CBDT introduces tax forms for HRA and LTA claims

The central board of direct taxes (CBDT) has introduced new form 122B to claim tax rebate over LTA, HRA and interest paid loan by salaried class. The form will be made available from June 1st 2016. Salaried individuals have to produce proof for travelling to claim travel deduction. Proof has to be submitted if HRA claims exceed INR 1 lakh. Along with the HRA details name PAN and address of the house should be furnished. The employee should provide details of travel expenditure to claim deduction under chapter VI-A. This procedure is expected to plug tax evasion, earlier just declaring the amount tax exemption to be claimed.

Now necessary documents have to be submitted. CBDT is yet to announce the list of acceptable documents that can be produce to claim reductions. The organization has also extended the time limit for providing tax deducted at source of immovable properties to 7 to 30 days. Government has been increasing stringent laws to catch tax evaders. This is done to reduce the fiscal deficit which is at 4 percent now. The finance ministry is trying to raise revenue by providing tax amnesty to encourage tax defaulters to confess without further legal issues. They are also tracking PAN numbers to check high value transactions and are eliminating duplicate PANs out of the system. All gold and real estate transactions now require PAN details bringing them all under governments radar

Government schemes that reduce tax implications

In the research, only thirty five million people in India paid their tax and about eighty five percent of them are under the tax slab of zero to five lakh. If an individual does not plan his taxes, he may not get any tax benefits.
The Public Provident Fund is a scheme which offers attractive interest rates and returns that are exempt from taxation. According to the Income tax Act under section 80C, you can deduct the money invested in PPF from the total income. This is one of the popular investment schemes suggested by the experts. The National Pension scheme is a pension system operated by the government of India. The National pension scheme provides the benefits of tax exemptions as mentioned in the Income tax Act. Depending on the contribution in the scheme by an employee determines the benefits he can receive from it.
The Equity Linked savings scheme is diverse and open-ended scheme provided by the Mutual fund. This scheme is best suited for individuals who have an interest in stocks and stock market. This scheme has a three year lock in period. The National savings certificate is a savings bond for income tax saving investments and small savings. This scheme is a part of the Postal department of India. An individual who has an account in the NSC can get tax benefits.
The Life insurance scheme is an insurance scheme that pays money either after a fixed time period or on the death of the insured person. Apart from risk coverage, it offers insurance premium for self and family, which comes under deduction up to one lakh according to the IT Act under section 80C. The Health Insurance premium is eligible for deduction of tax apart from the medical treatment.

Inherited properties taxed in the year of sale

According to the new rule a Person of Indian origin (PIO) can repatriate up to one million dollar for a financial year through the sale of the assets they have in India which they inherited from their ancestors.
Christopher Samuel is a non-resident Indian; eleven years ago he invested in the G-sec (sovereign bonds). Now he wishes to withdraw the matured amount, he doubts whether he would have to pay tax for that amount.
Experts said that if Samuel’s bond is tax-free, then he need not pay tax for the maturity amount in India. And by analyzing the status of the policy, the matured amount is in Samuel’s bank account which is in India, and there is no TDS when he withdraws the amount.
Chandra Prakash had a doubt on tax liabilities if a PIO sells an inherited property in India and repatriates that money. The expert said that according to the sales proceeds of asset in India, a person can repatriate up to one million dollar. But if the remittance is more than one million dollar, then they have to get permission from the RBI. And the amount is taxable in the year of sale, if the amount is received by selling the property which was in India.
For an inherited property, the date of acquisition of the property is assumed as the hold period of the property. You can claim for exemption if you reinvest the amount in India on a residential property or on a bond. And if the amount is not invested before filing the ITR form, you can deposit the amount in the CGAS so that you can withdraw the money for reinvestment. If you have not deposited or reinvested the amount, then it is taxable.

Road rationing decreases the VAT collection

Road rationing is also known as driving restriction or no-drive day. It is a strategy aimed to reduce the air population. Rationing is restricting traffic access into urban areas in peak hours.
The Delhi government implemented the road rationing mechanism for fifteen days every month, but the government will lose the more money gained from the tax report. The implementation of rationing mechanism in January reports that the VAT collection from the diesel and petrol sales is less than the monthly collection.
Tax report on Value Added tax on diesel and petrol shows that the government received only two hundred and thirty crore which is forty crore less than the average monthly VAT collection, thus if the government follows the road rationing mechanism, the VAT tax can go down up to five hundred crore. The oil company’s sales of petrol and diesel rate dropped from January to February, the government plans to re-implement the rationing mechanism from April 15th, 2016. The government has set its VAT collection target to twenty four thousand crore, thus the government will pay special attention to the income received through sales of fuel.
After the end of the first road rationing mechanism in January, the Delhi government headed by Arvind Kejriwal, the Chief Minister increased the rate of VAT on diesel and petrol by twenty five to twenty seven percent. The government officials said that they met with the Finance Minister for North Indian states and discussed about the uniform taxation of fuel.

