On August 13, 2020 Prime Minister Narendra Modi introduced the 'Transparent Taxation' platform while also announcing measures to enhance tax compliance, easing of process of tax return filing and faceless assessment. At the same time, the government proposes to reduce threshold limit for various transaction for the purpose of tax disclosures, the whole idea being to plug tax evasion and widen tax base.
So, as part of the rehaul Form 26AS, the statement that shows a detailed account of all the tax deducted at source (TDS) against your PAN, will now be an elaborative one asking for a lot more details on your financial transactions. Likewise, hotel bills or medical insurance premium over Rs. 20000, school fees over Rs. 1 lakh, electricity payment of over Rs 1 lakh per annum, life insurance premium of more than Rs. 50000 will now all be under taxman's lens.
Financial transactions proposed to be made part of the income tax reporting statement are as specified below:
1. Hotel expenses over Rs. 20000
2. Rent payment above Rs. 40000
3. Education fees or donation above Rs. 1 lakh per annum
4. Life insurance premium above Rs. 50000
5. Electricity consumption above Rs 100,000 per annum.
6. Domestic business class air travel/foreign travel
7. Deposit above Rs. 50 lakh in current account.
8. Purchase of jewellery, white goods, painting, marble, etc. above Rs 100,000
9. Medical insurance premium above Rs. 20000
10. Share market transactions
11. Property tax payment above Rs. 20000 per annum
The proposed list is yet to be notified and will bring in more transparency and increase compliance in the system.
While releasing citizens' tax charter yesterday, Modi said that only 1.3 crore people pay taxes as against a total population of 130 crore Indians.
Also, the government proposes to tax individuals carrying out high value transactions and not filing return by showing less income or below taxable income at a higher rate. Also, tax return filing has been made mandatory for all individuals carrying out bank transactions worth over Rs. 30 lakh and for businesses with turnover up to Rs. 50 lakh.