The newspaper released the names of the members involved in the Panama papers, and now the Income tax department ordered those members to disclose their accounts. The Panama law firm, Mossack Fonseca is the center of the global controversy for presumably helping the popular and wealthy people to make secret investments; there are five hundred members from India who are part of this controversial issue. People from the Hindi film industry and top industrialist are among the five hundred.
The Income tax department ordered the Indians involved in the Panama paper to disclose the offshore accounts and the purpose of those investments. After summoning about fifty members involved in the issue have to go to the income tax department. The tax department enquired those people about the reason why their names were in the document, and the government is doing background verification to see if they violated any rule while making investments in foreign countries or transfer the amount earned in India to tax havens.
A source reported that they will send notice to the members involved in the case and their explanations regarding the investments in any will be recorded for future reference. And he also said that an enforcement directorate who probes money-laundering case of the finance department will work with the IT department to investigate this issue.
Tax experts said that the tax department officers would ask the details on the income they obtained and the tax they paid for the past sixteen years, so the IT department will analyze the tax reports from the year 2016. The Indian government will also seek help from the Panama government regarding the case.
The liquidity deficit in the interbank sector will reduce to zero because of the problems faced by the banking sector. From December 2015 to meet the regular Cash Reserve Ratio, the banks borrowed a maximum of two lakh fifty thousand from the Reserve Bank of India. The money makers and the bankers of the RBI condemned the growth of the liquidity deficit in the interbank. But RBI has difficulties to overcome the liquidity deficit in the system, and they have to print the incremental cash flow because they have to replace the cash the public withdrew from the banks. And the other reason is they have to give extra cash for the services and goods for the entire year, which is equal to the nominal gross domestic product. RBI provided these by buying the dollars or government bonds and increased the reserve amount.
A report showed that for the past ten years the growth of rate of currency with the public has been below the M3 and reserve money, but in the year 2015-16 there was an increase by two percent growth of the rate of growth of currency than reserve money and four percent than M3. This was an unexpected growth and it is also the reason why the planned infusion fell short. Due to economic development, transactions take place using the credit card and the debit card in many countries, and this is the same trend in India for last ten years. But for the past two years the cash transaction seems to increase. This sudden change in the system needs an investigation because there were no proper explanations given on this issue.
The Union Budget 2016-17, announced by the Finance Minister Arun Jaitley had several new schemes, exemptions, and even introduced new protocols on the taxation.There are several new income tax exemptions introduced in this year’s budget, which is beneficial for the entire individual in the country. The Section 80C is an Income tax Act, according to this Act a person can invest only one lakh fifty thousand rupees in the Public Provident Fund (PPF), but the interest rate on the PPF is exempt from taxation. The Provident fund has contributions of both the employer and the employee; the interest rate of the fund is exempt from taxation.
And according to Section 80C the employee’s contribution is inclusive of the tax while the employer’s part is exempt.Some policies in the mutual funds offer tax savings, called the Equity Linked Saving Schemes (ELSS). And the Life insurance policies paid by an individual for himself, his spouse and children are in the deduction list. This is because if an individual pays for more than one policy they are exempt from tax. The National Savings certificate is a tax saving scheme with its maturity period of about 5 to 10 years. The interest rate for this scheme is also deduced because of the income tax act. But it is later taxed when the policy matures.
And individuals who have a fixed deposit in certain banks for five years are not required to pay tax. Like the FD, the Post office time deposit is a tax saving scheme with different time duration. But POTD policy with duration of 5 years is deductible under the Section 80C. The infrastructure companies issued the infrastructure bonds, which are also deducible under the exemption.The taxpayers should register immediately to claim the income tax exemption for the financial year 2015-16.
The new budget announced by the Finance Minister, has several changes unlike the previous budget. Taxation depends on the residential status of a person.A resident taxpayer is taxed in India for his income accrued in the country and outside the nation. And a non-resident is exempt from tax, for all the income he gets outside the country.Samir Gathe, a non-resident Indian lives in the United Kingdom has doubts about the taxation. Samir invested in an Indian company on the initial public offering (IPO).
