life insurance | health insurance: Financial transactions such as hotel bills, life, health insurance proposed to come under tax lens
In a tweet by mygov.in on Thursday, which was subsequently removed, the government has proposed to expand the list of reportable transactions to include domestic business class air travel or foreign travel, cash deposit of Rs 10 Lakh or more in non-current account, sale of foreign exchange above Rs 10 lakh, payment of property tax above Rs 20,000 per year, life insurance premium above Rs 50,000 and health insurance premium above Rs 20,000.
Some of the transactions are reported by taxpayers in their annual returns, and some related to share transactions, demat accounts, bank lockers, deposits in current account above Rs 50 lakh, and deposits in non-current account above Rs 25 lakh are captured by companies or financial institutions for reporting to the taxman under Rule 114-E.
However, to bring the transactions under the tax scanner would require amendment of rules and sections of the Income Tax Act.
For instance, certain provisions of Section 139 would have to be amended to include compulsory filing of return in case of persons having bank transactions above Rs 30 lakh, all professionals, businesses having turnover above Rs 50 lakh and rental income of more than Rs 40,000. These are also being proposed by the government to widen the tax base.
By including these transactions in the purview of reporting from both companies or financial institutions or others and taxpayers’ side, tax authorities will be able to identify people who may be making large purchases but not paying taxes, and also those who may be paying less tax than they’re supposed to, said experts.
The move comes in the backdrop of Prime Minister Narendra Modi asking more people to pay taxes where they are due, since in a population of over 1.3 billion, only 1.5 million were paying taxes.
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