Center likely to step up exercise against income tax evaders | Latest India News
The government could step up its exercise to identify people who undertake high-value financial transactions but avoid filing tax returns, officials familiar with the development said. The move comes as the government expects strong income tax collection in the year as it wants to broaden the tax base, which is just 81.3 million.
The Central Commission for Direct Taxes (CBDT) uses artificial intelligence and data analysis to detect cases of tax evasion. It could also deploy the Non-Filers Monitoring System (NMS) to trick people into filing their tax returns, officials said, requesting anonymity.
“It is surprising that in a country of over 1.3 billion people, only 81.3 million paid income tax in AY (tax year) 2020-21. The number of taxpayers in the upper slabs is even more limited. In the digital age, detecting tax evasion is not very difficult,” one of the officials said, adding that some of the tools include Financial Transaction Record, Withholding Tax Deduction, withholding tax, details of overseas remittances, trade data. and NMS.
The government has so far used 10 rounds of NMS since 2013, which identify and monitor people who enter into high-value transactions and have potential tax liabilities, but have not filed tax returns. “The decision is also in line with the directive of political leaders,” the official said, referring to Prime Minister Narendra Modi’s speech on February 12, 2020.
“In our country, great doctors, lawyers, chartered accountants and a number of competent professionals in their respective fields serve the nation. But it’s also a fact that there are only 2,200 professionals in the country who say their annual income is more than ₹1 crore,” Modi had said.
CBDT did not respond to an email query about this.
“Over the past two cycles… NMS-9 and NMS-10 regarding reporting of non-filers for tax years 2019-20 and 2020-21, a total of 4,017,235 cases were reported, out of those 1 069,186 taxpayers filed returns and a total of ₹7,318.65 crore was collected as self-assessment tax,” Deputy Finance Minister Pankaj Chaudhary told Parliament on February 7.
“The Department of Income Tax is enabling electronic verification of all these NMS cases to facilitate compliance by soliciting taxpayer response online as physical presence is not required,” a second person said.
Individuals who do not file tax returns are asked to assess their tax obligations for the given tax year and file returns or submit a response online within a stipulated time period, which is usually three weeks. In the event of non-response, the department may initiate proceedings in accordance with the law.
As of mid-March, more than 6.63 million tax returns have been filed for the 2021-22 tax year, showing growth of less than 3% compared to the same period of the year previous year, according to the latest official data.
The number is expected to increase as the last date for filing declarations, revised declarations, linking of Aadhaar and PAN and compliance with electronic assessment procedures is March 31.
Net direct tax collection through mid-March for the 2021-22 financial year, however, showed a jump of more than 48% at ₹13.63 lakh crore, compared to ₹9.18 lakh crore during the corresponding period of the prior fiscal year.
The net collection of direct taxes from ₹13,63,038.3 crore on March 16 include corporate income tax at ₹7,19,035 crore and personal income tax including security transaction tax at ₹6 40,588.3 crores, according to CBDT. Net inflow in 2021-22 so far is more than 9% higher than the revised estimate of ₹12.50 lakh crores.
Gross collection of direct taxes before adjustment for refunds, for 2021-22 was ₹15,50,364.20 crore on March 16, compared to ₹11 20,638.60 crores during the corresponding period of the previous financial year.