Soon Insurance Premium, School Fees and Hotel Payment under IT Scanner!

Soon your Insurance premium, school fees and hotel payments are under IT Scanner. To widen the scope of taxpayers, the Government proposed to include certain additional transactions under the IT Scanner. This is I think the best move to bring in the transparency in taxation and penalizing those who are avoiding the tax.

List of High Value Transactions

To bring in transperancy, in 2016 itself IT Department listed certain high value transactions which are directly reported to IT Departments. They are as below.

As per the govt’s notification, all goods & services providers have to report to the IT department about high-value cash transactions and cash receipts.

Under the new norms, cash receipts, purchase of shares, mutual funds, immovable property, term deposits, sale of foreign currency will have to be reported to the tax authorities in a prescribed format, which is Form 61A.

The list of such high value transactions are as below.

• Immovable Property:- The Registrar of properties will have to report the purchase and sale of all immovable property exceeding Rs.30 Lakh to the Income Tax authorities.
• Professionals:- The Professionals will be required to inform the tax department of receipt of cash payment exceeding Rs.2 lakh for sale of any goods or services.
• Cash Deposits in Banks:- Banks will have to report cash deposits aggregating Rs.10 lakh or more in a financial year in one or more accounts (other than Current Account / Time Deposit) of a person.
• Term Deposits in Banks:-  Banks will have to report cash deposits aggregating Rs .10 lakh or more in a financial year in one or more Time Deposit accounts of a person (other than a time deposit made through renewal of another time deposit). These norms will also cover deposits and withdrawal made in Post Office Account.
• Deposits in Current Accounts:- Cash deposits or withdrawals aggregating to Rs.50 lakh or more in a financial year in one or more Current Account of a person will have to be reported by the bank to the I-T authorities.
• Any cash payment of Rs 10 lakh or more in a financial year for the purchase of bank drafts or pre-paid instruments issued by RBI will also be reported.
• Credit Card Bill Payments:- If you make Credit Card bill payments of more than Rs.1 Lakh per annum in cash mode (or) Rs. more than Rs.10 Lakh through Cheques / NEFT transfers etc.,
• Investments in Financial Securities:- A company has to report receipt of Rs 10 lakh or more from a person/an investor in a financial year for acquiring bonds, debentures, shares or mutual funds (other than the amount received on account of transfer from one scheme to another scheme of that Mutual Fund).

Earlier, in July, the government launched a revised Form 26AS which included high-value transactions from SFTs from this assessment year. In their SFTs, banks and other reporting financial institutions record details of transactions that I have listed in the above list.

Widening the list, yesterday (on 13th August 2020), the Government proposed the below transactions also under the ambit of high-value transactions reporting system. I am sharing the Tweet of MyGovIndia and one more Tweet.

The proposed transactions are as below.

• Payment of rent above Rs 40,000.
• Payment of educational fee/donations above Rs 1 lakh per annum.
• Electricity consumption above Rs 1 lakh per annum.
• Domestic business class air travel/foreign travel.
• Deposit above Rs 1 crore in the current account.
• Expenditure of Rs 2 lakh on foreign travel.
• Payment to hotels above Rs 20,000.
• Purchase of jewelry, white goods, painting, marble, etc. above Rs 1 lakh.
• Deposit/credits in the current account above Rs 50 lakh.
• Deposit/credits in the non-current account above Rs 25 lakh.
• Payment of property tax above Rs 20,000 per annum.
• Life insurance premium above Rs 50,000.
• Health insurance premium above Rs 20,000.
• Share transactions/D-MAT accounts/bank lockers.
• TDS on cash withdrawal above Rs 1 crore (Rs 20 lakh for non-filers).
• TCS on the motor vehicle above Rs 10 lakh
• TCS on foreign remittance under LRS above Rs 7.5 lakh/overseas tour packages.
• TDS on eCommerce suppliers.
• TCS on purchase of goods above Rs 50 lakh.
• Sale of foreign exchange above Rs 10 lakh.

Do remember that these are proposed transactions which will be under the IT Department scanner. However, I hope that the Government will soon notify in this regard.

Conclusion:-I think Government is heading in right direction by bringing in the above transactions under the IT Department radar. This is the good move and let us welcome it.