In the endeavour to earn a high disposable income quite a few citizens often conceal information from the tax authorities. But let us apprise you that in the game of 'hide and seek' with the tax authorities, there are likely chances of one getting caught and facing prosecution. In December 2012, the Government had issued stern warning asking people to disclose their true income, or face the risk of an income tax scrutiny. The Finance Ministry had said, concealment of income while filing tax returns would not go unnoticed as various information of your transaction would be collated.

And now moving a step forward, the Finance Ministry is contemplating making it mandatory for individuals and Hindu Undivided Families (HUFs) to report their Indian asset and liabilities in their Income-Tax (I-T) return forms. In order to do so, the Government is considering introduction of new I-T return form, which will make it mandatory for individuals and HUFs to disclose their Indian asset and liabilities, rather than a mere statement of computation of total taxable income, from various sources as classified under the Income Tax Act, 1961.

It is noteworthy that, last year reporting of assets and liabilities were made mandatory only for individuals with foreign assets. But now with rising incomes, the Government also intends to keep a tab on the asset created in India by wealthy individuals and HUFs.

PersonalFN is of the view that the aforesaid thought seems to have come to the mind of the Government, as they may want to seek information about where High Networth Individuals (HNI) and HUFs are parking their money. It is also intended to keep a tab on those who aren’t disclosing all their assets to escape wealth tax partially. Therefore it is a bid to counter tax evasion and to meet the tax collection target. It is noteworthy that the financial year 2012-13, wealth tax collections stood at Rs 866 crore - much lower than the Budget estimate of Rs 1,244 crore; and now for the financial year 2013-14 the finance ministry has set a collection target of Rs 950 crore. Also in the Union Budget 2013 the Government levied a surcharge of 10% on persons whose taxable income exceeds Rs 1 crore per year, and is applicable to individuals, HUFs, firms and entities with similar tax status. PersonalFN believes all these initiatives are aimed at achieving the fiscal deficit target (of 4.8%) set for the fiscal year 2013-14 and increase the country’s tax-to-GDP ratio, which is one the lowest amongst its peers. PersonalFN is of the view that along with economic growth, robust consumerism and high savings rate; it is imperative for the Government to have an optimal tax-to-GDP ratio which can facilitate to put public finances in place and give better facilities to its citizens. Thus paying taxes should be viewed as moral responsibility by citizens.

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