Pakistan’s financial budget to include legal cover for foreign trust

Pakistan’s finance bill for the year 2016-17 presented by the government has proposed amendments to clause 23 of income tax ordinance. According to which legal cover will be provided to undeclared wealth held through foreign trust by the nation’s individuals.Vice president of Pakistan’s people party Sherry Rehman questioned the amendments and quoted them as suspicious. She also said that that according to the amendments “foreign trusts” do not come under the definition of “trust”. The suspicion has become evident given the current situation of Panama Papers leak with the prime minister’s family members name listed in it. Though there is no proof that the names listed in those papers are those of people stashing black money or legal account holders. Prime minister’s daughter’s name was listed for holding assets in tax havens.

These measures are widely regarded as a free pass to holders of undisclosed money in foreign accounts and a step that incentivizes tax evasion.Pakistan at present is losing Rs2.2 billion in corruption which is affecting the economy severely. Also the country has very small taxpaying base which makes the situation even more badly.Senator Rehman also said such measures were drain on the nation’s economy and erodes the values of good governance. Pakistan is not the only government that is tackling that panama papers more than half of the nations in the globe have their citizens’ name in it. There are almost 12 countries which have their national leaders directly or indirectly connected to it.

Compliance window is not tax amnesty

Finance Arun Jaitley stated that the present chance given to disclose income does not fall under the category of amnesty or voluntary disclosure of income (VDIS) of 1996.Presenting the 2016-17 budget finance minister said he wanted to give a compliance window for the non complaint citizens without any further legal action. One can clear the past dues by paying 30 percent tax charge, a surcharge at 7.5 percent and a penalty of 7.5 percent. This amounts to 45 percent of the undisclosed money.Amnesty creates inequality where an honest tax payer pays 30 percent and defaulter after few years pays the same 30 percent. Amnesty is the same as VDIS of 1996 and the current option is not structured that way.

By paying penalties money outside the system is brought in to the system. The compliance window will be open from June 1st to September 30th of 2016. And one has to pay the money within two months of declaration. In the previous budget the government came out with the same option for foreign assets holder. The present government has been trying various formulas to bring in more money into the countries revenue. India has a very small base of tax payers and has a staggering fiscal deficit of 3.5 percent.Finance ministry also came up with the idea of “name and shame” policy of high asset defaulters. They also brought out stringent norms to filter out duplicate Personal Account Numbers (PAN) to increase compliance.

Income tax department to name and shame all crorepatis

The government in the year 2015 released 67 names of the tax defaulters list. These names were released in 3 installments under the “name and shame policy. The source of income for majority of the individuals and entities in the list is through jewelry, diamonds and gold. The first list released was released in March 2015 with 18 names. The total amount these members owe to the government is 500 crore. The second list was released month later i.e. April 2015 with 31 names. The tax skimmed by these defaulters summed up to 1500 crore. The final list was released in December 2015 with 18 names and the due amount that has to be paid is 1,150 crore.This list is compiled by tax department and released by the finance ministry.

The list was published in leading national newspapers along with details regarding source of income, PAN number, and last known address and assessment years. The tax department has issued the notice to the defaulters to pay their taxes immediately. The department also welcomes public to come with any information regarding the defaulters. The public notice also points to the fact that the individuals or entities in the defaulters list are not “traceable” and do not have enough assets listed for recovery.Gujarat stands as the state with highest number of tax evaders. In the list of 67 ,24 are from Gujarat, followed by Gujarat Maharashtra and Telangana have 15 defaulters each.The first list for the year 2016 is released with 20 tax defaulter off which 3 are from Gujarat.

IT department facilitates ATM based filing for income tax returns

Income tax department of India has launched automatic teller machine (ATM) based validation system for electronic filing of income tax returns. This facility is to boost the paperless regime of filing annual IT returns.
Electronic verification code will be generated by pre-validating in the ATM of the bank, where the taxpayer has an account. State bank of India (SBI) currently has this facility while other banks will be launching it soon.
The IT department introduced bank account based validation facility to be more helpful for those who do not have internet banking To avail the facility login to the official website of the income tax department and start over after receiving one time password (OTP) verification through Aadhar number.

