The Prime Minister of India, Narendra Modi, provided taxpayers a reprieve. The Government of India (GOI) introduced a new system for people who pay taxes honestly, by allowing them to be assessed faceless. GOI also introduced the Taxpayer Charter implementation, which takes specific radical steps towards tax reforms and helps the Government already increase the scope that’s shown on Form 26AS.
The list also includes the payment of white good purchases, property tax, Life and Medical insurance premiums, and hotel bills, eventually reducing the overall threshold limit. On paying property tax, you can avail of the tax returns on insurance premiums, medical goods, and even hotel bills, according to Form 26AS.
Transparent Taxation –
The Prime Minister launched a platform known as “Transparent Taxation,” which is primarily created for streamlining the process for tax-paying for those looking to reduce the overall corruption scope and officials overreaching. GOI added it further by sharing a proposal that reduces the transactions for the threshold to make it easier for tax disclosure.
Here’s a bit about the new proposal to show how it is directly or even indirectly linked to us Indians –
The purchases on white goods (large electrical products such as refrigerators and washing machines) life or medical insurance premiums, property tax, business class air travel, foreign and domestic, and hotel bills can be included in the IT return filing.
Previously, properties above Rs. 30 Lakh, investment in shares worth Rs. 10 Lakh, Demat, credit cards, mutual funds, and FD transactions above Rs. 10 lakhs could be reported for the return. Further, the limit for any cash deposits increased to Rs. 25 Lakhs from Rs. 10 lakhs for the savings account and Rs. 50 lakh if you have a current account.
Here’s an example –
If you’re someone who pays an insurance premium or a hotel bill that amounts to above Rs. 20,000 or more than Rs. 50,000 on life insurance or pays school fees for your kids that go above Rs. 1 Lakh, you can apply in this IT return filing.
If you take an insurance premium that goes above Rs. 20,000, or a life insurance plan above Rs. 50,000, you can apply for the same in your IT return. The same applies to school fees that amount to or go above, Rs. 1 Lakh.
If you’ve purchased a painting, marble, jewelry, or any white goods, GOI will provide information relating to this transaction. Similarly, as mentioned above, information on business class travel by air and report on electricity bill and property tax between Rs. 20,000 to 1 Lakh.
What was the Reason to Introduce These Schemes?
GOI introduced these schemes to make it mandatory for reporting these transactions to unearth any form of black money. The number of people being scrutinized has been reduced, and the tax department wishes to increase faith among taxpayers as they’re moving towards a model that is more dependent on data analytics.
Since June, there have also been plenty of notices sent out to taxpayers to confirm if they’ve made high-profile transactions. These notices of confirmation reported under the taxpayers’ PAN have been issued purely based on the information that’s reported directly to the Government.
Taxpayers need to log-in to confirm whether their transactions belong to them or not. Once this is verified, the IT department then cross-checks and verifies the same with the submitted tax returns.
What was Listed as High-Value Transactions –
Adding to the previous list of high-value transactions, the Government has included –
- Any education fees or donations that exceed Rs. 1 Lakh annually
- Electricity bills which increase past Rs. 1 Lakh annually
- Both foreign and domestic air travel
- Hotel bills that go above Rs. 20000
- Purchasing jewelry above Rs. 1 lakh
- Deposits and credits in current accounts up to Rs. 50 Lakh and in non-current accounts for up to Rs. 25 Lakh
- Property taxes above Rs. 20,000 annually
- Life insurance premiums that go above Rs. 50,000
- Health insurance premiums that go above Rs. 20,000
- Demat accounts, bank lockers, and share transactions
The PM unveiled the tax charter for citizens and highlighted that only 1.3 crore individuals pay taxes in a population of 130 crores. The number of people who filed for taxes in the FY 18-19 amounted to 6.33 Crores.
Thus, these are the new standards of rules and regulations sanctioned by GOI to make it easier to pay taxes and manage finances better. Head over to Fingurus to better understand how this system works and take care of all your asset management.