New Delhi: Purchase of jewellery, white goods and paintings of above Rs 1 lakh, payment of education fees and donations of a similar amount, domestic business class and foreign travel, and hotel bills of Rs 20,000 will soon come under the Income Tax Department’s scanner, the government indicated in a tweet.
The Income Tax department is looking to include more transactions under its transaction reporting framework. This means that financial institutions and other firms may have to report transactions that are above the prescribed thresholds.
The tax department will then mine the data to identify people, who are making large purchases, but are not paying taxes or filing their tax returns.
This is part of the government’s efforts to widen the tax base.
An Income Tax department spokesperson, however, told ThePrint that these are proposed measures and one will have to wait for the formal notification to understand the fineprint.
Data with the Income Tax department showed that in the financial year 2019-20, 6.4 crore income tax returns were filed.
But according to the numbers quoted by Prime Minister Narendra Modi Thursday, only 1.5 crore Indians out of the 130 crore total population pay their taxes.
The other transactions that will come under the scanner include payment of life insurance premium of above Rs 50,000, payment of health insurance premium and property tax payment of more than Rs 20,000 and electricity consumption of above Rs 1 lakh.
However, it could not be ascertained if these limits will be applicable to transactions made through online mode or via cash.
All these transactions will be in addition to the existing reporting requirements for banks and other financial transactions relating to high value cash deposits in current and savings accounts, besides purchase of bonds and debentures and payment of credit card bills.
‘Will increase tax compliance burden for business entities’
A tax expert, who did not want to be identified, said that the government is yet to formally notify most of these additional reporting requirements.
“But it has clearly signalled its intent to closely monitor many high value transactions to ensure more people come under the income tax net,” the expert said.
Nikhil Vadia, chartered accountant with N.N. Vadia and Co, said: “These changes if implemented are big. It will help in increasing the tax base. But it will also increase the tax compliance burden for business entities significantly.”
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