Informist, Thursday, Jun 13, 2024
By Priyasmita Dutta and Sagar Sen
NEW DELHI – The government is planning to introduce a revamped version of the 'Income Declaration Scheme' for voluntary declaration of undisclosed income in a bid to check the rampant under-reporting of income by self-employed professionals, a senior finance ministry official said. The revamped version of the scheme is mainly aimed at self-employed professionals such as doctors, lawyers, and accountants, the official said.
The Central Board of Direct Taxes is currently holding discussions on the income declaration scheme and may announce it in the full Budget for 2024-25 (Apr-Mar), the official said. Finance Minister Nirmala Sitharaman will present the full budget in July.
"We were doing a 360-degree profiling of taxpayers to check their income from different sources, track their spending and investing pattern virtually and in non-intrusive ways, but we need to do more," the official told Informist. "We are unable to track cash transactions and so a huge chunk of undisclosed income is going untaxed."
While many self-employed professionals are making exorbitant expenses, including buying properties and taking foreign trips, the income tax paid by them is much lower in comparison, the official said.
The Income Tax Department is also pushing professionals to opt for payments for services through online transactions so that there is a record of all the services rendered by them, the official said. These professionals, in most cases, fall in the highest bracket of the tax slab on which there is a surcharge, so the tax foregone is huge, the official added.
In the Budget for 2023-24, the government cut the surcharge on annual income of 50 mln rupees or above to 25% from 37%, bringing down the effective tax rate on them by 3.74 percentage points. The super-rich surcharge on income tax starts from an income level of 5 mln rupees at 10% and rises to 15% for income of 10 mln rupees and above, and to 25% at the income threshold of 20 mln rupees.
The tax department will also check turnover shown in goods and service tax returns to track mismatches, the official said.
India already had income declaration schemes to tax black money, the latest being the 2016 avatar under the then-finance minister Arun Jaitley. At that time, the government had offered a one-time chance to individuals with income and assets that had illegally escaped taxes, to come clean by paying a tax and penalty of 45%.
The official said the tax authorities are also taking a closer look at some of the incomes that are currently being passed off as 'agriculture income'. However, the attempts to tax income from farming could open a can of worms for the Bharatiya Janata Party-led government, given that the party’s disappointing performance in agricultural states at the recently concluded Lok Sabha elections.
"While in the current political environment, the government would not like to touch the agriculture sector, the department is analysing the income of farmers who are seen based in urban areas, especially metropolitan cities," the official said. "In most cases, these are huge businesses of organic farming or some other technical farming, which they pass under the garb of the agriculture sector for income tax benefits," the official said. Income from agriculture is not taxed in India.
In some of these cases, the tax department may also go for physical verification, the official said.
The tax department has been pushing to eliminate evasion, improve compliance and thereby boost tax buoyancy. In 2024-25, the government aims to collect 10.43 trln rupees from corporate taxes and 11.56 trln rupees from income tax. End
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Informist, Thursday, Jun 13, 2024
By Priyasmita Dutta and Sagar Sen
NEW DELHI – The government is planning to introduce a revamped version of the 'Income Declaration Scheme' for voluntary declaration of undisclosed income in a bid to check the rampant under-reporting of income by self-employed professionals, a senior finance ministry official said. The revamped version of the scheme is mainly aimed at self-employed professionals such as doctors, lawyers, and accountants, the official said.
The Central Board of Direct Taxes is currently holding discussions on the income declaration scheme and may announce it in the full Budget for 2024-25 (Apr-Mar), the official said. Finance Minister Nirmala Sitharaman will present the full budget in July.
"We were doing a 360-degree profiling of taxpayers to check their income from different sources, track their spending and investing pattern virtually and in non-intrusive ways, but we need to do more," the official told Informist. "We are unable to track cash transactions and so a huge chunk of undisclosed income is going untaxed."
While many self-employed professionals are making exorbitant expenses, including buying properties and taking foreign trips, the income tax paid by them is much lower in comparison, the official said.
The Income Tax Department is also pushing professionals to opt for payments for services through online transactions so that there is a record of all the services rendered by them, the official said. These professionals, in most cases, fall in the highest bracket of the tax slab on which there is a surcharge, so the tax foregone is huge, the official added.
In the Budget for 2023-24, the government cut the surcharge on annual income of 50 mln rupees or above to 25% from 37%, bringing down the effective tax rate on them by 3.74 percentage points. The super-rich surcharge on income tax starts from an income level of 5 mln rupees at 10% and rises to 15% for income of 10 mln rupees and above, and to 25% at the income threshold of 20 mln rupees.
The tax department will also check turnover shown in goods and service tax returns to track mismatches, the official said.
India already had income declaration schemes to tax black money, the latest being the 2016 avatar under the then-finance minister Arun Jaitley. At that time, the government had offered a one-time chance to individuals with income and assets that had illegally escaped taxes, to come clean by paying a tax and penalty of 45%.
The official said the tax authorities are also taking a closer look at some of the incomes that are currently being passed off as 'agriculture income'. However, the attempts to tax income from farming could open a can of worms for the Bharatiya Janata Party-led government, given that the party’s disappointing performance in agricultural states at the recently concluded Lok Sabha elections.
"While in the current political environment, the government would not like to touch the agriculture sector, the department is analysing the income of farmers who are seen based in urban areas, especially metropolitan cities," the official said. "In most cases, these are huge businesses of organic farming or some other technical farming, which they pass under the garb of the agriculture sector for income tax benefits," the official said. Income from agriculture is not taxed in India.
In some of these cases, the tax department may also go for physical verification, the official said.
The tax department has been pushing to eliminate evasion, improve compliance and thereby boost tax buoyancy. In 2024-25, the government aims to collect 10.43 trln rupees from corporate taxes and 11.56 trln rupees from income tax. End
Informist Media Tel +91 (11) 4220-1000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2024. All rights reserved.