Year 2017: The Pandora's Box of Demonetization!

We are all set to bid farewell to the year 2016, a year that was nothing short of a roller coaster ride thanks to Demonetization, one of the most radical decision in the history of Indian Economy. The withdrawal of the legal tenders of Rs 500 and Rs 1000 notes created a swirl in the nation. This further led to panic when the Modi government announced that deposits in banks accounts will be monitored by the Income Tax Department. Long queues outside Banks & ATMs, rural distress, debates and discussions across the country and currency crunch became the common sight.

PM Modi had promised that the inconveniences caused due to demonetization would end in 50 days but to the dismay of the nation, they still persist. The cash liquidity and hardships of the small businessman, casual workers and households in the urban cities have improved but the rural areas are yet to attain stability in their daily lives. The boat of Indian economic stability is struggling to stay afloat and the economic growth has also been stalled due to the sudden reduction in the purchasing power of the nation.

So, what we can you expect in 2017?

• Implementation of Goods and Service Tax (GST)
• Tax-Relief to the financially overburdened taxpayers by increasing:
  • Basic exemption limit of Rs 2,50,000.
  • Limit of house loan interest deduction of Rs 2,00,000.
  • Limit of section 80C deductions of Rs 1,50,000
• Amendments in Income Tax sections which giving more benefits to taxpayers if they do transactions through banks. For example, The Finance Ministry has reduced the existing rate of deemed profit under section 44AD to 6% in respect of the amount of total turnover or gross receipts received through banking channel / digital means. This amendment will be carried out through the Finance Bill, 2017.
• Notices by Income Tax Department for deposits over Rs 50,000 in Jan Dhan bank accounts Rs 2,50,000 in other bank accounts asking for the source of such income.
• Notices under The Prohibition of Benami Property Transactions Act, 1988 or the Benami Law.
• Increase in the cases of prosecution by the Income Tax Department.
• More disclosures under the Pradhan Mantri Garib Kalyan Yojana, 2016 (PMGKY) (link of our blog)
• New Schemes for disclosure of property and gold held by a taxpayer.

Are we witnessing the making of something grand or it's just another one of those gimmicks of the government which a common man is unable to decipher? The government is trying to envisage a picture of cashless economy and corruption free nation through banning of old currency. But is it the true picture or are we unable to read between the lines?

Well, only year 2017 can reveal the secrets of this mystery. The year 2017 will not just be another new year, but it's the year of hopes and aspirations of millions of Indians inspired by the whimsical headline-grabbing speeches of PM Modi. We wish everything falls into place India comes out stronger than ever by becoming economic growth leader and free from corruption.

With this positive thought, Team Tax2win wishes you Happy New Year. Make 2017 your best Tax-year by correcting income tax planning that can save your taxes and yes, don't forget to file income tax return!