Prime Minister Narendra Modi announced new measures to ease compliance and reward honest taxpayers through the new “Transparent Taxation – Honouring the Honest” platform. Under the platform, a new transaction monitoring list was released.
The new list announced by the government will come under the scanner of the Income-tax Department. The government plans to expand the scope of reportable financial transactions as part of the Statement of Financial Transactions (SFT).
During the launch event, Modi said that the new ‘Transparent Taxation – Honouring the Honest’ is introduced to meet the modern 21-st century’s taxation system requirements. The platform has major reforms like Taxpayers Charter, Faceless Appeal, and Faceless Assessment.
While announcing the new “Transparent Taxation – Honouring the Honest” to alleviate the complications and honour the honey paying taxpayers, Modi announced a new set of reportable transactions.
- A new set of reportable transactions is proposed to expand the present list under the SFT. Life insurance premium payments over Rs 50,000
- Hotel bills over the amount of Rs 20,000
- Payments of over Rs 1 lakh per year for school/college fees,
- Health insurance payments of over Rs 20,000 along with donations.
- Purchase of jewellery, marbles, paintings, etc over Rs 1 lakh,
- Property tax payment of over Rs 20,000 per year,
- Electricity consumption above Rs 1 lakh
- Deposits/credits in the current account of Rs 50 lakh or more and deposits/credits in a non-current account of above Rs 25 lakh.
- Travel in business class both domestic/ international, share transactions, bank lockers, and Demat accounts.
- Compulsory tax filings by a person having transactions over Rs 30 lakh,
- A person paying rent over Rs 40,000 and all businesses and self-employed people with turnover above Rs 50 lakh.
Current reportable transactions
Previously, banks and financial institutions shared details related to high-value transactions recorded under SFTs with tax authorities. Later in July, the government launched a new Form 26AS which included high-value transactions for this assessment year.
These transactions will now be visible to taxpayers who will be filing income-tax returns. Banks and financial institutions under the SFTs record details of transactions with cash deposits of Rs 10 lakh or more. Cash payments by a person over Rs 1 lakh and bill payments of a credit card of Rs 10 lakh or more in a financial year.
New SFTs aim
According to the government, the new measures announced are aimed at widening the tax base. The new measures suggest that the taxpayers’ information will now be forwarded to tax authorities.
After implementation, the new measures would reflect on the Form 26AS: the annual statement of tax deductions showing collections and deductions and tax advance against an individual’s PAN.
The filing of income tax returns in the country has increased by nearly 2.5 crore people in the last 6-7 years. Meanwhile, only 1.5 crore people pay taxes in the country, with a population of over 130 crores.
The Prime Minister said that the number of people who are paying income tax in the country is too low. He asked more people to come forward to pay taxes. These reforms aim to make the tax system painless, seamless, and faceless.
According to him, ‘Painless’ means that everything from technology to rules should be simplified for the taxpayer. ‘Seamless’ implies working to resolve problems for taxpayers rather than entangling them further. While the ‘Faceless’ system doesn’t require direct contact between the taxpayer and the income tax officer.