Can India recover the economy as an ‘Atmanirbhar’ nation?

Foreign Direct Investment (FDI) has an enormous impact on the economic development of any country. Recently, the Union Minister, Hon’ble Shri Nitin Gadkari, said that India is in considerable need of Rs. 50-60 lakh crores of FDI and the money can be easily tapped by infrastructure projects as well as by the MSME sector to stimulate the wheels of the coronavirus-hit-economy. Such funds would serve the country as there is a call to inject liquidity in the Indian market.

The Central Board of Direct Taxes (CBDT) vide press release dated July12,2020 has facilitated a new functionality for banks and post offices through which they can ascertain the TDS applicability rates on cash withdrawal of

• Above Rs. 20 lakhs in case of a non-filer of the income-tax return and
• Above Rs. 1 Crore in case of a filer of the income-tax return

This functionality is available  as “Verification of applicability u/s 194N” on www.incometaxindiaefiling.gov.in since July 1, 2020 is also made available to the Banks through web-services so that the entire process can be automated and be linked to the Bank’s internal core banking solution.

In order to discourage cash transactions, curb black money and move towards less cash economy, the Finance (No.2) Act, 2019 has inserted Section 194N in the Income Tax Act, 1961 w.e.f. 1^st September, 2019 to provide for levy of TDS @ 2% on cash withdrawal exceeding Rs. 1 crore from a Bank/Post Office account/s subject to certain exceptions in the previous financial year.

What is House Rent Allowance?

House Rent Allowance (HRA) is an amount which is paid by employers to employees as a part of their salaries. It is a kind of exemption, which can be provided only if the employee is living in rented accommodation. In case the employee lives in his/her house, they cannot claim HRA. It is only for employees living in rented accommodation.

How is HRA computed?

HRA depends on the salary of an employee.

For the last many years there has been a tremendous rise in foreign trips by Indian residents. Despite spending huge amounts on such trips, people do not comply with the filing of returns of income. This brings the government to take some corrective steps to reach out for those people who are actually avoiding the mandatory income tax compliances. In this year’s budget, the significant amendment is brought in the Income-Tax Act for Foreign Tour Operators. This amendment is coming in the form of a collection of TCS by these operators arranging foreign tours for their clients.

This year, taxpayers are very much confused while making their investment declarations to employers for tax deduction at source (TDS). This confusion is nothing but the selection of old regular income tax regime or the newly introduced regime in this year’s budget. Now it is becoming a headache for taxpayers whether to stick with the old regime by availing tax deductions or forego certain deductions and claim lower tax rates under new optional income tax regime.