Person paying electricity bill exceeding Rs. 1 Lakh in a year will be required to file income tax return
Widening the tax base is one of the key concerns of every Government. Various initiatives are undertaken year after year to widen the tax-base. Union budget -2019 recently presented by Smt. Nirmala Sitharaman on 5th July have some special provisions to widen the tax base, as under:
- TDS on payment of personal nature [Section 194M]:
Originally, TDS compliance was required to be done only by the taxpayers who are in to business. Slowly, the scope is stretched to others, beginning from TDS on purchase of immovable property for value exceeding Rs. 50 Lakh. Last year, it was further extended to rent payment exceeding Rs. 50,000/- per month or part of a month. In this year budget, even payment to any resident for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract or by way of fees for professional services shall be subject to TDS. Rate of TDS is 5% and TDS is attracted if the payment or aggregate of payment exceeds Rs. 50 Lakh. It appears that the TDS net like this is sure to widen further in years to come. - TDS on cash withdrawals [Section 194N]:
Focus now is on cash withdrawals as bank will now be required to do TDS @ 2% if aggregate amount of withdrawals during the year exceed Rs. 1 Crore. - Mandatory return filing for persons doing high value transactions:
Presently, Company and firm are mandatorily required to file the return of income even if the income is nil or there is a loss. Any person other than a company & firm are required to furnish the return of income only if his total income exceeds the maximum amount not chargeable to tax, subject to certain exceptions. Recent Budget has proposed to make the return filing mandatory for some other categories of person, if during the previous year, he
(i) has deposited an amount or aggregate of the amounts exceeding Rs. 1Cr in one or more current bank A/c or
(ii) has incurred expenditure of an amount or aggregate of the amounts exceeding Rs. 2 Lakh for himself or any other person for travel to a foreign country; or
(iii) has incurred expenditure of an amount or aggregate of the amounts exceeding Rs. 1 Lakh towards consumption of electricity; or
(iv) Fulfils such other prescribed conditions, as may be prescribed.
In addition to above, person claiming rollover benefit of exemption from capital gains tax on investment in specified assets like house, bonds etc., is presently not required to file return of income his total income after exemption is below the basic exemption limit. Now, person claiming capital gain exemption will be required to file the return if his income before such exemption exceeds the basic exemption limit. All above proposal will be applicable for the return of FY 2019-20 & will accordingly apply in relation to AY 2020-2021 & onwards.
Few years back, on the similar line 1/6 scheme was introduced and thereafter it was deleted from the statute book as it proves futile. Question re-emerges, will it be beneficial now? Will it serve any purpose? In my opinion, first two clauses i.e., deposit of cash exceeding Rs. 1 Cr in one or more current A/c & expenditure exceeding Rs. 2 Lakh on foreign travel may not yield any new result as this information is otherwise also available with the department through other routes.
As far as the payment of electricity bill exceeding Rs. 1 Lakh in a year is concerned, it is more likely to result in plethora of unwanted notices, harassment & compliances. There are various instances wherein proposed amendment would result in unnecessary return filing by the owner of the premises, like in case the home or premises is owned by the non earning member and the payment is done by the earning member or in case the property is let out and the electricity payment is done by the tenant etc.
However, proposed amendment is now empowering CBDT to prescribe additional conditions for return filing. CBDT may now notify various transactions for mandatory return filing like payment to hospital above Rs. 2 Lakh, deposits in a society / bank above Rs. 5 Lakh, Purchase of Gold above certain amount, etc.
undertaken year after year to widen the tax-base. Union budget -2019 recently presented by Smt. Nirmala Sitharaman on 5th July have some special provisions to widen the tax base, as under:
- TDS on payment of personal nature [Section 194M]:
Originally, TDS compliance was required to be done only by the taxpayers who are in to business. Slowly, the scope is stretched to others, beginning from TDS on purchase of immovable property for value exceeding Rs. 50 Lakh. Last year, it was further extended to rent payment exceeding Rs. 50,000/- per month or part of a month. In this year budget, even payment to any resident for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract or by way of fees for professional services shall be subject to TDS. Rate of TDS is 5% and TDS is attracted if the payment or aggregate of payment exceeds Rs. 50 Lakh. It appears that the TDS net like this is sure to widen further in years to come. - TDS on cash withdrawals [Section 194N]:
Focus now is on cash withdrawals as bank will now be required to do TDS @ 2% if aggregate amount of withdrawals during the year exceed Rs. 1 Crore. - Mandatory return filing for persons doing high value transactions:
Presently, Company and firm are mandatorily required to file the return of income even if the income is nil or there is a loss. Any person other than a company & firm are required to furnish the return of income only if his total income exceeds the maximum amount not chargeable to tax, subject to certain exceptions. Recent Budget has proposed to make the return filing mandatory for some other categories of person, if during the previous year, he
(i) has deposited an amount or aggregate of the amounts exceeding Rs. 1Cr in one or more current bank A/c or
(ii) has incurred expenditure of an amount or aggregate of the amounts exceeding Rs. 2 Lakh for himself or any other person for travel to a foreign country; or
(iii has incurred expenditure of an amount or aggregate of the amounts exceeding Rs. 1 Lakh towards consumption of electricity; or
(iv) Fulfils such other prescribed conditions, as may be prescribed.
In addition to above, person claiming rollover benefit of exemption from capital gains tax on investment in specified assets like house, bonds etc., is presently not required to file return of income his total income after exemption is below the basic exemption limit. Now, person claiming capital gain exemption will be required to file the return if his income before such exemption exceeds the basic exemption limit. All above proposal will be applicable for the return of FY 2019-20 & will accordingly apply in relation to AY 2020-2021 & onwards.
Few years back, on the similar line 1/6 scheme was introduced and thereafter it was deleted from the statute book as it proves futile. Question re-emerges, will it be beneficial now? Will it serve any purpose? In my opinion, first two clauses i.e., deposit of cash exceeding Rs. 1 Cr in one or more current A/c & expenditure exceeding Rs. 2 Lakh on foreign travel may not yield any new result as this information is otherwise also available with the department through other routes.
As far as the payment of electricity bill exceeding Rs. 1 Lakh in a year is concerned, it is more likely to result in plethora of unwanted notices, harassment & compliances. There are various instances wherein proposed amendment would result in unnecessary return filing by the owner of the premises, like in case the home or premises is owned by the non earning member and the payment is done by the earning member or in case the property is let out and the electricity payment is done by the tenant etc.
However, proposed amendment is now empowering CBDT to prescribe additional conditions for return filing. CBDT may now notify various transactions for mandatory return filing like payment to hospital above Rs. 2 Lakh, deposits in a society / bank above Rs. 5 Lakh, Purchase of Gold above certain amount, etc.
