New tax norms target black money but make filing cumbersome: ExpertsNew Delhi: The government may intend to target black money with a new income tax returns form, mandating assessees to disclose their bank accounts and details of foreign visits, but it also makes filing of
New Delhi: The government may intend to target black money with a new income tax returns form, mandating assessees to disclose their bank accounts and details of foreign visits, but it also makes filing of returns that much more cumbersome, experts maintain.
"The disclosure requirement on number of accounts and those opened and closed is interesting," Vineet Agarwal, partner, international accounting firm KPMG in India, told IANS, referring to the norms notified by the Central Board of Direct Taxes (CBDT) applicable from the 2015-16 assessment year.
"A lot of people have a number of bank accounts. They also leave some of these accounts passive, or inactive. These have to be divulged in the new set of forms for e-filing of returns," he added.
But one doubt remains. "A question that needs clarification in respect of disclosure requirements of is whether the 'all bank accounts' includes recurring deposits, fixed deposits, time deposits and loan acounts, besides saving and current accounts," said Sandeep Kanoi, a chartered accountant.
The assessee, as per the new norms, also has to furnish the name of the bank, account number, its address, the Indian Financial System Code (IFSC code) and any possible joint account holder. But one demand, of not having to send a physical form after electronic filing, has not been met.
On foreign travel, the returns are required to disclose the passport number of the assessee, the countries and the frequency of visit in the financial year, as also the expenses incurred, if any, from own sources of income on such trips.
The move, experts said, is to ostensibly check black money and also have written proof from an assessee, that can be used in a court of law, regarding the foreign assets and income abroad in terms of what has been disclosed and what has not.
But that is one aspect. Assessees will also have to track their overseas travel.
"Given that disclosures are required for the financial year 2014-15, one would need to collate and analyse the expenses incurred on trips made in the recently-concluded tax year," Tapati Ghose, partner, Deloitte Haskins and Sells LLP, said.
"Steps have also been taken to arrest leakage of tax on Indian income, with additional reporting requirements like details of all Indian bank accounts, usage of balance in capital gains schemes in the return and confirmation that tax residency Certificates have been obtained," she said.
"It is imperative that the fine print in the return forms and the instructions to the same are thoroughly analyzed by all individuals filings returns to understand the implications an applicability in each case."
Some of the significant disclosures required include:
- Mention status of an account: Owner, beneficial-owner or beneficiary
- Furnish account opening date, held since, date of acquisition
- State nature of income earned from various sources, including assets held
- Mention amount taxable and offered in the return
- Disclose details of any other income derived from any other source outside India
- Report the Aadhaar number if an individual has one
- Provide more details on short-term and long-term capital gains
- Mention if tax relief has been claimed using various tax treaty with other countries
- Furnish signed copy of physical return.