India Regulatory Brief: ITR Form Simplified, Filing Date Extended to August 31
ITR Form Simplified Before New August 31 Filing Date
The Central Board of Direct Taxes (CBDT) last week simplified the Income Tax Retun (ITR) form and delayed the filing date from July 31 to August 31. Expatriates and Non-Resident Indians (NRIs) will no longer have to report foreign assets as previously planned. Furthermore, previous plans to require taxpayers to submit foreign travel itinerary and additional bank account information have been relaxed by the government.
The simplified ITR will come as a relief to income tax payers ahead of the new August 31 filing date. The government had promised to simplify the new ITR after many observers criticized the complexity of the new form and the amount of detailed information required. The government had previously expanded the amount of information requirements for the ITR in a bid to curb tax avoidance.
Black Money Amnesty Window Coming Soon
Multiple local media reports citing government sources claim that the Central Board of Direct Taxes (CBDT) will soon announce dates for a Undisclosed Foreign Assets and Income Act, 2015 compliance window. According to government sources quoted in the local media, the compliance window will be announced in early July.
During the compliance window, Indian tax residents that have not declared their foreign assets or income will be eligible for a 30 percent tax and a 30 percent penalty. Government sources cited in the local media claim the clemency period could be as short as two month or as long as five months.
The Undisclosed Foreign Assets and Income Act, 2015, commonly known as the ‘black money act’, penalizes Indian tax residents for hiding foreign assets and income. Under the law, Indians that have undeclared foreign assets above Rs 5 lakh (USD $7,850) are liable for a flat 30 percent tax, a 90 percent penalty and up to 10 years in prison.
India among Top 10 FDI Destinations
The World Investment Report 2015 found that India is one of the top ten destinations for foreign direct investment (FDI) in the world. Published by the United Nations Conference on Trade and Development (Unctad), this is the first time that India has featured in the top ten FDI recipients since 2008. India had been ranked at 15 for the previous two years, but a 22 percent increase in FDI – totaling US $34 billion – during 2014 helped India crack the top ten in the 2015 report.
This improvement is perhaps all the more commendable given the global drop in total FDI: FDI across the globe dropped by 16 percent to US $1.23 trillion in 2014. The report attributes this global drop in FDI to elevated geopolitical risks and uncertain policy direction, amongst other factors. The new government led by Prime Minister Narendra Modi has done much to sate these concerns; Modi has attempted to strengthen diplomatic relations in Asia, and provide a long-term economic strategy for increasing Indian manufacturing and exports.
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