I-T returns: Top 1% earned 18% of income

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The top 1 per cent of earning individuals who filed tax returns earned about 18 per cent of the total income in financial year 2011-12, according to the latest data on income tax released by the income-tax department recently.

The bottom half of the earning individuals earned just about 21 per cent of the total income shown in the returns, the data showed, highlighting stark income inequality. However, in between there is a big chunk of middle class. It is this class, which was addressed by Prime Minister Narendra Modi in his Independence-Day speech when he said he would further mitigate their problems with the income-tax department.  The top 1 per cent of the individuals were those who earned Rs 25 lakh and above, while the bottom 50 per cent made up of those who earned up to Rs 2.5 lakh. In between, there was a middle class, constituting about 49 per cent of the total tax payees. Their income was around 61 per cent of the total.

Three individuals filed returns showing income of more than Rs 500 crore in the financial year 2011-12. About 35,616 individuals earned more than Rs 1 crore as taxable income during that year.  These individuals  made it to the super-rich category, for which an additional surcharge of 10 per cent was introduced in the financial year 2013-14. The super-rich surcharge imposed on taxable income of more than Rs 1 crore, has since then been raised to 15 per cent.

India’s Gini Coefficient, a measure of inequality, stands at 0.38. The higher the coefficient, ranging between zero and one, the higher is inequality. However, it should be noted that agriculture income is exempted from income tax.

As many as 1,33,000 individuals reported zero taxable income in 2011-12.  Maximum individuals or about 38 per cent individual return filers (10.8 million individuals) were in the taxable income bracket of Rs 1.5-2.5 lakh.

About 33 per cent of the 46.5 million taxpayers in the country paid taxes but did not file returns in assessment year 2012-13.

For individuals, salary income constituted about half the total income, while business income represented 33.4 per cent. Of the 31.2 million returns filed, 28.9 million or 92 per cent were individual taxpayers.

Amid pressure from celebrated economist Thomas Piketty and Chief Economic Advisor Arvind Subramanian, the revenue department has released the revised set of income tax data for assessment year 2012-13, omitting about 150,000 returns to bring consistency of data within various categories. In cases where more than one returns were submitted, the values of the latest returns have been considered.

Income tax deductions totalling Rs 1.35 lakh crore significantly lowered taxable income of individuals, making up for 11 per cent of total gross income for individuals. For companies, the deductions were about 7.1 per cent of total gross income.

According to a recent write up by Revenue Secretary Hasmukh Adhia and CEA Subramanian, the total tax foregone on all income taxes amounted to 0.4 per cent of gross domestic product in 2011-12. The government had in the Budget announced a plan to phase out corporate tax deductions and exemptions, putting a sunset date in most cases. It plans to reduce corporate tax to 25 per cent from 30 per cent currently by 2019.

With the government taking efforts to encourage individuals to file returns, about 155,000 filed zero-income returns in 2011-12. Filing of returns is mandatory to avail loans.

About 3.7 per cent of the population and 9.1 per cent of the workforce were part of the individual income-tax system the assessment year 2012-13. There were 44 million individual income taxpayers and 0.65 million corporate taxpayers that year. These include those tax payers also who did not file returns but paid tax through tax deducted at source (TDS).

Source: http://www.business-standard.com/article/economy-policy/i-t-returns-top-1-earned-18-of-income-116081601347_1.html

Over 75 lakh taxpayers availed e-verification facility for filing Income Tax Returns

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Over 75 lakh taxpayers availed the e-verification facility of their income tax returns filed till August 5 against around 33 lakh taxpayers last year till September 7, which will ensure faster processing of their returns. In all 226.98 lakh e-returns were filed in FY 2016-17 as compared to 70.97 lakh for the same period in FY 2015-16. The number is higher because last year the date of filing had been extended to September 7.

By September 7, 2015 nearly 207 lakh returns had been filed, which yields 9.8% rise in e-filing this year. Aadhaar based e-verification was used by 17.68 lakh taxpayers during the current year as against 10.41 lakh taxpayers during the same period in 2015-16, finance ministry said in a statement.

“In addition to these, 3.32 lakh returns were digitally signed. Thus, over 35% of taxpayers have already completed the entire process of return submission electronically,” it added. The forms that are not electronically verified have to be physically mailed to processing centre in Bengaluru before they can be processed.

The revenue department is encouraging all taxpayers who have submitted their returns to e-verify them as an easy alternative to sending their ITR-V form to CPC, Bengaluru.

The government said tax refunds of Rs 14,332 crore have been issued this year till August 5. “The Central Processing Centre (CPC) Bengaluru has already issued over 54.35 lakh refunds totaling to Rs 14,332 crore have been issued this year till August 5. “The Central Processing Centre (CPC) Bengaluru has already issued over 54.35 lakh refunds totaling to Rs 14,332 crore which includes 20.81 lakh refunds for AY 2016-17 (current year returns) totaling to Rs 2,922 crore till August 5, 2016,” the statement said.