These measures saves the taxpayers time and reduces the cumbersome process of sending the paper based ITR-V by post to the central processing center (CPC) for verification.Filing income tax return is essential as they are required in various situations like applying for a housing loan or credit card. It serves as a proof of income in such cases. Any citizen who pays tax has to file returns. Failing to file returns in time will lead to penalties. A minimum INR 2.5 lakhs per annum earning person has to pay taxes.There are various ITR forms based on the profession and the income earned by a person. Thus one must take care while filling out the application.Income tax department scrutinizes the forms submitted and any discrepancy in data might lead to legal action or

Filing income tax return for the financial year 2015-16

Any citizen having taxable income is supposed to file income tax return. Tax is levied on citizens having income more than INR 2.5 lakhs per annum.The income tax department can refund only if a tax return is filed. In a tax return filling all details regarding income and tax deduction at source (TDS) is provided.A person holding foreign assets and accounts should state the details of the same in their tax return filling. Also completing this procedure comes handy when applying for a home loan. Lenders take this proof of income. Visa authorities also request you to submit details of tax return. Freelancers should also pay tax and they are given certain benefits such as presumptive taxation to ease the paper work.

Salaried class employees have the flexibility of TDS which makes it easier for them to file.To boost the savings of the citizens government also gives incentives for saving money and money spent over education is not taxable. Agricultural income is also completely exempted from paying taxes.Income tax officials do not unnecessarily scrutinize tax payers. However any major discrepancy if found out will lead to penalties and also for non-filling. The income tax department has data regarding your investments and income from various sources. This will let them track your filling.Also avoid filling in the last minute to free yourself from mistakes in the data you provide. A penalty of INR 5,000 will be levied if you miss to fail for particular financial year.

Incentives given to own a house

To make own house a reality for all people in India the government has brought in various schemes. Let us look at the incentives provided for owning or constructing a residential house and tax benefits provided to a builder or developer. Home loans for individualsAmong all the loans provided by the banks such as business loans and personal loans, housing loan comes with the lowest interest rate. Reserve bank of India (RBI) mandates all banks to allocate certain percentage of loans for purchase, construction and repair of housing properties. Loans to individuals up to 28 lakhs in a city of more than 10 lakh people is considered as priority sector given that the cost of the house does not exceed 35 lakh.

For people in rural area the limit is 20 lakhs and the cost of the house should be within 25 lakh. However people dwelling in metro areas will not benefit much from the priority, residents from small town and rural areas gain the most.Builders/ promoters Amount lent to builder or promoter for building housing for poor section of the society comes under priority. Any family with income less than 2 lakh per year are considered as poor section or from “economically marginalized society”. The limit is 10 lakh per dwelling unit area.Subsidizing interest In addition to treating the above stated category as priority they are also given subsidized interest rates at 6.5 percent.There are no service taxes levied on properties for purchase which are brought from the developer completely.

Avoid paying Income tax in the rush hour

The deadline for paying income taxes in India is June-end. However the Reserve bank of India (RBI) has requested the citizens to pay in advance to avoid rush at the last moment. It is well known that remitting taxes at the end of the time period in RBI and other authorized banks becomes crowded at the end of March, June, September and December.
It has become difficult for the banks to cope up with the inflow of receipts though additional counters have been created.Most of the times tax payers are made to wait in queues for long hours. RBI announced to the public that all branches of State bank of India (SBI) and its associates can collect dues.

Besides them certain private banks like HDFC bank, ICICI bank, Axis Bank, IDBI bank and J&K bank in Delhi are also authorized to collect dues.The Income tax payers have also the option to make online payment. However in the last moment there are many people trying to pay which leads to slow down of the web and server crash.To avoid such discomfort it is in the best interest of the tax payers to make it as soon as possible.Last payment also leads to missing out information on forms and other necessary details. Incorrect data can prove to be costly if the I-T department scrutinizes them. It can leady to payment of fine and legal action. The tax payer has to go through the information stated by them with full caution to avoid any discrepancy in data.

