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Government may seek more disclosures from taxpayers starting new financial year

india | Nov 14, 2022 5:32 PM IST

Government may seek more disclosures from taxpayers starting new financial year

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Sources privy to the developments told CNBC-TV18 that the tax department could make it mandatory to "share details of foreign remittance received by NRI from India and its bifurcation into taxable and non-taxable income."

Come the next financial year when you will be filing your tax returns, the Income Tax Department might want you to share more granular details in certain specific cases.

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Sources privy to the developments told CNBC-TV18 that the tax department could make it mandatory to "share details of foreign remittance received by NRI from India and its bifurcation into taxable and non-taxable income."
"NRIs could further be asked to disclose the business connections they have in India and might be required to report the nature and address of such business connections," said people familiar with the matter.
The tax department would also want to know those details, "in case of capital assets, if a person who has acquired capital asset from the previous owner who was exempt from capital gains, then he might be asked to report previous owner's details on the sale of the capital asset," according to multiple people familiar with the development.
Similarly, there could be more details that start-ups will have to provide while filing their returns.
"For start-ups, the tax department would want to know the details related to registration of start-ups with the DPIIT. Details such as registration number, date of issue of Form 2, Inter-Ministerial board's certificate number, and details for tax exemption u/s 80IAC such as date of incorporation & initial year of deduction u/s 80IAC to be captured in a new form while filing the tax returns," sources in the know told CNBC-TV18.
However, to action these proposed changes, the government will have to move them via Budget announcement and propose them under the Finance Act.
Commenting on the changes, Sandeep Jhunjhunwala, Partner, Nangia Andersen LLP, said, "With the advancement in technology, there has been a rise in synchronisation of taxpayers' financial data available with the tax authorities. The Annual Information Statement, these days, provides detailed information related to various financial activities of taxpayers."
"The common ITR forms, once notified, should bring in more simplification and uniformity in disclosures to be made by taxpayers. For certain categories of taxpayers, say, crypto investors, the new form brings in the requirement to disclose income from virtual digital assets, which was introduced recently," Jhunjhunwala said.
"Reporting by non-residents in common ITR form, also look a bit more extended to include bifurcation of receipts from India into taxable and non-taxable income and disclosure on the business connection in India. Similarly, reporting of capital gains in certain scenarios and details pertaining to start-up income tax holidays by eligible start-ups also finds a new mention in the draft common ITR form," he said.
Jhunjhunwala said overall, with the earlier introduction of pre-filled information in the return form and now with a common ITR form, taxpayers should find the income tax returns more customised to the constitution of their income.
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