Buying land? Or jewellery above Rs 2 lakh? Your tax net just widened

If you are buying bullion or jewellery worth Rs 2 lakh or more, or sold property or land, beware: the taxman is watching you.

If you are buying bullion or jewellery worth Rs 2 lakh or more, or sold property or land, beware: the taxman is watching you.

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Finance minister Pranab Mukherjee on Friday proposed to introduce compulsory reporting for a host of assets, a move experts see as a step towards eventually widening the scope of wealth tax.

It was however not clear whether the government plans to exercise a right to buy out your property if it smells an undervalued deal aimed at avoiding tax.

Mukherjee also allowed taxmen to dig into income tax filings of the past 16 years of suspect assessees, a move aimed at strengthening the mechanism to investigate black money cases. The move is aimed at bringing unaccounted money within the ambit of the legitimate tax system.

Mukherjee proposed that assets held abroad will have to be compulsorily disclosed to tax authorities.

Tax will be collected at source on cash purchase of bullion or jewellery in excess of Rs 2 lakh (single transaction), on transfer of immovable property other than agricultural land (above a specified threshold) and on trading in coal, lignite and iron ore.

The government has increased the onus of proof on closely held companies for funds received from shareholders as well as taxing share premium in excess of fair market value.

This would bring investment in hundreds of unlisted companies under the government’s scanner for funnelling black money worth thousands of crores of rupees into the financial system through instruments, which authorities suspect are being used to obscure the source of slush funds.

Unexplained money, credits, investments, expenditures will be taxed at the highest rate of 30 % irrespective of the slab of income, Mukherjee said.