INCOME TAX DEPARTMENT TO EXPAND THE LIST OF REPORTABLE TRANSACTIONS UNDER (SFT)

INCOME TAX DEPARTMENT TO EXPAND THE LIST OF REPORTABLE TRANSACTIONS UNDER (SFT)

As per the government, it is the duty of every taxpayer to maintain better compliance and transparency while filing the tax.

 

The Income-tax department of India is planning to widen the scope of reportable transactions that need to be mentioned in Statement of Financial Transactions (SFT). This measure will help in reducing tax evasion and will expand the tax base


Very soon, transactions such as Hotel bills more than Rs 20,000/-, life insurance premium payment exceeds Rs 50,000/- and education fees of more than Rs 1 lakh a year, purchase of jewelry, white goods, marble or paintings exceeds Rs 1 lakh among others, may come under the scrutiny of the Income-tax Department.

On the twitter handle of the Government’s Citizen Engagement Platform, “myGov”, a list of transactions under Specified Financial Transaction (SFT) that needs to be reported by payment receiver or supplier of goods and services to the Income Tax Department, were tweeted. But, a few minutes later, the same was removed from the platform. A total of 11 transactions are supposed to be included under the SFT reporting, and the clarification on the same is yet to be announced.
 

List of proposed transactions

The following are the proposed transactions that will be reported under SFT:

S.No List of proposed transactions
1 Payment of educational fee/ donations above Rs 1 lakh per annum
2 Payment to hotels above Rs 20,000/-
3 Purchase of jewelry, white goods, marbles, paintings, etc above Rs 1 lakh
4 Life insurance premium over Rs 50,000/-
5 Payment of property tax above Rs 20,000/- per annum
6 Electricity consumption above Rs 1 lakh per annum
7 Health insurance premium above Rs 20,000/-
8 Deposits/credits in the current account above Rs 50 lakh
9 Deposits/ credits in non-current account above Rs 25 lakh
10 Domestic business class air travel/ foreign travel
11 Share transactions/ demat accounts/ bank lockers

 
Proposed Mandatory Filing

The government of India has also proposed by the same tweet, a mandatory filing of returns for the following transactions:

  1. person having bank transactions over Rs 30 lakh, 
  2. payment of rent exceeds Rs 40,000/- and 
  3. all professionals and businesses having a turnover of more than Rs 50 lakh.
     

Reasons behind the widening the scope of reportable transactions

 

Prime Minister of India, Mr. Narendra Modi, while launching the ‘Transparent Taxation –Honoring the Honest’ platform on Thursday pointed out that a nation whose population is  130 crore and out of which only 1.5 crore people pay the taxes is itself a serious matter and which becomes a hindrance in the nation’s growth.
 

He further added that the government is trying every possible way to ensure that the tax base gets expanded and at the same time also taking effective measures to reduce the tax burden.

He said that it is now high time that every citizen of the nation should come forward and acknowledge their responsibility and pay their part of the tax.
 

Why such a proposal?

Through such a proposal it is expected by the government that there will be an immense increase in the tax base. On the other hand, it is going to be a tough task for the taxpayers as in the future they have to be cautious while doing any transactions as they have to provide the details of every transaction if it exceeds the given limit to the IT department.

After the implementation, the transactions will be reflected in Form 26AS. This form is the consolidated annual statement that shows total tax deductions or collections and advances tax against the taxpayer's PAN.  

If all such transactions will be reported, the authorities will be in a better position to identify those people who make huge transactions but do not pay the correct amount of tax.
 

Conclusion

It is expected that such a proposal will help in widening the tax base and to improve the better monitoring system, which in turn will help in the country’s growth.
 

Edited by Minu Mishra
 

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