How Budget 2018 has quietly made a major step in increasing the tax base

In the past few years, one has seen that the Modi Government has focused on expanding the tax net. GST and Demonetisation were two major steps which have already reaped results. With Budget 2018 the Government has brought in one more rule which will take this agenda further.

Currently, as per the Income Tax Act, an entity needs to obtain a PAN only if the taxable income crosses the minimum tax threshold limit, or if its sales are expected to cross Rs 5 lacs. There are some other clauses which make certain specific bodies liable to obtain a PAN. The clauses of applicability are linked to incomes.

Now the budget has proposed to bring in another clause which links the requirement of having a PAN, with transactions other than income. It is proposed to amend Section 139A of the Income Tax Act and mandate that every entity not being an individual, will have to apply for a PAN if it enters into a financial transaction of an amount aggregating to Rs 2.5 lakh in a financial year.

- Advertisement - - Article resumes -

In simple terms, you have to obtain a PAN if you do any sort of transaction, and the total of such transactions in any financial year crosses Rs 2.5 lacs. The departure from using the word “income” and using the word “transaction” indicates how the scope has now been widened.

Thus under this clause, even loans and other non income transactions get triggered, and that entity has to obtain a PAN. Once a PAN is obtained, automatically, the tax net is widened. The budget document states that this has been done in order to use PAN as Unique Entity Number (UEN) for non-individual entities.

The clause further provides that not only such entity, but its promoters will also have to obtain a PAN. Thus managing director, director, partner, trustee, author, founder, karta, chief executive officer, principal officer or office bearer or any person competent to act on behalf of such entities will also have to apply for a PAN.

This move will certainly help bring more entities under the cover of Income Tax Act. Once this comes into force from April 2018, one can hope that the meager tax base of merely 2% odd of India’s population, will be given a boost with the new registrations via this clause.


Share This Post and Support:
We need your support to survive in the media industry. Please consider paying us for the content we produce:

To know more about these payments, please click here.


Most read articles recently

Pakistanis get scared about attack by India after seeing their own Air Force fighter jets flying over civilian areas

Several people posted on social media that India has dropped bombs over Sialkot in Pakistan
Locals even pelted stones at injured jawans

Pulwama attack: Women, children in Kashmir ferried expensive military grade RDX in small quantities for months

The trigger for the explosive was manufactured locally and that ammonium nitrate was used as an oxidizer in the RDX explosive. The military grade RDX was obtained from Pakistan and the device was assembled around 10 km from the blast site.
Image Source: Twitter

Fearing India’s retaliation, Pakistan cancels leaves of its troops, uses flares to light up night sky to see movement of Indian troops

Pakistani administration has asked people to stay in underground bunkers, which could protect them from shelling or any form of attacks which could come from the other side of the border.

Congress deletes video where Rahul Gandhi was seen dancing shortly after the Pulwama attack

After Congress' lies against the Prime Minister were exposed, Congress proceeded to delete the tweet where Rahul Gandhi was seen dancing after the Pulwama terror attack.

Waters of 3 rivers flowing into Pakistan will be diverted to Yamuna as per Indus Water Treaty: Nitin Gadkari

Nitin Gadkari had said that dams and other developmental projects are being conceptualised on the 3 rivers will choke Pakistan’s water supply

After Ajaz Ashraf of Caravan reduced martyrs to their caste, he shouldn’t play victim when he is reduced to his religion

In his report, Ajaz Ashraf says quite clearly that he called the martyrs of the family to in their moment of unimaginable tragedy to inquire about their caste.

Congress workers used to do booth capturing for me and my father when there was no EVM : Congress leader Kirti Azad

Kirti Azad was suspended from the Bharatiya Janata Party in 2015 after he accused senior BJP leader Arun Jaitley of Corruption.
Image Source: The Week

Mandya: Actor-turned-politician Prakash Raj attends funeral of Pulwama martyr, villagers expose his hypocrisy towards Armed Forces

Prakash Raj, a left wing ideologue, who is often known for joining hands with the left-liberals to express their hate towards Hindus and the BJP, has plans to contest in the upcoming elections from Bengaluru Central Lok Sabha constituency.

This is why Neena Gupta wants no one to wish Pritish Nandy even a Happy Birthday

Pritish Nandy 'stole' Masaba's birth certificate and printed in his magazine without Neena Gupta's permission

Fact Check: Was PM Narendra Modi doing a photoshoot in Uttarakhand after the Pulwama terror attack?

PM Modi had completed before his forest visit in Corbett National Park before the Pulwama attack

Latest articles

Connect with us

138,439FansLike
111,361FollowersFollow
23,505SubscribersSubscribe

Don't miss these