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.


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.

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.

Lamborghini buyers will be watched over by Tax authorities

The Indian government has been struggling with small taxpaying population to meet its fiscal deficit. In a bid to face this herculean task the government has decided to try every hack to get hold of tax evaders.Tax authorities from now on will be watching over luxury car buyers like the Lamborghini. The company has rolled out its $580,000 (nearly INR 4 crore) V12 model for sale. Authorities will check tax declarations with the buyers list of this ultra luxurious car.The tax data released recently shows the deep rooted tax evasion in India. Only six people earning more than 50 crore according to the documents coming as a stark contrast to the 2,100 high wealth Indians whose worth exceeds 335 crore .

In line with this government has also made PAN details mandatory during high value transactions and increased vigilance over tax deduction at source (TDS). To weed out duplicate PAN government has been taking measures which narrows down tax evaders. Currently many people use multiple PANs to hide their transactions and cover tracks of their income. Finance Minister Arun Jaitley has announced all these measures will ensure that the fiscal deficit gap of 3.5 percent will narrow down to zero in the span of 5 years. To facilitate citizens to voluntarily come out and pay tax the ministry has announced tax amnesty to pay their past dues without any further investigations except for fines over the default money.

Krishi Kalyan Tax to be levied on services from June 1st

The 2016 budget had a provision which introduced the additional cess of 0.5 percent on all taxable services name krishi kalyan cess. This would be levied over the service tax and swatch bharat tax. The cess is introduced to finance and promote agricultural starting from June 1st. The revenue earned through cess can be used only for the purpose for which it was collected and not any other expenditure. Similarly swatch bharat cess is used for cleanliness activities. This cess is not over income but over all services for which service tax is applicable.
Telephone bill, internet bill, under construction property rent payment etc are some of the day-to-day services over which krishi kalyan will be levied upon.

The overall service tax stands at 15 percent. While a bill is generated for your service it will contain the split up of taxes you pay.Krishi kalian will be applicable over services which you obtain before 1st June if you have not paid the bill before the beginning of the month. So it is advisable to pay your bills before the month of June to avoid the excess tax at least for this month. Input credit of this cess will be allowed for claim. However claim against swatch bharat is not allowed.Like all taxes the cess will be a part of consolidated funds of India which will managed by the comptroller and auditor general of India.

Google office raided by income tax officers in France

Google’s Paris headquarters was raided by French Police as a follow-up of the investigation of probable tax evasion by the search giant.Google stated that it fully complies with the French laws and has paid all its taxes. In the recent times several multinational companies are accused of evading taxes by acting as subsidiaries of companies operating from tax havens.France’s central officer against corruption and tax fraud, investigators from financial prosecutors’ office and Income tax specialist took part in the raid.The investigation is verifying whether Google Ireland Ltd has a permanent base in France and is involved in fiscal obligation (corporate tax and value added tax) by not disclosing its activities in France.

The investigation began followed by the complaint received from French Tax authorities started in June of 2015 and made public during May, 2016.Google is now a part of alphabet Inc and pays only a small amount of tax in Europe. It reports as a company based in Ireland. The staff does not finalize contracts in France and the company does not pay taxes there.If Google is found guilty at the end of the investigation the company has to shell out 10 million euro as fine or half of the money laundered. France in the year 2015 has recovered 3.3 billion Euros as back taxes from just 5 multinational companies. According to the financial filling Google France made a profit of 12.2 million Euros from a revenue of 225.4 million Euros in the year 2014.

Finance ministry wants to bring foreign fund managers to India

At present foreign capital to India is managed from offshore nations like Mauritius, Singapore and London. In a bid to bring these managers to India the government has eased the norms. The Indian taxation structure has an inbuilt tax incentive system for those operating from these places. For example according to the earlier India-Mauritius tax treaty, capital gains exemption was given to funds flowing from there but with this exemption being phased out, government is expecting them to move to India. According to the phase out investments from Mauritius have to pay capital gains tax at a reduced 15 percentage from April 1, 2019 and will increase after a certain window period.

Another change to woe to them to set-up in India is modification of personal establishment norms. Based on the change the mere presence of fund manager in India will not result in PE of offshore funds and therefore will not be subject to double taxation. In the long run these moves will earn India revenue.Earlier India introduced such incentives to attract more foreign investors due to lack of companies and a weak economy. But today India has a strong workforce and knowledge wealth to attract many investors and companies. Thus it is the logical move from Indian government to phase out these incentives and raise the revenue.Initially these actions may cause turbulence to rupee value but will strengthen in the long run.