IMPORTANT ANNOUNCEMENT ON PROPOSAL OF NEW TAX RULES: BUYING JEWELLERY FOR MORE THAN '1 LAKH', SPENDING RS 20,000 FOR 'HOTEL BILLS' TO COME UNDER GOVT. TAX SCANNER! DETAILS

Hotel bills above Rs 20,000, purchase of jewelry and white goods for above Rs 1 Lakh and education fee over Rs 1 lakh might now come under Income Tax Department’s scanner as per the measures proposed to widen the tax base. The new changes are being proposed in the department’s reporting of transactions framework that brings high value transactions of individuals under the radar. This is being done by expanding the number of individuals who are coming under the scanner and thus expanding its scope to improve co compliance according to a tweet by Ministry of finance. 

Currently, high- value transactions are required to be filed in ‘Statement of Financial transactions’ by entities such as banks and mutual funds as er the regulations of the income Tax act. 

For example, cash deposits of over Rs 10 lakh or credit card payments of over Rs 1 lakh or more in cash are among details that are to be reported to the Income Tax Department so that such transactions don’t skip payment of tax. The government is proposing these changes to improve compliance and transparency.

According to Bloomberg Quint’s report, these are the transactions that will come under the taxman’s radar: 

-Payment of education fee and donations above Rs 1 lakh per annum. 

-Electricity consumption above Rs 1 lakh per annum.

-Domestic or foreign business class air travel. 

-Payment to hotels above Rs 20,000. 

-Purchase of jewellery, white goods, paintings above Rs 1 lakh. 

-Payment of property tax above Rs 20,000 per annum. 

-Life insurance premium, health insurance premium above Rs 50,000 and Rs 20,000, respectively. 

-Share market transactions and details of bank lockers.

The proposal also includes changes to be made to tax collections. It suggests that tax is to be collected at a higher rate from those who carry out high value transactions but don’t file IT returns by showing less income. It has also proposed that any person making bank transactions above Rs 30 lakh should be mandatorily filing an income tax returns along with all businesses having a turnover of Rs 50 Lakh.