Tips to save IPO listing gains tax!
In the years 2023 and 2024, many IPOs brought huge earnings for the investors. But tax also has to be paid on this! What is the tax rule on booking listing gains from IPO? How can tax liability on listing gains be reduced? How will the tax be calculated on selling IPO shares?
Keen to widen the tax base and add to the tax buoyancy in the country, the Central Board of Direct Taxes (CBDT) is drawing up a comprehensive plan to catch all those who incur a lot of expenditure but keep dodging the tax net or pay less tax than their spendings indicate they should. It follows the Centre’s determination to maximise tax revenue that has steadily risen over the past several years, even during the Covid-hit years, according to a Business Standard report.
Increase IT returns
While the method might become a part of the sustained approach of the CBDT, the immediate target is to push up the number of those filing IT returns to 8.6 crore from the current figure of 7.78 crore.
According to the new plan being prepared, tax officials will mine new fields to access data to spot big spenders. These include tapping data on big expenditure on electricity bills above Rs 1 lakh per annum. They will also scrutinise data on foreign travel and lookout for expenditure more than Rs 2 lakh if the duration of the stay abroad is 10 days and beyond.
While targeting big spenders and conspicuous consumption has been a favourite tactic of the IT department, the effort to target them as a matter of sustained strategy was witnessed in the years following demonetisation.
Income tax-GDP ratio rising
On April 25 during a review meeting with CBDT officials, Union finance minister Nirmala Sitharaman was informed that personal income tax as a percentage of the Gross Domestic Product zoomed from 2.11% in 2014-15 to 2.94% in 2021-22. The officials also told the minister that over the past few years they have successfully employed new methods to tap and crunch financial transaction data such as mutual funds, interests and dividends and mined information on about 3 crore persons.
The number of taxpayers in the country has gone up fast in the third decade of the current century. The rates of growth in their numbers between 2019-20, 2020-21, 2021-22 and 2202-23 were 10.6%, 10.2%, 8.0% and 6.6% respectively. CBDT is keen to achieve 10% rate of growth in the number of income taxpayers in the current fiscal too.