“No. of taxpayers are significantly low with only 1.5 Crore paying taxes out of 130 Crore people” Hon’ble PM Narendra Modi said while launching platform for ‘Transparent Taxation’-Honouring the Honest on 13th August 2020. The Post in twitter handle on same day revealed a fresh set of expenditure items to be traced by Income-tax Department. The tweet was subsequently deleted but the details reveal that Income-tax Dept. wants to expand the list of Reportable Financial Transactions to increase tax base. Govt. proposed to introduce 11 new transactions which will appear in Form 26AS and compulsory filing of returns for certain persons.
1) Education related fees and donations above 1 lakh in a year.
2) Electricity bills of above 1 lakh in a year
3) Domestic business class air travel or foreign travel.
4) Hotel bills above Rs.20,000/-
5) Purchase of jewellery, white goods, paintings, marble, etc. above Rs.1lakh. White goods includes Electronic Products i.e. TV, Refrigerator, Washing Machine.
6) Deposits or withdrawals above 50lakhs in Current Accounts.
7) Deposits or withdrawals above 25lakhs in Non-Current Accounts.
8) Payment of property tax above Rs.20,000/- per annum.
9) Life Insurance premium above Rs.50,000/-.
10) Health Insurance premium above Rs.20,000/-.
11) Share Transactions, Demat account and bank lockers.
1) By those having bank transactions above 30lakhs.
2) All businesses having turnover of more than Rs.50lakhs
3) Payment of rent above Rs.40000/-
4) Deduct TDS at higher rates for those who do not file income-tax returns.
4. HOW GOVT. WILL KNOW ABOUT THESE TRANSACTIONS-
PM Modi focused on Less Compliance and Clear Compliance. But this seems to be contradictory with the above proposal. If any persons enters into above transactions then it will be additional burden on Schools, Colleges, Hotels, Jewellery Shopkeepers, Galleries, businessman, etc. to maintain data of persons who purchases from them and then report to Govt. Already businesses are reporting detailed transactions in GST returns. The proposed additional burden may increase compliance on businesses and it may harm ranking of Ease of Business as 63rd as said by PM Modi.
5. IMPLEMENTION OF ABOVE PROPOSAL-THE BIGGER CHALLENGE-
There is nothing that is impossible to implement but it requires highest level of planning to overcome the challenge that comes into the way when we take bold move. The challenges may be-
1) How these proposals may be implemented beyond cities where there are network issues?
2)Will businessman do Business or only Compliances?
3) How reconciliation of proposed expenses with income can be done in electronic mode since it is now E-Assessment?
Govt. has to take certain steps to ensure higher filing of returns and payment of taxes. But at the same time it should ensure that it does not forces any person to file return or explain their expenditures when their income is below taxable limit. They may make hotel bill payments or pay travel bills from their accumulated savings. Govt. should trace big ticket transactions incurred by higher income earning persons rather than tracing transactions with smaller values which results in unnecessary problems for middle class and lower middle class persons. We cannot ignore that these bold moves of Govt. are taking our nation to one step higher but at the same time it should not hurt feelings, emotions and financial liberty of the citizens of India. But at present it is only a proposal and has not be notified yet.
The above comments do not constitute professional advice. The Author can be reached at email@example.com. My name is CA Divya Agrawal and I am Practising Chartered Accountant. I also upload educational videos in You tube and name of my channel is FINANCIAL TREE COMPANY. Soon we are launching our website- www.financialtreecompany.com. My aim is to help people in improving their financial health by spreading knowledge and love. Stay Financially Fit and Healthy.