The ultra-rich and high networth individuals with annual income of Rs 50 lakhs who are being asked by tax authorities to make enhanced disclosures on high-cost purchases might find it difficult to fully comply with the requirements, feel tax experts.
The income tax (I-T) department has recently asked those with annual income of over Rs 50 lakh to disclose the acquisition cost of all the assets like land, building, jewellery,utensils, apparels and furniture studded with precious stones and ornaments made of gold, silver, platinum or any other precious metal or alloy in the Income Tax return forms for assessment year 2016-17. The amount in respect of assets to be reported will be the cost price of such assets to the assessee.
“These tax assessees may find it difficult to keep a record of all the items mentioned. Many ultra rich and high networth individuals (HNIs) have assets spread nationally as well as overseas,” Manish Shah, CEO and founder, BigDecisions.com, an investment advisory, told FeMoney.
The aim of the tax authorities is to nail evaders among the super-rich. “Tax authorities are making it mandatory for assesses to report Indian assets and liabilities in income-tax return to counter the problems of tax evasion. Tax authorities would be tracking HNIs who have not been declaring all their assets to avoid paying tax,” Shah said.
HNIs and ultra-rich are also required to pay a surcharge of 10 per cent on annual taxable income above Rs 1 crore on the maximum tax-slab of 30 per cent.
However, in a temporary relief tax payers, including ultra rich, who have undisclosed income, Union Budget 2016 has announced an Income Declaration Scheme to provide amnesty by paying a penalty. Daksha Baxi, Executive Director, Khaitan & Co said, the scheme provides “resident taxpayers an option to declare any income up to FY 2015-16, for which either no return has been furnished, or which is not disclosed in the income tax return, or which has escaped assessment due to non-disclosure of material facts necessary for assessment.” However, there are certain exclusion such as those taxpayers to whom notices have been issued or search and survey has been conducted. The provision would come into effect for June 1, 2016.
