Union Budget 2018: Narendra Modi government will present the union budget 2018 on February 1. The government has provided many Income Tax benefits in the recent times, however, the 'Income From Other Sources' still needs fine tunings.
Union Budget 2018: Narendra Modi government will present the union budget 2018 on February 1. This will be the fifth budget of the Modi government presented by finance minister Arun Jaitley. This union budget is considered one of the crucial ones for the government as it will be the last full-fledged budget ahead of the 2019 Lok Sabha elections. The government has noted in the economic survey 2018 that there has been a considerable increase in the number of taxpayers post GST. The common man has many concerns regarding the tax structure, especially if the taxpayer has more than one source of income. The government has provided many Income Tax benefits in the recent times, however, the ‘Income From Other Sources’ still needs fine tunings. It should be noted that the cash/property received by relatives other than parents is taxable.
As per the pre-budget memorandum of the Institute of Chartered Accountants of India (ICAI), under the existing provisions of section 56(2)(vii), any sum or property received by an individual or HUF for inadequate consideration or without consideration is deemed as income and is taxed under the head ‘Income from other sources’. However, in case of any individual, receipts from specified relatives are excluded from the purview and hence, are not taxable.
The pre-budget memorandum also states that the explanation to section 56(2)(vii) was amended by the Finance Act, 2012 so as to provide that any sum or property received without consideration or inadequate consideration by a HUF from its members would also be excluded from taxation. The provisions of clubbing of income as contained in Chapter V of the Income-tax Act, 1961 are attracted in respect of income from any sum of money or value of assets transferred to a non-relative. Once the sum of money or value of assets is subject to tax under section 56(2) in the hands of the recipient, the income from such assets should not be subject to the clubbing provisions contained in Chapter V.
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As per ICAI, there are three major fine-tuning points or suggestions to the Narendra Modi government. Firstly, the provisions of clubbing of income as contained in Chapter V of the Income-tax Act, 1961 should not be attracted once the sum of money or value of assets is subject to tax under section 56(2) in the hands of the recipient. Secondly, the lineal descendants of brothers and sisters of self and spouse may also be included in the definition of “relative” in line with the provisions of section 13(3). Thirdly, the application of the provision should also be extended to the relatives of the members of HUF.
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While speaking to the media after the economic survey being tabled by the finance minister Arun Jaitley on Monday, CEA Arvind Subramanium hoped that at least one or two states will implement the idea of universal basic income (UBI) in the next two years. Universal basic income (UBI) is a scheme which will guarantee all citizens enough income to cover their basic needs. However, there was no mention of the same in the Economic Survey 2018.