Is ITD asking too much? New ITR Forms and Angel Tax
What’s happening this week
Hey!
Planned any trips? Be sure to flaunt it on your Instagram and ITR Form too. Check out what the taxman wants to know in the new ITR forms… Is it too much information?
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Did you scratch your head and wonder how did the taxman know about that expensive watch you bought, those F&O trades or jewelry purchase? It’s because of its link with your PAN. This time the Income Tax department is seeking a peek into your passport.
Share it all… The ITD wants you to share details of your passport, employer, house property address, tenant, electricity expense & foreign travel expense.
Being the early bird… the Income Tax Department surprisingly released ITR forms ITR-1 (Mostly used by Salaried) & ITR-4 (Mostly used by Professionals) way ahead of the tax filing season which starts in April. Looks like India’s taxman is pulling up their socks this new year
Share the lifestyle pie… The taxman wants to be your travel buddy. You will now have to file ITR 4 instead of the plain vanilla — ITR 1, if you incurred foreign travel expense more than INR 2 lakh, electricity expense more than INR 1 lakh or deposited INR 1 crore. The taxman wants to know if the expenses are in line with your earnings.
Declining the follow request… Last year, there was a lot of chatter around the Income Tax Department snooping around your social media to gain insights into your spending behaviour. Why wouldn’t you share those exotic beaches or that desert safari or that Louis Vuitton Bag? The ITD said — No we don’t snoop… But we have other ‘authentic sources’ for data like banks, credit card companies, sub-registrars etc.
Binoculars on… The tax department introduced a new system last year, titled ‘Project Insight’ which gives them 360-degree profiling and insight into an entities’ complete transactions trail. Got Goosebumps?
Stalker much?! CBDT Chairman P C Mody then said they were working to start an SMS-based service where a person will be intimated about at least 18 different types of transactions they undertake above a certain threshold. They wanted the taxpayer to note that the ITD knows about the transaction and the taxpayer should mention it in their ITR & pay tax if applicable.
Backing up… Last year, the ITD made it compulsory to file ITR if you undertake certain transactions. This time they went up a notch restricting them from filing the simplest of all forms i.e. ITR 1. Nudging them to share more information by having them file other ITR forms… Does the ITD want to know too much about you?
Startups mushrooming… A report suggests India has nearly 50,000 startups and about 10% of them are funded. The brainy entrepreneurs are ideating, incubators supporting, investors funding and government supporting… Well, government support has been a little debatable. They proved to be both the Angel and Demon in the Startup Tax story last year.
Angel or Demon? The infamous angel tax has been one of the most controversial since its introduction in 2012… the aim was to curb money laundering which was routed through investments in bogus startups. The intent wasn’t pure evil, Right?!
Saving Angel’s wings… After a great uproar and startups considering shifting base to more ‘startup-friendly’ nations like U.S, Singapore, etc. The Indian government had eased the angel tax norms and allowed exemption to DPIIT registered startups. Commerce minister Piyush Goyal says 1658 startups have been exempted from angel tax until November 25.
Keeping the Halo shining… DPIIT reportedly proposed Budget 2020 recommendations to sweeten India’s Startup ecosystem. Some suggestions include — Tax Incentives to Incubators, ESOP (Employee Stock Ownership Plans) tax benefits, GST Advantages, etc.
Still growing… The Indian Venture Capital Association (IVCA), is also seeking tax breaks as incentives to help create a pool of domestic capital to boost investments in startups. VCs and PEs in India are urging pension funds to contribute 1% of their overall asset towards creating alternative funds. Using these resources to create multiple startup-focused funds.
Startups… where the adrenaline kicks in. Nothing can match the thrill and excitement for a startup — the joy of funding (btw, Quicko just raised seed funding from Raimatter), the passion to strive & succeed and the grind and struggle of coping with the laws (not Ananya Pandey’s kind of struggle :p)
United we stand… Looks like everyone is contributing their fair share for startups — media by reporting, consumers by testing and buying, investors by investing and stay tuned for government in #Budget2020.
“Corporate Tax reduction shows how much our government believes in reforms.”
Nirmala Sitharaman
