The new proposed income-tax bill that is to be implemented all across India by the end of 2015 has various pros and cons says, William D King. It has aroused mixed feelings among people in general about its benefits for them. The government on one hand claims that it will make life much easier for everyone since they do not have to go through the trouble of filing tax returns every year, while on the other hand there are some who are concerned with the loss of transparency in terms of the annual income/expenditure statement of citizens.
The major advantage is that since there would be no need to file yearly tax returns, the cost of compliance will come down significantly thus making doing business much more affordable. This can further lead to more investments in the economy says, William D King.
It also removes the process of filing tax returns every year which is both cumbersome and time-consuming. The lack of transparency in terms of annual income/expenditure statements makes it much more difficult for the government to analyze any suspicious movement in bank accounts thus taking help from chartered accountants will become a thing of the past since doing business would be so easy without filing yearly returns. Since there would be no need to hire CA firms every now and then, this will greatly reduce their expense as well. This can further lead to an increase in demand for products from India by foreign countries thus helping our economy grow at a faster rate.
The recent implementation of GST has been a massive success where everyone was able to contribute towards fighting against black money, thus this act of not mentioning annual income/expenditure on tax returns can also help in this regard.
On the other hand, it has been seen that people sometimes rely completely on their yearly income statement and do not maintain any record of expenditures which they have made during the year. Thus they are unable to justify their yearly earnings with what they have spent unless if they keep track of everything by themselves. This does defeat the purpose of filing tax returns since there is no way anyone can be sure about what is being declared as income/expending without any supporting documents explains William D King.
This is why some people are asking for another implementation date after December 31, 2015, because implementing this new reform now will cause a lot of inconvenience to most taxpayers.
Here are some FAQs recently asked by the public:
FAQ: What will happen to my account?
What happens to my account depends on whether I choose to link it with Aadhaar or not. If you choose not to do so. Your bank account will continue as usual and there is nothing different for you. Except for the fact that you will no longer need any form of tax return.
On the other hand, if you decide to link your Aadhaar number with your bank account. It means that every transaction made through this bank account will be linked with your Aadhaar number. Which can be used by banks for easy verification of identity. This does pose a risk because money laundering can become very easy. Since anyone who has got access to your Aadhaar card can easily withdraw cash from bank accounts. Without having to go through any official verification says, William D King.
FAQ: What will happen to my tax return?
If you choose not to link Aadhaar with your bank account. Then it is highly recommend that you keep all the documents that prove the source of income. Because now if you are caught without any supporting document. There are no chances of getting away with the penalty since there is no way for anyone. To verify or trace transactions made in your bank account without linking it with an Aadhaar number.
Your average income declared on tax returns will still remain unchanged. But what changes is the frequency at which you need to file them, i.e., annually as opposed to time basis? Also whenever your bank gives out information about any transaction made through your account. They have to mention whether it was a loan, cash withdrawal, or anything of that sort. Because only then the IT department will be able to verify if it has been declaring as income or not.
FAQ: I don’t have an Aadhaar card yet, what should I do?
Since this is a very important reform and requires everyone’s support. Since black money creates so much trouble for our country. Eventually, there will be another implementation date. But you do need to take steps now by applying for an Aadhaar card. This can be online at the UIDAI website or by taking help from your bank. You can also visit any nearby center which provides Aadhaar verification services. Such as the Indian Post Office, Public Distribution Stores, and many more.
William D King says the pros of this new income-tax bill far outweigh its cons. Since it can potentially help in making the Indian economy grow at a faster rate which is beneficial for everyone. Every individual will have to do some kind of analysis of the benefits. That they are going to get from this reform before passing an opinion about it. Especially when it comes to businessmen since their profession needs them to be more organized. If done properly, India can become an economic superpower in no time.