He used his NRE account for the investment, and he wishes to book the profits. Because the stocks are at a good price. He wishes to know the taxation of his interest earned from the invest he made.The experts say that if an Indian company ‘s shares are in the stock exchange, and if the gross is on hold for 12 months , then that capital is a long-term asset. If the duration of the capital held for a minimal time, the capital is a short-term asset. Thus, the equity shares of the long-term amount gain is not taxable in India, and in case of the gains in the short-term amount, it is taxed at the 15% besides the service charge.
Sundar has been working in Australia for the past 2 years, he wants to know about the Double tax avoidance agreement of India. And wants to know the impact it has on his salary received in both the countries.
According to the expert, Sundar is a non-resident because he has been working in Australia for a couple of years. As a non-resident, Sundar is exempt from taxation for the income he receives outside the country. But the income he receives in India is taxable. And he can claim benefits in both the country, depending on his residential status. Besides that, he can fill an ITR form for the income he receives in India for tax exemption.
“Make in India” is the initiative launched by the Indian government under the governance of Prime Minister of Narendra Modi. The aim of the program is to make India a global design and manufacturing hub. The electronics manufacturing industries is expected to have a growth rate of 13-16 percent. The rise will be from $75 billion at present to $130 billion by 2018. These figures are forecasted keeping in mind the rising labor costs in China and availability of cheap and quality workforce in India. India has proven its engineering capabilities in the IT sector. There is also strong consumerism in the domestic market.However to achieve this expectation the Indian government should resolve tax and labor issues in the country.
India has a complicated tax procedure and the red tape around setting up of new industries comes as a major hurdle to attain the above mentioned growth rate. The GST bill is a sign of encouragement to industries; it resolves the double taxation and combines various taxes to make the overall tax payment a simpler one. Union finance minister Arun Jaitley has stated that the corporate tax will be brought down to 25 percent in the course of 3 years. In keeping up with his word, the finance budget of the year 2015-16 brought down the tax to 29 percent for SMEs. The tax for newly set-up industries will be at 25 percent given that the companies’ give up accelerated depreciation.These steps by government are a welcome sign but still there are lot of steps necessary from the government’s side to make use of the positive environment in India’s favor
India is the diabetes capital of the world, with 50 million people suffering with type-2 diabetes. The research conducted by Cambridge University in the year 2015 points that sugar or artificial sweetened drink also contributes to type-2 diabetes. The health ministry is trying to take steps to cut down the consumption of these foods. Inter ministerial meeting took place in the month of February 2016 in this regard.The consumption of aerated drinks in India has risen from 2 liters per head to 11 liters per head from the year 1998 to 2014 based on the joint research conducted by Diabetes foundation and center of nutrition and metabolic.
The financial budget of the year 2015-16 raised the aerated drinks excise duty to 18 percent from 12 percent. The government believes taxing aerated drinks at a higher rate will reduce the buyers and provide a solution to diabetes and obesity problem. There was uproar from the beverage companies after the GST expert committee on uptra consultancy advised 18 percent tax and a 40 percent “sin tax” on aerated drinks. However the government has increased only the tax to 18 percent and not yet imposed the sin tax.
The beverage manufacturing companies feel unfair about the government clubbing aerated drinks under tobacco products. Coco-Cola has openly stated that a 40 percent sin tax would lead to shut down of its factories in India. As the raise in tax will lead to the end product cost rising by 10-15 percent which will drastically reduce its market. The packing of aerated drinks will be subject to stringent norms which are in line with the World Health Organization recommendations.
The deadline to file income tax returns (ITR) for the financial year 2014-was March 31st 2016. The government of India provides 2 years to file income tax return after the end of a financial year. The income tax department has been hitting hard on tax defaulters and has also sent notices to individuals seeking clarification about their income. Therefore all tax payers should calculate their past dues and make sure everything is filed. If in case the I-T department has issued notification despite paying the dues the taxpayer should register ITR number in the e-filing website and clarify that the dues are paid properly. Also the taxpayer should have proper paper work to back the claim that there are no dues.
The paper work should consist of bank statements, TDS, calculation of investments and stock values. The taxpayer needs to mention the date and mode of filling the ITR Tax payers who have not filed at all need to select an appropriate response for non-compliance. There are various options such as action needed self-investment etc. Read through the options and select the appropriate option which suits the reason for non-compliance. There is a separate option for registering if wrong PAN is quoted for the notice issued by tax authorities. The government is scanning high value transactions and also stock market investors skimming tax. The taxpayer missing the deadline will have to pay a fine of INR 5,000.
