Attention taxpayers! from April 1
Think twice before you flaunt your lavish lifestyle on social media. The taxman will be keeping an eye come April 1. The Income Tax department is all set to implement its brainchild – Project Insight – in a bid to crack down on tax evaders.
Project Insight is a tax tracker built over a period of seven years at a cost of about Rs 1000 crores. It is expected to allow tax officials to develop comprehensive, 360-degree profiles of Indian taxpayers. Earlier, the I-T department used to rely largely on bank records of individuals to calculate their tax liabilities.
But, with Project Insight, the I-T department is planning to collect information from a variety of sources including social media accounts such as Facebook, Twitter and Instagram.
This is expected to help the tax department match the spending patterns of taxpayers with their income declaration and gauge their liability. For example, if a taxpayer uploads photos of his new car, house or foreign trip, which appear incompatible with his declared income, tax officials will be able to use big data to detect a potential gap between his earnings and expenditure. If they find a mismatch, then they will most likely carry out a raid at his home or office.
With Project Insight, India has joined countries such as Belgium, Canada and Australia that are already using big data to detect tax evasion, it is reported. The UK government implemented a similar system called ‘Connect’ to track down tax evaders. The effective execution of this system is said to have earned the government $5.4 billion in revenue and the number of criminal prosecutions had also climbed to 1,165 from a mere 165 per year, it is reported, quoting the London-based Institute of Financial Accountants.
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GST on real estate: what it means for the homebuyer
When the Goods and Services Tax (GST) Council meet last week, the outcome was that now real estate developers could choose either to opt for old GST rate with input tax credit benefit or go for the new reduced GST rate without input tax credit. This change for the developer will have no impact for you as a homebuyer.
Before the February GST Council meeting, the GST on real estate was 12% with input tax credit and for affordable housing it was 8% with input tax credit. Input tax credit is the credit on the material used for the project. In February, this was revised to 5% without input credit and for affordable housing it was 1% without input credit. Majority of the developers were unhappy about the change. Their issue was not with the new GST rate but about the input tax credit which the government dropped in the change.
After the developers expressed their concern about the input tax credit, the government decided to provide a choice. “There was justifiable worry about what would happen to the input stock which they have accumulated much before as part of their long-term purchases. For them, this new move will be beneficial,” said Anuj Puri, the chairman of Anarock Property Consultants.
Also, projects in which constructions have commenced before 1 April 2019, the developer will have the option to opt for the old or new GST rate. However, for the projects which will start after 1 April 2019, the developer will have to opt for the new GST rate. Real estate experts said that the GST Council’s announcement made last week, was almost on expected lines. “The Election Commission’s model code of conduct is in force, and reducing taxes at this point could have been interpreted as a move to woo voters,” noted Puri.
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Jet Airways chairman steps down, banks take control
Naresh Goyal on Monday agreed to step down as Jet Airways chairman, giving in to pressure from creditors as the airline that he founded 25 years ago teetered on the edge of bankruptcy with thousands of jobs on the line. Goyal’s decision, which came during a marathon board meeting that began late on Sunday and ended Monday afternoon, paved the way for banks to provide a cash infusion of ?1,500 crore, which is likely to take care of some of immediate payments such as delayed salaries and dues on aircraft lease.
Goyal, his wife Anita, and Etihad Airways nominee, director Kevin Knight, also quit the board. “Naresh Goyal also ceases to be the chairman of the company,” the airline told stock markets, as its stock price rose by 12.4%.
Saddled with debt of at least ?8,000 crore, Jet has been on the brink of collapse, and had to ground flights as it struggled to pay lenders, suppliers, pilots and leasing companies. The airline grounded nearly two-thirds of its 119-aircraft fleet due to the financial crisis. A consortium of lenders led by the State Bank of India took control of the airline, promising to throw open a bidding contest for a new investor.
Goyal, a former ticketing agent who went on to build one of India’s biggest airlines, had been under pressure to step down for months now. The financial crisis was a consequence of combination of factors, including a shrinking market-share that has gone to budget carriers and high oil prices last year.
