ITR filing to become compulsory for these people, more classes may be notified!
Budget has proposed to make Income Tax Return (ITR) filing compulsory for persons who deposit over Rs 1 crore in a current account in a year, spend over Rs 2 lakh on foreign travel or have an annual electricity bill of more than Rs 1 lakh.
Proposals in Budget 2019 have made tax evasion by the super-rich difficult. For example, the Budget has proposed to make Income Tax Return (ITR) filing compulsory for persons who deposit over Rs 1 crore in a current account in a year, spend over Rs 2 lakh on foreign travel or have an annual electricity bill of more than Rs 1 lakh. Now, according to a report by news agency IANS, the government may notify some other classes of people who would be required to file income tax returns. This will be a move to contain tax evasion by a government which is armed with transaction details using big data analytics.
Revenue Secretary Ajay Bhushan Pandey was quoted as saying by the agency: "People evading tax have to be dealt differently. The 2 per cent TDS (in case of withdrawal of more than Rs 1 crore cash from bank account in a year) is actually for those who are getting away. You must have seen in the budget that there are several measures such as those whose electricity bill is more than Rs 1 lakh would need to file return. We may notify some other class of people who would be required to file tax returns."
As per tax experts, the proposed move is the budget is positive and it will help widen the taxpayer base while curbing evasion. Experts, now believe that going forward, high hotel bills, massive expenditure on holding a party or purchasing a car could require people to file tax returns.
"The government has already said that those doing high-value transaction would be covered. The next could be high hotel bills, clubs, expenditure on holding a party, purchase of cars and investment above a certain level," Riaz Thingna, Director, Grant Thornton, was quoted as saying. "If someone is buying a car for Rs 5 lakh, it is unlikely that his income would be less than Rs 5 lakh. Today, people are buying Rs 75 lakh car and still not paying taxes. So, I think there are enough opportunities to take up so many different areas."
Even as tax compliance has improved in the last few years, with a huge rise in number of returns filed, there is enough scope for improvement.
According to the official data, as many as 6.86 crore income tax returns (ITRs) were filed in 2017-18.
Budget 2019 has raised surcharge on super rich. Accordingly, those with annual income between Rs 2 to Rs 5 crore would be levied a surcharge of 25 per cent from 15 per cent previously. For those earning Rs 5 crore or more annually, the surcharge has been increased from 15 per cent to 37 per cent. With this, the effective tax rate will go up to 39 per cent for those in the Rs 2-5 crore income slab. The effective rate for those in Rs 5 crore and above group would go up to 42.74 per cent.
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