Five Tax Measures This Year To Curb Tax Evasion

Prime Minister Narendra Modi-led government took an unprecedented move towards the end of 2016 to curb tax evasion. The government invalidated Rs 1000 and Rs 500 notes as legal tender, the action termed as ‘Demonetisation.’ It followed a slew of tax measures to curb tax evasion and bring more people within tax ambit.

Few measures that are truly aimed to take a grip on tax evaders are discussed below

1. Amnesty Scheme - The scheme managed to grab highest attention as it stipulates 50% in taxes and surcharges. This comes with the condition of locking-in the quarter of the total wealth in a no-interest bearing scheme for a period of four years. Failure to take advantage of this scheme could mean 85% in penal tax, if revealed in subsequent years. Few financial experts claim that the amnesty scheme will divert more cash into the stock markets as unaccounted cash will convert into legitimate and flow into the system.
2. Digital Push - Government has waived off 15% service tax charged on debit, credit and other cards to promote cashless transactions upto Rs 2,000. This implies lower costs for banks and merchants that can be passed on to the end-customers. The step attempts to motivate more people to switch to digital payments from cash transactions, which will apparently replace the cash economy.
3. Rigid Reporting - Cash deposits aggregating Rs 10 lakh and more in a bank account have no scope of escaping the eyes of Income-tax department following it’s new instructions. Moreover, payment towards credit card dues in excess of Rs 1 lakh cash will also be reported to the department. Alongside this, transactions in stocks, mutual funds and foreign exchange aggregating Rs 10 lakh in value during a financial year are also reportable.
4. New Tax Forms - The income tax department has introduced new tax return forms for people belonging to high income group. Tax-payers with a total income of Rs 50 lakh and more will have to declare their assets, states the new income-tax rule. New reporting columns - ‘Asset and liability at the end of the year’, are introduced in ITR forms. Liability in relation to declared assets will also be made compulsory for the declaring entity.
5. Goods and Services Tax (GST) - The GST is more than likely to become a reality in 2017 as it already got cleared in the parliament last June. Moreover, the GST Council has recently agreed on four slabs - 5%, 12%, 18% and 28% - to structure the tax on various goods and services. Essential commodities like medicines, vegetables, and food grains might not attract any tax.

With these measures the government has successfully tried to plug holes that might have aided unaccounted cash holders to escape the tax scrutiny until now. But, the times ahead are likely to get rougher with more radical tax changes waiting to unfold in financial year 2017.

About The Author: Reenika Avasthi is associated with Inverika Investment Solutions LLP as a Content Writer and Financial Planner. She is a Certified Financial Planner and a freelance content writer in the field of personal finance. Her interest in writing and spreading investor awareness motivated her to start blogging.

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