IT Rules changes

Subject: Economy

Section: Fiscal Policy

Why in the news?

Four new criteria added by the I-T Department to the rules for filing ITR.

Details:

If an individual’s total sales, turnover or gross receipts in the business exceeds Rs 60 lakh during the previous year, or
If an individual’s total gross receipts in profession exceeds Rs 10 lakh, or
If an individual’s aggregate of TDS and TCS is Rs 25,000 or more, or
If the person’s deposit in one or more savings bank accounts is Rs 50 lakh or more during the previous year,

Given any of the four conditions – the individual has to file returns as per the new rule

Benefits:

Such norms will capture all assessees incurring high value transactions but not filing returns because their taxable income is less than the basic exemption limit.
Reduce tax non compliance and tax evasion.
Increased transparency
Increase tax base

Tax Deducted at Source and Tax Collected at Source

Both are incurred at the source of income. However:

TDS-Tax Deducted at Source
- TDS is the tax which is deducted on a payment made by a company to an individual, in case the amount exceeds a certain limit.
- TDS deduction is applicable on payments such as salaries, rent, professional fee, brokerage, commission, etc.
- TDS is applicable only on payments that exceed a certain amount.
- Example-Let’s say Mr.X works at a company. His company deducts a tax on monthly salary at the applicable rate before they make him the final payout. The amount that is deducted in this manner is TDS.
TCS –Tax Collected at Source
- TCS is the tax which is collected by sellers while selling something to buyers.
- TCS deduction is applicable on sales of goods like timber, scrap, mineral wood, and so on.
- TCS is applicable on sales of specific goods which don’t include production or manufacturing material.
- Example-Mr.Y is a mineral wood trader. He sells some mineral wood to Mr.Z. While making the sale, Mr.Y collects 5 percent tax; this sum collected by Mr.Y from the customer is called TCS.