The resignation marks a rare, if not unprecedented, ceding of control of a prominent corporate promoter in India. It also comes within months of the IL&FS crisis, in which the government for the first time took control of a private company as fears abounded of a wider contagion spreading in Indian stock markets.
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Too many accounts can eat into your savings
How many savings accounts do you have? For those who have worked in multiple organisations over a period of time, you may have multiple salary savings accounts opened by your employers.
You may have accounts opened with the help of your parents when you first entered the work force or before getting an income. Some may have opened a savings account just because a banker asked them to open one. But do you still use all of them and how many is too many?
Before opening a bank account, find the purpose of the savings account. You need to label each bank account with a purpose. The three purposes a savings account can fulfil include income, expenses and investment. Once you label each of the savings accounts, use it for the assigned needs.
For instance, the income account will see all the money flow in the form of salary and dividends. The savings account for expenses is where you need to park the amount that you will spend on grocery, rent and to pay bills.
The third account is where you move the money for savings and investments on a monthly basis. If you are disciplined, you can stick to two bank accounts—your income and investment can be one account and the money for all your expenses can be parked in a separate account.
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Direct tax collection falls short, CBDT raises alarm
The CBDT has rung alarm bells and has asked the Income Tax Department to go for a major assault as the direct tax collection target remains short of about 15 per cent, with the financial year closing less than a week away.
On March 26, CBDT Member (Revenue) Neena Kumar shot off a letter to all the regional chiefs of the department stating that the tax collection figures have “been reviewed and it is seen that as against the budget collection target of Rs 12,00,000 crore, only 85.1 per cent of the target at Rs 10,21,251 crore has been collected as on March 23.” The officer, who is responsible to supervise I-T department’s tax collection work across the country, underlined the areas that are sluggish vis-a-vis direct tax collections obtained from personal, corporate and advance tax categories.
“The minor head-wise analysis indicates worsening trend of negative growth in regular collections at -6.9 per cent as against -5.2 per cent in the last week. This is an alarming situation which needs immediate attention,” Kumar wrote in the letter.
The officer expressed CBDT’s disappointment at this situation and has asked the supervisory tax officials to pull up their socks and ensure no stone remains unturned to achieve the target.
The Central Board of Direct Taxes (CBDT) frames policy for the I-T department and is also its controlling authority that functions from the North Block in the Finance Ministry.
“You are aware that regular assessment tax is bench-mark of performance as it is based upon quality of demand raised which can further be converted into actual collections,” Kumar wrote in the letter.
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EPFO may replace LIC as fund manager for PM’S pension plan
The government plans to ease eligibility norms to make its pension scheme for unorganised sector workers more inclusive and is considering replacing the fund manager, Life Insurance Corporation of India (LIC), with the Employees’ Provident Fund Organisation (EPFO) to ensure better synergy, officials privy to the proposal said.
The Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM), a contributory scheme that offers a pension of ₹3,000 per month to those employed in the unorganised sector, from cobblers to construction workers, excludes those covered by the Employees’ State Insurance Corporation (ESIC) and EPFO. This exclusion criterion appears restrictive, based on a mistaken assumption that workers cannot move from the unorganised sector to the organised sector and vice versa, two officials with direct knowledge of the matter said on condition of anonymity The government is considering relaxing the criterion so that those who enrol in PM-SYM continue to receive its benefits even if they move to a job in the organised sector, the officials said.
The proposed changes are based on feedbacks received by the government. The scheme has become quite popular, attracting around 2.56 million subscribers in less than three weeks after its formal nationwide launch on March 5 by Prime Minister Narendra Modi in Ahmedabad, the officials cited above said. The pension of ₹3,000 per month will start after a worker reaches the age of 60. Those with a maximum monthly income of ₹15,000 can enrol in the scheme. The government is also considering a proposal to enlist EPFO as the administrator of the new pension scheme because the retirement fund manager, with at least 45 million subscribers, has better infrastructure and expertise than LIC in managing the funds, the officials cited above said.