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Extend scope of Income Tax Scrutiny Relaxations: ICAI

In the Budget Speech on 1.2.17, the Honble Finance Minister mentioned that the assessees, having taxable income upto Rs.5 lakhs other than business income, will not be subjected to scrutiny unless there is specific information available with the Department regarding his high value transaction

Relaxation from scrutiny provisions for assessees, having taxable income up to Rs. 5 lakhs other than business income, filing return for the first time – Scope of relaxation to be extended

Issue/Justification

In the Budget Speech on 1.2.17, the Hon’ble Finance Minister mentioned that the assessees, having taxable income up to Rs. 5 lakhs other than business income, will not be subjected to scrutiny unless there is specific information available with the Department regarding his high value transaction:

“In order to expand tax net, I also plan to have a simple one-page form to be filed as Income Tax Return for the category of individuals having taxable income up to Rs. 5 lakhs other than business income. Also, a person of this category who files income tax return for the first time would not be subjected to any scrutiny in the first year unless there is specific information available with the Department regarding his high value transaction. I appeal to all citizens of India to contribute to Nation Building by making a small payment of 5% tax if their income is falling in the lowest slab of Rs. 2.5 lakhs to Rs. 5 lakhs.” (Para 176)

Suggestion

It is a welcome move. However, in order to encourage more people to file income tax returns, necessary provisions may be introduced, such as:

  • Individuals having taxable income up to Rs. 10 lakhs may not be subjected to scrutiny for 3 Assessment Years unless there is specific information available with the Department regarding his high value transaction.
  • Individuals who pay 30% more taxes as compared to immediately preceding assessment year, may not be subjected to scrutiny for such Assessment Year unless there is specific information available with the Department regarding his high value transaction.
Source-  ICAI Pre-Budget Memorandum–2018 (Direct Taxes and International Tax)
Categories: Income Tax
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