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K.R. Srivats

New Delhi, Dec 26

With stock market indices continuing to scale dizzy heights this fiscal, the Finance Ministry is now swamped with stock market related pre-Budget suggestions to help check tax avoidance.

The accountancy profession regulator, the Institute of Chartered Accountants of India (ICAI) has suggested that listed and unlisted companies receiving share application monies beyond a particular threshold should be covered under the ambit of annual information returns (AIR). The CBDT has been relying on AIR to enlarge its information base on high-value transactions. Such returns help the Tax Department to detect tax evasion in a non-intrusive manner.

These returns are being filed with the Tax Department by third parties for transactions beyond a threshold limit. Currently, seven categories of entities/ person and transactions above certain specified value are coming under the scope of AIR.

“For listed companies, we have suggested that companies receiving share application monies exceeding Rs 1 lakh should come under AIR. Also, unlisted companies receiving share application monies exceeding Rs 50,000 should furnish information under AIR,” Mr G. Ramaswamy, Chairman of ICAI’s fiscal laws committee, told Business Line. ICAI has recently submitted its pre-budget memorandum to the senior officials of the Central Board of Direct Taxes (CBDT).

In respect of day traders, ICAI has said that sales and purchase of shares exceeding Rs 5 crore should be brought within ambit of AIR. It has been suggested that the information could be filed by the brokers concerned who are dealing with the day traders.

Moreover, ICAI has also suggested that information on Government tenders where the value exceeds Rs 10 lakh should also be provided by the government department concerned. Also, educational fees paid in excess of Rs 1 lakh per annum should come under the AIR ambit, ICAI has submitted to the Finance Ministry.

More Stories on : Stock Markets | Income Tax

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