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More high-value deals on I-T radar

29 Sep

Under pressure on the black money issue, the government plans to monitor high-value savings and investments more closely to net tax evaders. High-value share market transactions in the secondary market, insurance premiums, bank accounts and debit card payments may all come under the tax department’s watch.

The finance ministry is debating whether to tweak the limit on property deals to be monitored by the income tax department. The ministry is considering bringing all high-value transactions in these areas under the Annual Information Return (AIR).

As per the Income Tax Act, specified entities are required to furnish AIRs of specified financial transactions recorded by them in a financial year to the income tax authority. The income tax department can detect tax evasion by verifying AIR information with the return filed by a person.

Secondary market transactions of Rs 10 lakh or more in a year, insurance premium of above Rs 1 lakh, debit card payments above Rs 2 lakh, fixed deposits and recurring deposits of over Rs 10 lakh each, and cash deposits of Rs 20 lakh in current accounts are likely to be added to the AIR list, which currently comprises eight items. High-value sales and purchases of property are taken as two items.

“We are considering seven-eight new categories for AIRs. The threshold for new categories in bank transactions may be kept the same as the limit for existing transactions. The idea is to check tax evasion by getting more relevant information,” said a finance ministry official, who did not wish to be identified.

A payment of Rs 1 lakh or more for acquiring shares issued by a company through a public or rights issue is already covered under the AIR. However, for transactions involving sale and purchase of shares in the secondary market, the tax department has to seek information from market regulator Sebi. By bringing such transactions under AIRs, the department will get direct access to the information.

The tax department is also considering changes in information on property deals. Currently, the sale or purchase by any person of immovable property valued Rs 30 lakh or more is reported in AIRs and information on deals between Rs 5 lakh and Rs 30 lakh is sent to tax commissioners by registrars/sub-registrars appointed under the Registration Act.

The ministry is now considering doing away with the need for filing with commissioners and get the information electronically under AIRs. It is debating whether the existing limit of Rs 30 lakh should be reduced or left untouched, taking into account inflation and depreciation in the rupee. When a decision is taken to expand items under the AIR, a notification will be issued to that effect.

The department considered bringing the purchase of gold and luxury cars under the AIR, but dropped the idea because procuring information through third parties would be difficult. It is also likely to leave post office savings schemes out, as the return on these schemes is not “lucrative” now.

Currently, AIRs are furnished by banks, financial institutions, trustees of mutual funds, companies issuing bonds or debentures, companies issuing shares through public or rights issues, registrars or sub-registrars of land or property and the Reserve Bank of India (RBI). It is furnished when the transaction involves cash deposits of at least Rs 10 lakh in a year in a savings account, credit card payments of Rs 2 lakh or more in a year, purchase of mutual fund units of over Rs 2 lakh, payment of a minimum of Rs 5 lakh to buy bonds or debentures, share purchases of Rs 1 lakh or more, purchase or sale of immovable property valued at Rs 30 lakh and above, and payment of Rs 5 lakh or more to buy bonds issued by the RBI.

Source: Business Standard

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Posted by on 29/09/2011 in Income Tax

 

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