Important forms to be remembered for last hour tax payers

The deadline for filing tax this year is July 31st. But most of us keep procrastinating and rush in the last minute. To all those final hour working people. Here are the forms that should be ready with:Form 16 and Form 16A:Form 16 is for declaring the basic information regarding income earned and tax deducted during the year. If you work for more than one organization or entity you should collect Form 16 from each one of them.Form 16A is for tax deducted at source (TDS) and is issued by banks over interest gained through deposits, capital gains for NRIs etc. If you earn any professional income or commission, you should obtain TDS certificate.Form 26 ASThis form is filled up with details of your high value transactions, income from all sources and tax deductions.

Income tax department scrutinizes this from along with income tax return for any discrepancies. While the filling the forms make sure you match the details.Bank statements from all bank accounts Fill in the details of all transactions carried out during the financial year such as income earned, interest gained over deposits, expenses etc. Home and education loan interest certificates To claim deduction in taxes, collect all the certificates regarding the loan amount and interest from the lender. Investments If you have missed to submit the proof of any investments or savings made by you during the current financial year to your employer you can still file it separately. To avoid last minute rush try to do complete these procedures soon.

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Government implements tax collection at source

Under the provisions of Tax collection at source (TCS) specific persons require to collect tax at 1 to 5 percentage for niche transactions from opposite parties. The percentage is dependent on the type of transaction.
These transactions are mostly constrained to business activities and not day-to-day money exchange. The person collecting TCS is given credit over his income tax return.TCS is now seen as an effective toll to curb tax evasion and black money laundering. From the year 2012 cash payments during purchase of bullion exceeding INR 2 lakhs and jewelry exceeding INR 5 lakh were brought under TCS. In the budget of 2016, various high value transactions were included under this taxation, such as, sale of automobile value exceeding INR 10 lakh and goods or provision or service over 2 lakhs.

The seller needs to collect additional 1 percentage from the buyer and pay it to the government. The seller can be anyone from a businessman to salaried employee. So TCS will affect all consumers willing to pay large amounts cash.TCS has existed even before but what lacks is implementation. Today government has increased its vigilance over jewelers and automobile makers over their sales activity. These are one of the major areas where people with huge amount of black money look out for investments.Government is also looking into sale of high value properties. Real estate is the dark area of illegal transactions. Also all transactions made require the details of PAN which makes it harder to cover tracks of income

Facts about Indian tax payers and the system

India has undergone a sea of change in taxation. In the early 1990s India opened its economy for foreign investment and liberalization of economy began. Since then the income of the nation has been increasing and various tax reforms started to come into effect to increase government revenue.Here are some of the interesting facts regarding tax regime of India:

1. Among 120 crore Indians only 4 percent paid taxes (5.1 crore) in the financial year 2015-16.
2. The state of Maharashtra and Delhi alone account for 53 percent of Indian tax revenue. Taking into account of all the previous financial years.
3. There are 10 lakh people in India who pay taxes more than INR 10 lakh
4. 85 percent tax payers pay less 1.5 lakh per annum as taxes
5. Only three Indians pay more than 100 crore a year as income tax.
6. On an average only 20,000 people pay more than a crore as income tax.
7. Over 2,700 entities have declared more than 1 crore as agricultural income, which is exempt from tax.
8. The number of tax payers increased to 5.17 crore from the previous year
9. The top 5 states in terms of increase in tax collections are Sikkim, Mizoram, Kerala, Madhya Pradesh and Nagaland.
10. Around 54 percent (1.7 crore) of people who filled tax had zero tax liability. That is they paid no taxes.
These data show how poor the tax implementation is and how small the tax net is in the country. The government is trying to increase the implementation by making PAN details mandatory for high value transactions and eliminating duplicate PAN numbers.