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Tuesday, 01 May 2018 07:55
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Report suggests 1.5 crore new returns were filed in FY18

 

A combination of data collected by the taxman from those making cash deposits after demonetisation and a much better tax administration has resulted in, a report in The Times of India suggests, an additional 1.5 crore new taxpayers in FY18—according to ToI, with this, the total direct taxpayers’ base rose to 9.3 crore in FY18. A few weeks ago, the tax department had put the new additions at 99.49 lakh—as compared to an additional 85.5 lakh in FY17—so the ToI report suggests more numbers were added after all the results came in. After demonetisation, the government had said a total of 1.75 crore potential assessees had been targeted by SMS/email queries and the high number of returns is clearly a result of this.

Even before this, though, the taxman has been following an active policy of targeting non-filers after gathering data on their income/expenditure patterns. Going by the ToI data, there has been a 43% hike in the number of direct-tax-filers since 2013-14 and that augurs well for future tax collections. Equally important is the number of e-filed income tax returns—from a mere 21.7 lakh in FY08, these rose to 4.33 crore in FY16 and 5.29 crore in FY17. E-filing is critical since it allows electronic matching of this data with other information bases such as those from credit card companies on how much money is spent by their clients.

And what was started by demonetisation will be completed by GST—indeed, as this newspaper has argued before, GST is a more powerful and far less disruptive tool. Since the process of invoice-matching will force assessees to declare their genuine incomes, over a period of time, the tax base will increase significantly. If, for instance, a trader is forced to declare a 200% jump in transactions, surely he will also have to declare a higher personal income as a result of this—by how much this will increase remains to be seen.

Apart from this, Project Insight, a computerisation of all databases with extensive search and matching facilities, is expected to be complete around now. Once this is done, and the Aadhaar-linking of PAN numbers takes place, the taxman will have a very good estimate of expenditure and will match this with income statements. In other words, over the next few years, expect a big breakthrough in India’s fight against black money, taking India to tax-GDP levels that are in keeping with its GDP.

 

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