Chairman of Central Board of Direct Taxes, Ravi Agrawal, has said that getting a clearance certificate for Indians leaving the country for longer duration under IT Act, Gift Tax Act or Wealth Tax Act is not new. In an interview with businessline, he said just one Act, Black Money Act has been added to the list.
Since the indexation begin in 2001, how would the capital gain be calculated under new mechanism for property bought before 2001 and now being sold?
Against the past regime when a fair market value of 2001 was determined and that indexation was applied for the purpose of the cost of acquisition, now fair market value of 2001 would be determined without indexation. If the 2001 fair market value is higher than the cost of acquisition, it will be used for tax calculation. However, if the cost of acquisition is higher than the 2001 valuation, the cost of acquisition will be used instead.
Whichever is higher between the two, would be considered. Then sale consideration would be reduced from the acquisition cost or 2001 fair market value, whichever is higher, and 12.5 per cent tax would be levied.
How does one go for valuation?
There is no fresh requirement. Valuation can be done by approved valuer at the time of selling which was prevalent earlier too.
Some clarity is needed on NPS contribution by an employee. Will he/she get the benefit up to 14 per cent of contribution?
Employers get the benefit for the contribution up to 14 per cent, while the employee gets benefit under Section 80CCD for the contribution he makes. It was 10 per cent. That figure has been changed to 14 per cent provided he opts for the new Income Tax regime. Benefit will be available for actual contribution or up to 14 per cent.
What about the provision for taking clearance under IT Act, Gift Tax Act, Wealth Tax Act and others?
If a person is moving abroad, he will need clearance to ensure that there is no tax liability. If one is going abroad for a short time for tourism purpose, then clearance is not required. In case there is a demand, there is a liability or there is expected liability, then you have to get this clearance. There is nothing which has been introduced in the Act except for the fact that one more obligation under Black Money Act has been added. This provision was there already. There is no fresh requirement as such. It has been in the statute for a long time. Till now, the certificate was required to see if he has any liabilities under the Income Tax Act or Wealth Act, Gift Tax Act or Expenditure tax Act and now the Black Money Act has been added. Other than that, there is no fresh requirement
What are the various new provisions under TDS?
One is the rationalisation of the TDS rates. Then comes rationalising in the context of salary class. Typically, the employer would deduct TDS on the salary at applicable rates but the taxpayer did not get benefit of the TDS from other sources. This provision has now been made so as to enable credit on other sources. The other component is rationalisation or de-criminalisation. We have now made sure there are no unnecessary or frivolous prosecutions. Earlier, a delay of even one day could lead to prosecution. We have ensured that such situations do not arise.