The union government represented by Finance Minister Nirmala Sitharaman, has proposed to make high spending taxpayers liable to file their income tax returns. Even if they lie below the income threshold exemption limit of Rs.5 lakhs, it has been made mandatory for them to file income tax returns if they enter into certain high value transactions.
In the union budget of 2019-20, government has proposed to amend the section 139 of Income Tax Act. Under this amendment, those taxpayers spending more than Rs.2 lakhs on foreign travel in a year, spending more than Rs.1 lakh on electricity bills in a year or depositing more than Rs.1 crore in a current account in a year will have to furnish their income tax details and file returns.
It means any person who has made an expenditure of amount Rs.2 lakh or exceeding it for him or any other person on foreign travel in the previous year will have to file a tax return.
Also, any person who has deposited an amount of Rs.One crore or more in a current account in the previous year shall be liable to file the income tax return.
The government also took into account other high value expenditures like electricity bill. Under the proposal, if you have incurred an expenditure of Rs.One lakh or more on electricity bill dues in a previous year, you will have to file your income tax return next year.
This means that even if your income does not exceeds Rs.5 lakh, you will have to furnish your income details if you have incurred any of the above mentioned expenditures.
These amendments will be in effect from 1st September, 2019. The assessment from 2020 and following years will be done on the basis of above amendments.
The union government also paid attention towards its cashless initiative in this budget. To promote cashless transactions further, government has proposed to insert a new section 194N in the Income Tax Act. Under this new section, TDS at the rate of 2 per cent will be levied on cash transaction of Rs.1 crore or more in the previous year by a company or individual from an account maintained by the recipient.
Finance minister Sitharaman also vowed to take actions and steps which will make filling of income tax returns a lot easier. To start with, taxpayers will see pre-filled versions of their income tax returns with their salary and income, tax deductions, securities, dividends and other information already filled in.
Form 16 has also been accentuated. Under the new system, employers will have to furnish complete and detailed information like remunerations and tax deductions availed by the employees.