Source: http://economictimes.indiatimes.com/articleshow/53607133.cms

 

Today is the last day to file Income tax return, know easy steps if you haven’t filed yet

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The last date for filing income-tax returns was extended to August 5, and it ends today. Tax returns for 2015-16 (assessment year 2016-17) were originally to be filed by July 31. But in view of the day-long strike at public sector banks, the deadline was extended to August 5. However, the deadline for Jammu and Kashmir will be August 31 in view of the ongoing turmoil in the state.

The return is mandatory if your taxable income is above Rs 2,50,000.

The Revenue Authorities have introduced new reporting requirements for FY 2015-16 for Assets and Liabilities for individuals with income above Rs 50,00,000. In case of this, the individual has to disclose the cost value of all the assets above the specified amount, in the tax form, as well as disclose the debts associated with these assets- land, building, cash-in-hand, jewellery, bullion, vehicles, yachts, boats and any aircraft owned. It is advisable that you retain the purchase receipt of any of these assets.

It has almost become a ritual for people to delay filing their income tax returns till the last date and for the government to extend the same due to “popular demand”. However, the long queues that used to be another annual feature of the tax filing week has become a thing of the past due to the growing popularity of income tax e-filing.

The incometaxindiaefiling.gov.in has made it really easy for people to file their returns from the comfort of their homes.

If you have not yet filled you returns, here are some easy and essential steps to do it before the time ends.

Step 1: Select the right form: You have to select the form based on your source of incomes. So ITR-1 is for salaried individuals whose get a salary or a pension along with income from a house/property or from other sources, things like lottery. This is not for those with multiple houses/properties, income from winning a lottery, agricultural income of above Rs 5000, income from business. Tax payers filing for double tax relief should also not use this.

ITR-2A, introduced this year, is for those individuals who have income from more than one house property. ITR-2 can be used by individuals with no income from business / profession. ITR-3 is for individuals partnering in a firm, but not for those earning income from a proprietorship form. ITR-4 is for those individual earning income from a proprietorship firm. ITR-5 and 6 are for use by companies alone.

Step 2: Get your Form 16 ready: This form given by your employer shows your saving as well as the tax deducted. There will be multiple forms if you have changed jobs over the assessment year.

Step 3: Additional documents: You might need your bank statements, interest certificates, and your housing loan certificate (in case of housing loan).

Step 4: Download Form 26AS from the e-filing website to see which taxes are deducted at source

Step 5: Filing/uploading: Individuals with over Rs 5,00,000 income have to e-file their tax returns. You will get an automatic acknowledgement once the return is successfully uploaded. Verify this and submit the acknowledgement online, ideally with e-verification. This completes the process of filing your income-tax return.

Source: http://indianexpress.com/article/business/business-others/income-tax-return-filling-last-date-steps-to-file-it-2955207/

CBDT tightens scrutiny rules for assessing officers

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If you have received an income-tax scrutiny notice, there’s no need to be unduly fearful as the government has sought to protect you against possible harassment.

That’s in line with Prime Minister Narendra Modi’s recent message to the tax department that people should not fear such persecution.

The Central Board of Direct Taxes (CBDT) has made it more difficult for assessing officers to expand the scope of a ‘limited’ scrutiny to a complete one.

They will also have to substantiate any contention of possible under-reporting of income and loss of taxes, apart from requiring approval of senior officers.

The guidelines issued recently by the apex direct taxes body call for assessing officers to form a “reasonable view” that there is a possibility of income under-assessment, said an official aware of the move.

Besides, when manually selecting cases for scrutiny in the current financial year, the threshold for metros has been raised to Rs 25 lakh from Rs 10 lakh for instances involving additions in the earlier year.

That is, if an assessing officer finds that some income should have been added to the declaration, the return can’t be opened for scrutiny if the incremental amount is less than Rs 25 lakh.

In the past two years, the government has sought to make the department’s revenue collection efforts less aggressive and move away from what’s been dubbed by some as tax terrorism.

Modi delivered much the same message to tax officials at a meeting last month. Processes are being made less discretionary and increased reliance is being placed on information technology.

E-scrutiny, which allows payees to reply to scrutiny questions over email in metros, has also been started. These latest directives add to measures aimed at ensuring that tax officers don’t embark on fishing expedition even in cases of limited scrutiny under the Computer Aided Scrutiny Selection (CASS) where the perceived risk area is limited to only that particular transaction.

Tax experts welcomed the move. Together with the new scrutiny formats, this will lead to greater accountability of the tax department, said Amit Maheshwari, partner, Ashok Maheshwary & Associates LLP, chartered accountants.

