| More sectors likely to attract tax collected at source |
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New Delhi, 11 February The finance ministry might make tax collected at source (TCS) mandatory for transactions in real estate, foreign tours and mutual funds, besides credit card payments and luxury spends, among others, to plug revenue leakages. As part of Budget 2013- 14 proposals, it is considering widening the scope of source- based taxation to more areas to improve reporting mechanism for transactions, curb flow of unaccounted money and bring down cash transactions. With the help of tax deducted at source ( TDS)/ TCS returns, besides information from other channels, the tax department revealed 1.2 million people had not filed their income- tax returns this year, the finance ministry said today. "In Budget 2012- 13, we added new categories for payment of TCS and TDS. Some more areas might be brought under the ambit in the upcoming Budget. One per cent TCS might be levied, especially on huge cash payments, to track the money trail," said a finance ministry official. TCS is collected by sellers from buyers at the time of making of payments. Sellers deposit the tax with the government and buyers get credit for the tax paid on their behalf. In the case of TDS, tax is deducted from a receiver's income at the time of payment. "What the finance ministry is trying to do is to widen the tax base by bringing more sections under the tax net, year after year," said Deloitte Partner Lakshminarayanan. He added it might not be feasible to levy tax on payments at the retail end. Normally, TCS is not levied if someone is buying goods for personal consumption. Last Budget, however, the government introduced one per cent TCS on cash sale of bullion & jewellery, irrespective of whether a buyer was a manufacturer or trader or was purchasing for personal use. It levied one per cent TCS on sale of minerals like coal, lignite and iron ore, arguing trading of minerals had remained largely unregulated, leading to non- reporting or under- reporting of transactions for taxation. In this case, purchase for personal consumption is exempt from TCS. Besides, in Budget 2012- 13, TDS was announced on transfer of certain immovable property and remuneration to directors. More items might be added this year. Later, the provision for TDS on immovable property was withdrawn as the sector opposed it, saying it would increase compliance burden. The finance ministry might, however, like to be careful while bringing more categories under TCS or TDS. In January, the Central Board of Direct Taxes had issued a notification exempting certain categories from TDS, since these were leading to a rise in litigation. ECONOMY 6 > >1.2 million high spenders under I- T scanner for not filing returns To plug revenue leakages, govt mulls move as part of Budget proposals WIDENING THE NET Areas brought under tax collected at source (TCS) in Union Budget 2012- 13 Goods TCS% Alcoholic liquor for human consumption 1.0 Tendu leaves 5.0 Timber obtained 2.5 Anyother forestproduce 2.5 Scrap 1.0 Minerals ( coal, lignite, iron) 1.0 Parking lot 2.0 Toll plaza 2.0 Mining & quarrying 2.0 Bullion exceeding~ 2 lakh 1.0 Jewelleryexceeding ~ 5 lakh 1.0 TCS : Tax collected at source >FM COMMENTS SPARK HOPES OF CHANGES IN STT TSI, 1 RUN- UP TO THE BUDGET 2013- 14 |
| 1.2 mn high spenders under I- T lens for not filing returns |
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New Delhi, 11 February After sending notices to companies, the finance ministry has zeroed on errant individual tax assessees. The ministry today said it had identified 1.2 million Permanent Account Number ( PAN) holders who had not filed their returns, despite being high spenders. "The directorate of systems of the income tax department has undertaken a business intelligence project to identify PAN holders who have not filed income tax returns and about whom specific information is available," the ministry said here. The information is available in 148 codes of annual information returns, central information branch data, tax deducted at source and tax deducted at source returns. Information in the cash transaction reports of the financial intelligence unit was also included. "This data analysis has identified atarget segment of 12,19,832 non- filers linked to more than 47 million information records. Rule- based algorithms have been used to identify high priority cases for followup and monitoring," the statement said. An official said the identification of these many non- filers was unprecedented. Of these, 35,000 are being sent letters. "In the first batch, letters are being sent to 35,170 PAN holders by the directorate of intelligence and criminal investigation," the ministry statement said. The letter contains the summary of the information of financial