Modi government woos taxpayers, offers new Income Tax incentives, simplifies Return forms

New Delhi: In an effort to help taxpayers, Narendra Modi government on Tuesday notified the new set of Income Tax Return forms for assessment year 2015-16 and also proposed income tax benefits for individuals who make payments through debit and credit cards.

Only the passport number needs to be filled in in the new forms. No details of foreign trips or money incurred thereon need to be mentioned.

The forms were simplified by the Finance Ministry after public outcry over the clause that sought mandatory disclosure of foreign trips and dormant bank accounts. No details of foreign trips need to be disclosed in the new form.

Taxpayers can now file their Income Tax Returns (ITR) till August 31.

A draft proposal by the Finance Ministry asked card companies to remove transaction charges on card payments at petrol pumps, gas agencies and for railway tickets.

In a draft paper for moving towards cashless economy and reduce tax avoidance, the government also proposed to make it mandatory to settle high value transactions of more than Rs 1 lakh through electronic mode.

In order to incentivise shopkeepers, it has proposed tax rebate to them provided they accept a significant value of sales through debit or credit cards.

The proposals are aimed at building a transactions history of an individual to enable improved credit access and financial inclusion, reduce tax avoidance and check counterfeiting of currency.

"Tax benefits in terms of income tax rebates to be considered to consumers for paying a certain proportion of their expenditure through electronic means," said that draft proposals for facilitating electronic transactions on which the government has invited comments till June 29.

It further said that all "high value transactions of, say, more than Rs 1 lakh, (be settled) only by electronic means". The paper said the tax benefits could be provided to merchants for accepting electronic payments.

"An appropriate tax rebate can be extended to a merchant if at least say 50 per cent value of the transactions is through electronic means. Alternatively, 1-2 per cent reduction in value added tax could be considered on all electronic transactions by the merchants," it added.

Finance Minister Arun Jaitley in his Budget speech had said that the government would "introduce soon several measure that will incentivise credit or debit card transactions and disincentive cash transaction".