Income Tax Current Affairs - 2019
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The government has increased the tax-free gratuity income limit to Rs 20 lakh. This move will benefit the public as well as private sector employees.
What is Gratuity?
Gratuity is the monetary benefit provided by the employer to his/her employee for the services rendered by him during the period of employment. A minimum of five years of service with an organisation is mandatory for availing the benefit of gratuity.
The Payment of Gratuity Act 1972 makes it mandatory for the employers to pay their employees gratuity at the time of quitting, provided certain conditions were met.
An organisation comes under the purview of the Payment of Gratuity Act 1972 if it has 10 or more employees on any single day in the preceding 12 months. The Payment of Gratuity Act follows the rule of ‘Once Covered, Always Covered’ which implies that that once an organisation comes under the Act, it will always remain covered even if the number of employees falls below 10.
The Ministry of Finance has now enhanced the income tax exemption for gratuity under Section 10 (10) (iii) of the Income Tax Act, 1961 to Rs 20 lakhs.
As per the information provided by Minister of State for Finance Pon Radhakrishnan to the Lok Sabha 61 individuals who declared an income of more than Rs 100 crore during the assessment year 2017-18.
Even though the numbers have increased sharply from the 38 individuals reporting income over Rs 100 Crore in the previous assessment year, it is still a minuscule number in a population of 1.3 billion Indians.
In the assessment year 2014-15, the number of individuals disclosing a gross total income of over Rs 100 crore in a year in his/her return of income filed with the Income Tax (IT) department was 24.
Even though there has been a sharp increase in the number of individuals declaring income of over 100 crore, it has been said the actual numbers are predominantly more and reported numbers are less due to the large scale underreporting.
The following steps have been initiated to prevent the under-reporting:
- Government is taking stringent actions under the Benami Properties Transactions Act and properties valued at Rs 6,900 crore were under attachment by agencies.
- Income tax authorities had identified more than 2,000 benami transactions till December 2018 which includes include deposits in bank accounts, land, apartments and jewellery and the provisional attachment of properties had been done in over 1,800 cases.
- The Revenue Department under the Ministry of Finance is setting up a mechanism to ensure that all returns are processed within 24 hours and refunds issued simultaneously to increase the compliance in the filing of IT returns.
The government has already sanctioned Rs 4,200 crore for the upgrade of information technology infrastructure of Central Board of Direct Taxes (CBDT) for processing returns, refunds, faceless scrutiny and verification.