“This would help save precious resources of the department, lead to early closure of assessments and prevent unnecessary harassment,” he said.

Source :  http://economictimes.indiatimes.com/articleshow/53257731.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

 

Black money: No cut in tax, warns CBDT

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The government on Thursday clarified that tax paid under the ongoing amnesty scheme for persons with undisclosed domestic assets can’t be reduced to an effective 31% from 45% prescribed by enjoying immunity not only for such income declared but also for the other undisclosed income from which the tax is paid.

The Income Disclosure Scheme (IDS) 2016 is the latest in a series of such windows opened by governments to address the scourge of black money and the second by the Modi government.

The government on Thursday clarified that tax paid under the ongoing amnesty scheme for persons with undisclosed domestic assets can’t be reduced to an effective 31% from 45% prescribed by enjoying immunity not only for such income declared but also for the other undisclosed income from which the tax is paid.

The tax department said its earlier answer to a query in this regard, where it said after a valid declaration is made under the scheme, it won’t make any “enquiry in respect of sources of income, payment of tax, surcharge and penalty”, was “limited to the conduct of enquiry by the department”; the clarification, the department said, was in no way intended to modify the tax rate.

The Income Disclosure Scheme (IDS) 2016 is the latest in a series of such windows opened by governments to address the scourge of black money and the second by the Modi government.

The government had found response to an earlier amnesty scheme for Indians with undisclosed assets overseas tepid. The IDS, under which declarations can be made between June 1 and September 30, 2016, provides persons with hidden income a chance to declare such income/assets and pay tax, surcharge and penalty totalling 45% and enjoy immunity.

What necessitated the latest clarification by the I-T department is an interpretation by sections of analysts that its assurance that no enquiry will be made into “the sources of income, payment of tax” allowed one to pay the 45% tax on the fair market value of the declared asset (immovable property) and claim immunity with respect to not only this asset but an additional one equivalent to 45% of the declared asset as “the source of payment of tax”.

Effectively, this would have reduced the tax rate (including surcharge and penalty) on the assets declared plus the source of income for tax payment to 31%. However, the department has now said this has never been the intention.

Giving the example of a person declaring Rs 100 lakh as undisclosed income (as fair market value of immovable property as on June 1, 2016) under the scheme and paying the stipulated 45% tax on it from her “other undisclosed income”, the department has said:

“To get immunity under the scheme in respect of the entire undisclosed income of R145 lakh, the declarant has to declare undisclosed income of R145 lakh (R100 lakh being the undisclosed income represented by the immovable property and R45 lakh being the payment made from undisclosed income), and pay tax, surcharge, penalty under the scheme amounting to R65.25 lakh, ie, 45% of R145 lakh.”

Meanwhile, in recognition of the concerns raised by many quarters that the initial deadline (November 30, 2016) for making payments under the scheme was very tight and force people to make distress sale of assets, the government has revised the schedule for payments:

As per the new schedule, a minimum amount of 25% of the tax, surcharge and penalty will have to be paid by November 30, 2016; a further amount of 25% of the tax, surcharge and penalty by March 31, 2017; and the balance on or before August 30, 2017.

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 Source: http://www.financialexpress.com/economy/tax-outgo-amnesty-scheme-cant-reduced-31per-cent-cbdt/317162/

E-filing: ATM-based Income Tax Return (ITR) validation facility enhanced

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The Income Tax department has widened the ATM-based validation system for filing e-ITRs by taxpayers with the inclusion of Axis Bank, after SBI, as part of its measure to enhance the paperless regime of filing the annual I-T returns.

“Now, Electronic Verification Code (EVC) can also be generated by pre-validating Automated Teller Machine (ATM) provided by Axis Bank. SBI had activated the facility last month. Other banks are also expected to join soon,” a senior I-T department official said.

In May this year, the department had launched the bank account-based validation facility in this regard for those who have not availed the internet banking facility.

 

The new facility is available on the official e-filing portal of the department- http://incometaxindiaefiling.gov.in/ and will work by using the One Time Password (OTP) verification system as activated by the department last year by using the Aadhaar number.

These measures are used to validate the e-ITR so that the taxpayer does not take the trouble of sending the paper-based ITR-V by post to the Bengaluru-based Central Processing Centre (CPC) for final resolution and processing.

The new ITRs have been notified early this year and taxpayers can e-file their ITRs till July 31.

ITR-1 can be filed by individuals having income from salaries, one house property and from other sources including interest.

ITR-2 is filed by Individuals and Hindu Undivided Families (HUFs) not having income from business or profession.

ITR-2A is filed by those individuals and HUFs who do not have income from business or profession and capital gains and who do not hold foreign assets.