Individuals now have to deduct tax at source in multiple situations.
What is more, the budget also proposes to allow refund of excess money paid under this scheme for a 'class of persons' to be notified later by the government.
While the government's aim is to widen and deepen the tax base through these steps, it increases the financial accounting liability for individuals impacted by these rules.
Currently, a person other than a company or a firm is required to furnish the return of income only if his total income exceeds the maximum amount not chargeable to tax, subject to certain exceptions.
As per the changes approved by the Cabinet, a person on maturity at the age of 60 would be able to withdraw up to 60 percent of the corpus without payment of tax.
"Government will initiate steps to empower accountholders to remedy the current situation in which they do not have control over deposit of cash by others in their accounts. Reforms will also be undertaken to strengthen governance in Public Sector Banks."
Rumours were already doing the rounds that the government will introduce such a tax.
The new format will allow I-T department to view a detailed break-up of the income and tax breaks.
Going forward, the pension may be calculated on the basis of average salary of last 12 months.
In a statement, the RBI said that efficient payment systems are indispensable to the functioning of financial markets, reduce costs of exchanging goods and services.
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