On February 9th, Finance Minister Arun Jaitley presented the Union Budget for the year 2016-17. The new budget plan has relieved the pensioners from the rise in the low income threshold for paying tax for senior and super senior citizens.The Government has proposed to provide the pension sector by uniform tax treatment and has raised the tax exemption. The tax exemption has increased from Rs.1 lakh to Rs.1.5 lakh by an employee for an annual contribution to the superannuation fund. A limit of Rs.1 lakh, given as an annual contribution in a provident fund and one-time portability from Superannuation fund or Provident fund to the National Pension System(NPS). The finance minister also proposed that a non-levy of tax upon death of an employee under the National Pension System.
That is on the death of an employee, at the closure of an account under the National Pension system is exempt. It also stated that 40 percent exemption for the pension wealth under the National Pension System of an employee from a recognized superannuation fund or a provident fund on or from April 1st , 2016. But this scheme is not applicable to an employee who has a recognizable provident fund with a monthly salary of Rs.15,000.To help the country move towards higher pension coverage, the government has also exempted the impose of the service tax on annuity under the National Pension System, which is run by the Pension Fund Regulatory and Development Authority of India (PFRDA).
The Karnataka Chief Minister proposed the agricultural tax exemption on March 18th, 2016 in response to the demand by the growers of tea, coffee, rubber, spices and other plantation crops. The foodgrain production declined from 126 lakh tonne to 110 lakh tonne from 2014-2015. The lack of the south-west monsoon rain and about three fourth of the State experienced low rainfall. The economic growth of the state fell to 6.2 percent in 2015-2016 from 7.8 percent in the 2014-2015.
And due to drought in 137 taluks during kharif and 62 taluks during the rabi crop season, the agricultural sector to decline by 4.7 percent this year.The State Legislative Assembly proposed the budget to abolish the agricultural income tax on the plantation crops was a relief for the planters of Karnataka. A new committee, called the Karnataka State Agriculture and Farmers Welfare Committee headed by the Chief Minister will address to the farmer’s grievances and help the farmers uplift their economic status. The committee will also include the other welfare departments related to the agricultural growth.
The State government will also identify a special zone to focus on the farmers and the agricultural techniques followed by them. Under the ‘Suvarna Krishi Grama Programme’, the budget has proposed to develop 100 villages across four revenue divisions in four districts.The budget proposal has also removed the tax on hand-made paper board which includes hand-made paper products manufactured by the Kadhi and Village Industries Board. They have removed the VAT on articles of nickel and titanium from 14.5 percent to 5.5 percent. The VAT rate is low for files made from paper and paperboards, rubber sheets, set-top boxes, LED bulbs and multimedia speakers.
Agriculture is the backbone of India. About seventy percent of the population depends on the agriculture and one-third of the nation’s income is from agriculture. To improve the economic welfare of the country, it is important to develop agriculture. The number of people disclosing the agricultural income increases, with constant land and growth. According to the report, about 14 crore hectare of the cultivated land remains constant over a year and the agricultural growth lies between 3-4 percent, which has not even crossed 5 percent. And by analysis of the Gross Domestic Product (GDP) of the country, the production in agriculture is only around 14-15 percent.
But, we don’t have significant justification behind the rise in the agricultural income. And moreover, the agricultural income is exempt from taxation, and about 90 percent of farmers cultivate the land. Only 2 percent of the farmers file tax under the agricultural income, yet it runs trillions of rupees. The gross domestic product of the country exceeds up to 20 times in the year 2010-2011 and about 6 times in the year 2011-12. By looking at the statistics, the agricultural land and the food production seem constant, but the average income seems to be three hundred crore. And it may increase on an average of seventy crore per farmer.
By analyzing these reports, we can conclude that these illegal revenues gained from unauthorized resource is under the agriculture income. But if these revenues were liable, it would have increased the economy of the country. At the same time, there were reports on several Indians having illegal revenue in their foreign bank accounts. Before the government could address to the issue, they have withdrawn the amount from the account. And after several trials , this issue made headlines in the Parliament , and the government has plans to investigate on the issue.