Recently, the Special Investigation Team (SIT) constituted on black money submitted its first report to the Supreme Court wherein indications are that certain changes like disclosure of foreign travel in a year in income tax return have been suggested.
Over the past decade, Indians undertaking foreign visits have increased manifold due to holidaying, medical treatment, education and business requirements as well as liberalization of exchange controls. While foreign travel expenses incurred for business purposes are tax deductible, personal foreign travel
The purpose of the purported coverage of the foreign trip in the income tax return seems to be to closely scrutinize the personal foreign travels undertaken by Individuals and whether expenses for the same have been duly accounted by taxpayers. It is worthwhile to note that for this reason, the Income-tax Act had introduced a scheme (later on recognized as one-by-six scheme) which provided six economic criteria including foreign travel which necessitated furnishing return of income even if total income was below the threshold limit. However, the scheme did not work, and the same had to be abolished in 2006.
One of the major challenges tax administration is facing is abundance of data but limited resources to scrutinize the same particularly when a large number of foreign travel expenses are incurred for business purposes by employers. As such, if such reporting is introduced, the tax administration needs to be geared up to meet challenges of data analysis and revalidation with tax returns.
Do you think CBDT should extend Tax Audit Report and relevant ITR Due Date? Please Comment, Vote, Retweet and Like.— Tax Guru (@taxguru_in) September 18, 2018