Income Tax Returns: 7 Steps Government Announced

The year 2016 saw the passage of the Goods & Services Tax (GST) Bill and steps taken to unearth black money, including two Income Disclosure Schemes and demonetisation of Rs 500 and Rs 1000 currency notes. The government also announced schemes promoting transactions through banking channels and digital mode. The government has thus made its intention to expand the tax base and bring more people into the tax net clear.

Dividend income taxable

From FY 2016-17 onwards, dividend earned by any individual in excess of R10 lakh from domestic companies has been made liable to tax @ 10%. Earlier, any amount of such dividend income was exempt from tax.

Reduced compliance burden

The scope of presumed profits in case of small businesses has been increased from a turnover of up to Rs 1 crore to up to Rs 2 crore. Further, benefit of presumed profits has been extended to professionals (including doctors, CAs, lawyers, etc.) having gross receipts up to R50 lakh. Under presumed profits scheme, taxpayers are exempted from mandatory maintenance of books of accounts and getting them audited.

Additional deduction for home loan

First home buyers were allowed additional deduction of R50,000 from taxable income for loans sanctioned during FY 2016-17 of up to Rs 35 lakh for purchasing a house costing up to R50 lakh.

Income declaration scheme

Under IDS-1, opportunity was provided to persons who had not paid full taxes in the past to declare undisclosed income and pay total tax, surcharge and penalty of 45%, in respect of undisclosed income of any financial year up to 2015-16. As per government published data, around Rs 65,250 crore of undisclosed income and assets were declared in IDS-1.

Additional reporting requirement

While notifying income tax return forms for AY 2016-17, the government prescribed additional reporting requirements for individuals having income more than Rs 50 lakh in a year. Such individuals are required to declare details of their assets and liabilities, including movable assets such as cash in hand, jewellery, bullions, yachts, aircrafts, etc.

Foreign tax credit

The government has notified rules for claim of taxes paid by Indian residents in any foreign country in respect of foreign income, including salaries, interest, dividend, royalties and fees for technical services. These rules make the process for claiming foreign tax credit more standardised and easier.

Pradhan Mantri Garib Kalyan Yojna

Following demonetisation, the government introduced PMGKY, whereby any person holding undeclared income in form of demonetised currency or otherwise can declare it by paying aggregate tax and penalty @ 49.9% of undeclared income and further investing 25% of undeclared income in RBI’s interest-free four years special Bond Ledger account, up to March 31, 2017.

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Also Read : Avail Benefits for Both HRA & Home Loan EMI Deduction To Lower Your Taxable Income