NEW DELHI: Gifts to trustsin the form of money or property for the benefit of relatives will not be taxed. The finance bill, approved by the Lok Sabha on Wednesday, has amended the original proposal that had expanded the scope of gifts to include money or property received for no consideration by trusts.
Gifts received from trusts registered under section 12A of the Income Tax Act will also be excluded. Besides, trusts receiving dividend income will be exempt from the additional 10% tax on dividend income exceeding Rs 10 lakh. The move benefits those looking at succession planning.
The provision had been introduced in the finance bill to prevent abuse and the exclusion was made to avoid hardship in genuine cases, a government official said.
“This is a welcome amendment and would not impact succession planning through trust structures as feared earlier. The amendment in Section 56 (2), as proposed by the Finance Bill 2017, would have made tax-free gifts to trusts taxable,” said Amit Maheshwari, a partner at Ashok Maheshwary & Associates LLP.
The finance bill proposes to merge seven tribunals and bring uniformity in service rules, besides making Aadhaar mandatory for getting permanent account numbers and filing of income tax returns.
The Lok Sabha passed the Finance Bill 2017 by a voice vote on Wednesday. Finance minister arun jaitley defended making Aadhaar mandatory for PAN and IT returns, saying about 98% of the adults in the country already had Aadhaar and it would prevent misuse through multiple PANs. The opposition had demanded a relook at the provision.
“Aadhaar has biometric details, so its chances of misuse become minimal. When the country has so much technology and when it is being put to use, then why create such a hue and cry about it? It is an anti-evasion measure, which will benefit the country. So, the government considers it right to implement it,” Jaitley said.
CASH TRANSACTION LIMIT
The amended finance bill bans cash transactions of over Rs 2 lakh. Jaitley said the original proposal for a Rs 3 lakh limit was lowered to curb generation of black money.
“To encourage digital economy and to discourage cash economy, I had proposed in the budget that there will be a ban on cash transactions of over Rs 3 lakh. I am making it Rs 2 lakh by an amendment,” he said. The provision provides for a penalty equal to the transacted amount if the limit is breached.
9.29 lakh entities to face action
NEW DELHI: Action will “definitely” be taken against 9.29 lakh entities who have not responded to the I-T department’s queries over cash deposited by them which did not match their income profile, the government asserted on Wednesday. Over 18 lakh entities deposited old notes of Rs 500 and Rs 1,000 not commensurate with their income means, FM Arun Jaitley said in Lok Sabha. (PTI)