN to such person on the basis of Aadhaar after obtaining demographic data from the Unique Identification Authority of India (UIDAI).
It is also proposed to provide that a person who has already linked his/her Aadhaar with his/her PAN may at his option use Aadhaar in place of PAN under the Act.
The Inter-changeability of PAN & Aadhaar and mandatory quoting in prescribed transactions or for filing or return would help to increase the tax base.
In order to track high-value transactions, it is proposed to provide that the quoting and authentication of PAN/Aadhaar shall be mandatory for certain prescribed transactions. “It is also proposed to provide that the person receiving relevant documents shall ensure correct quoting and authentication of PAN/Aadhaar for the prescribed transactions. To ensure compliance of these provisions it is also proposed to amend the relevant penalty provisions,” Sitharaman said.
Presently, the Act provides for making PAN invalid if it is not linked with Aadhaar within a notified date. In order to protect past transactions carried out through such PAN, it is proposed to provide that if a person fails to intimate the Aadhaar number, the PAN allotted to such person shall be made inoperative in the prescribed manner after the date notified for the said linking.
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