Keeping a tab on spending

Photo: Getty Images/Istock

Photo: Getty Images/Istock  


High-value transactions to come under the scanner.

The Budget has done its bit to improve the ‘ease of living’ for assessees by bringing in pre-filled returns as well as faceless assessments. At the same time, to keep track of high-value spends, the government, in the Budget, has brought assessees who enter into high value transactions and whose income is otherwise not taxable, under the return filing net.

Return filing has got a bit quicker with the Budget introducing pre-filled tax return forms. While the personal information is usually auto filled in most e-returns, pre-filled tax returns with details of salary income, capital gains from securities, bank interests, and dividends and tax deductions will also be available from now on.

E-assessments will help reduce harassment by tax officials in case your returns are taken up for further scrutiny. If you are receiving a maturity payout from an insurance company where the premium paid during any year is more than 10% of the sum assured, the receipt is taxable and a TDS of 1% is levied on the gross amount paid.

However, when you disclose your income on this front in your tax return, you are required to disclose the net income (after deducting the premium paid from the total sum received). This leads to a mismatch between income as per the TDS return of the deductor (ie the insurance company) and the income declared by you. To weed out this anomaly, a 5% TDS will be charged on net income from September 1, 2019 onwards. This should help prevent possibility of tax disputes due to mismatch in income declared.

Tightening the grip

But the goodies end there. Several measures have been taken to widen the tax base which puts the individual taxpayer under the scanner. To keep track of high value spends, the Budget has introduced mandatory return filing for certain persons even if their incomes are below the taxable limit.

Thus, from assessment year 2020-21 onwards ( ie, for transactions /income during 2019-20), you will have to file your returns if you have deposited more than ₹1 crore in a current account, have spent more than ₹2 lakh on foreign travel for yourself or others or have paid an amount of ₹1 lakh or more towards electricity bills. Besides, as per the current laws, a person claiming benefit of exemption from capital gains tax on investment in specified assets like house, bonds etc., is not required to furnish a return of income, if after the claim, his total income is below that taxable limit. Now, a return has to be filed if before the claim, your total income is above the taxable limit.

Further, to keep tabs on high value transactions entered into by those who don’t possess a PAN, quoting of Aadhaar has now been mandated from September 1, 2019. Cash withdrawals in excess of ₹1 crore in aggregate during a year from a bank/co-operative bank or post office will attract TDS (tax deduction at source) of 2%.

Sellers of immovable property (other than agricultural land) could now see more outflow on account of TDS levied as 1% of consideration. This is because the definition of ‘consideration’ has been expanded to include club membership fee, car parking fee, electricity and water facility fees among others., maintenance fee or any other similar charges incidental to transfer of the immovable property. Individuals providing contractual work or professional service will now see a TDS cut of 5% on receipts/professional fee in excess of ₹50 lakh in aggregate in a year. All these TDS moves will also take effect from September 1, 2019.

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Printable version | Jan 23, 2020 7:57:38 PM | https://www.thehindu.com/business/budget/keeping-a-tab-on-spending-the-government-has-brought-assessees-who-enter-into-high-value-transactions-and-whose-income-is-otherwise-not-taxable-under-the-return-filing-net-in-the-budget/article28307259.ece

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