Many new changes are anticipated to be taken in by the Nation with the appointment of new finance minister by newly elected National Democratic Alliance (NDA) government.
These mutations may include taxation on cash transactions, taxation on inherited property, change in the fiscal year from April-March to January-December and equalising the duration of the fiscal year and assessment year for income tax.
The government is pondering on re-announcing the banking cash transaction tax with the aim to jettison the black money out of the economy. The tax on cash transactions will not only contribute to the government’s revenues, but it is also an avenue to identify and track huge cash transactions within the system. The proposal has gathered attention and ideas at pre-Budget consultation meetings.
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According to the government official, the suggestions have been received on taxing cash transactions and the concerned departments are testifying the feasibility and effectiveness of the tax.
The overture of 0.1 per cent tax on cash withdrawals of more than Rs 10,000 by the then Finance Minister P Chidambaram, took place in 2005 followed by the rise of the limit to Rs 25,000 but eventually abolished in 2009. This was the cap for individuals and Hindu Undivided Families (HUFs). For others, the limit was cash transactions more than Rs 1 lakh.
The government had gathered only Rs 600 crore as BCTT in 2008-09 which is a very insignificant amount as in comparison to Income Tax.
The imposition of an estate tax on inherited property is also one of the considerations by tax authorities. This tax was also introduced earlier but was scrapped in 1985. According to the reports, properties whose value is less than Rs 5 crore may remain out of the tax ambit.
Changing the fiscal year to January-December from April-March was also a subject matter at pre-Budget consultations Business Standard reports.
The Income Tax Department is urging on making the fiscal year and assessment year of the same duration.
However, the whole and exact picture will come on the surface, once the NDA government appoints a Finance Minister.