transaction( s), along with a customised response sheet, and seeks to know whether the person had filed a return or not. "A nodal cell has been set up to capture the response. There will be an online monitoring system to ensure followup action and track return filing and tax payment of the target segment," the ministry added. There is a huge mismatch between PAN card holders and IT returns filed. According to a report by the Comptroller General of Accounts ( 2010- 11), atotal of 95.8 million PAN cards were issued up to March 2010, but the number of I- T returns filed during 2009- 10 fiscal added up to a mere 34.1 million. According to a report, while 121.1 million PAN card holders were there up to March 31, 2011, the number of tax returns filed were just 34.8 million during 2010- 11. The finance ministry, through the statement, also appealed to all tax payers to disclose their true income and pay appropriate taxes within the current financial year. |Cash deposits aggregating to ₹ 10 lakh MONEY MONITORING Transactions in ayear tracked under AIR | Credit card payment of over ₹ 2 lakh |Payment of over ₹ 2 lakh for mutual fund units |Payment of over ₹ 5 lakh for bonds/ debentures |Payment of ₹ 5 lakh for bonds issued by RBI |Payment of ₹ 1 lakh or more for acquiring shares |Sale or purchase of property over ₹ 30 lakh AIR: Annual Information Returns Source: Government |
| Funds seek open- ended status for RGESS |
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Mumbai, 11 February The Rajiv Gandhi Equity Savings Scheme ( RGESS), the new tax- saving mutual fund product, could become open- ended and eligibility to invest in these could be relaxed if the finance ministry accepts the sector's suggestions. Finance Minister P Chidambaram said on Saturday the Union budget could make some announcements to simplify RGESS to attract more retail investors. The close- ended structure of RGESS is one of the main hindrances to the product's popularity, said four mutual fund sector officials. In a close- ended scheme, investors' units in the product are locked in for a pre- determined period — three years in this case. The sector is seeking achange in structure to open- ended, where unitholders can withdraw at will. "It's very difficult to attract investors if it's closeended, as they want liquidity, especially when a product is considered risky for a firsttimer," said a senior official with a bank- sponsored mutual fund, familiar with representations to the finance ministry. RGESS, a product tailored exclusively for first- time retail investors in the stock market, allows those, who invest up to ₹ 50,000 in ' eligible securities' and have gross total annual income of up to ₹ 10 lakh to gain tax benefits. Mutual funds were allowed to launch the product after representations but some of the rules dimmed its prospects. The sector believes the rule to allow tax benefits for only the first year also needs to be relaxed. Mutual funds are pushing for a ' permanent benefit', where investors with gross annual income below ₹ 10 lakh can avail of this benefit till his salary stays below the threshold. "If allowed only for firsttimers, investors will invest the money for tax benefits and forget about it. They will not be able to see the benefits of systematic investments in the market," said the chief executive officer of one of the largest mutual funds in the country. The rule requiring investors to buy RGESS through a demat account is also dampening interest in the scheme. Mutual fund schemes are mostly sold through distributors. "Asking a first- time investor to open a demat account is asking for too much. The person is already coming in with apprehensions," said the managing director of another banksponsored mutual fund. "The cost to open a demat and maintaining one annually also beats the purpose," he said. Echoing the bank- sponsored fund's managing director, Dhirendra Kumar, chief executive officer of Value Research, a Delhi- based mutual fund tracker, said investing in mutual funds through demat will make it cumbersome for first- time investors. MFs ask finance ministry to relax investment eligibility in the product MAKING LIFE EASIER Tax deduction calculation under RGESS Investment: ₹ 50,000 ( maximum investment eligible for deduction) Tax benefit: 50% on investment= ₹ 25,000 Maximum tax benefit: Maximum tax benefit Total tax benefit: 20% of ₹ 25,000= ₹ 5,000 HOW THEY STACK UP RGESS ELSS PPF Eligibility Annual income None None below ₹ 10 lakh Lock- in period ( Years) 3 3 15 Tax benefits (%) 50 100 100 Maximum deduction 50,000 1 lakh 1 lakh for investments (₹) RGESS: Rajiv Gandhi Equity Savings Scheme ELSS: equity- linked savings scheme PPF: Public provident fund |
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Company Secretary, Chennai
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