New rules of filing tax returns: What they mean for you
July, 03rd 2012
A week may be a long time in politics, but when it comes to filing tax returns, some people may find that even four weeks aren't enough. As the deadline for filing tax returns approaches, thousands of Indians who have worked abroad will be scrambling to gather the information required to be filled in the new tax forms.
This year's budget had proposed that individuals who have assets abroad must file their tax return and mention details of their foreign assets in the forms. "This new requirement is likely to become a big nuisance. Even if you have $10 in a bank account abroad, it has to be reported in the tax form," says Amarpal S Chadha, tax partner, Ernst & Young.
This is just one of the several changes in the tax filing rules this year. Some of these are minor and may not make a material difference. But most of them are significant and will broaden as well as deepen the information that an individual discloses in the tax returns. For the honest taxpayer, who pays his taxes and has nothing to hide, these changes should not matter. However, he will have to be a lot more disciplined in keeping records of financial transactions.
The new forms are a wake-up call for taxpayers who have not been entirely honest in paying their taxes. Nearly 5% of the respondents in an online survey conducted by ET Wealth last week said that they have under-reported their income quite a few times. Another 10% said they have done so just once or twice. We believe there is also a large community of innocent offenders who don't even know that they are falling foul of the tax laws.
These taxpayers must realise that Big Brother is watching. Earlier this year, the IT Department announced that nearly 27.5 lakh taxpayers made cash deposits of over Rs 10 lakh in their bank accounts in 2009-10 and 2010-11.
More than 6 lakh people purchased or sold property worth over Rs 30 lakh. Over 15 lakh cardholders made payments of over Rs 2 lakh in a year on their credit cards. All this information flows to the IT Department from banks, credit card issuers, property registration authorities, mutual funds and brokers. The department has put about 2.22 crore transactions under the scanner.