Interest from FD is taxable in India

Manas Gupta is working with an airline company in Dubai, he has fixed deposits in India and wants to know if it is taxable in India. The interests earned from the fixed deposits are taxable in India. But according to the Income tax Act there are some tax exemptions available like the interest amount from NRE account is exempt from tax, and for a resident outside the country, according to FEMA who has permission from the RBI to maintain an NRE account are also exempt from tax. The interest from the NRO account is taxable. Therefore, we have to analyze Gupta’s residential status and the type of account he has to determine the taxation. http://uptra.in/

Gurpreet Singh is an NRI living in Sweden for twenty five years; he wants to buy a house in India for his father. He wants to know whether if anyone of them will have to pay tax and if he is taxed he wants to know the tax aspects. In Gurpreet’s case, if he buys his father a house, it will become a gift. Some gifts are exempt from tax, but if the stamp value of an immovable property as a gift is above fifty thousand then the gift is taxable. And if he gifts the property to his relative, both of them are exempt from tax because the term is ‘relative’ is included in the income tax Act, and according to the act, parents are also included in the term relative. Thus the property gifted by Gurpreet to his father is not considered under any tax implications. But we have to keep in mind that any income gained from the property is taxable in India.

ITR form notifies mandatory information for wealthy taxpayers

The government has introduced a new Income tax return form on April 1st, 2016. The new ITR form is a simplified form, making it easy for the filers. The Finance Ministry released the new ITR forms, with significant changes in it. The government has asked the taxpayers with an annual income of more than fifty thousand, to specify their assets in the tax return form so as on to prevent from tax evasion.
The income tax department has asked the taxpayers to specify their immovable assets like buildings, lands and movable assets like jewelry, vehicles etc. This is to ensure that there is no illegal property or money prevailing among the wealthy people. The National Democratic government has taken several steps to stop the illegal and black money accounted in foreign banks. Coming to power, Prime Minister Narendra Modi has promised to recover the black money from the country.
Hence, the previous year’s tax return form had a column to specify the taxpayers, foreign tours and expenditures during his tour. And also asked about the taxpayers bank details and account balance. But, this year’s revised income tax return form , only had a column to fill the passport number without the expenditure details and bank account details without the account balance. For the taxpayers, whose annual income exceeds fifty lakh has to fill the new column, which specifies ‘Liability and Assets’ with the details of their property. And they have sought the Aadhaar card number of the taxpayers along with their account.

Equalization levy affects Foreign market

The Finance Ministry proposed the Equalization levy in its new Budget plan, which has a greater impact on the digital marketing and the online marketing in India. To regularize taxation, the government proposed the equalization levy. According to this the non-resident digital system becomes liable to pay tax, because they do not have a permanent establishment in India and if the total exceeds one lakh within a year, 6% of the gross is liable under equalization levy.
Collection of tax from the digital economy is an indirect taxation of the multi-national companies. For example, if a resident company pays a multinational e-commerce company for online advertising, then the 6 percent of the gross goes to the government of India. Thus the multinational companies like Alphabet , Facebook, Google, Twitter which earns money from India are in turn taxed.
This levy is only for business-to-business transactions, but it can extend its specifications in the future, like taxation on the online service and goods sales, software downloads, and downloading books, movies, songs, etc. But, this equalization levy may affect the small and start-ups. If a start-up seeks advertising in Facebook, and which has more than one lakh payment in a year comes under the levy. These small companies cannot negotiate with the foreign companies to reduce their margin. Thus, when the country receives its monetary tax income, the start-ups and small business have a negative impact.
Equalization levy it equalizes the domestic and foreign e-commerce market. Because when the multi-national ecommerce company do not have a permanent establishment in the country, it becomes taxable. And thus opens the door to the domestic market. The equalization levy has both boon and bane over the e-commerce market. It not only affects the foreign entities, but also the Indian start-ups.

A word of advice by the Prime Minister

The Prime Minister Mr. Narendra Modi addressed the probationary officers of the Indian Revenue Service (IRS).
Around 167 probationary officers attended a meeting held by the Prime Minister of India Narendra Modi on March 10th, 2016. In the meeting, the Prime Minister said that the civil servants and the authorities of the revenue department should treat the income tax payers with a sensitive approach.
Narendra Modi said that the majority of the people obeys the law and abide by the rules and regulation of the nation, so that the nation could grow as a developed nation. He said that, the government officials should not harass the taxpayers while they work towards the revenue policy of the government. The Prime Minister’s officials reported that, Narendra Modi also asked the revenue officials to treat each taxpayer as their family and help them with their process. The young trainees of the Indian Revenue Service asked the Prime Minister several questions. And Narendra Modi answered all the questions and advised the trainees to work hard with enthusiasm.
The meeting attended by the probationary officers with the Prime Minister prevailed for about forty five minutes, and Modi shared his own experience from his personal life and political life and explained the officers to maintain a diplomatic to become a successful civil officer. He also informed the probationary officers that all the people- friendly schemes and policies reach the public on-time so that the people get benefitted by them.