Pressuring tax evaders PDF Print E-mail
Wednesday, 20 July 2016 05:23
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Good idea to send letters to high-value transactors


Given the dismal record of black money disclosure schemes in the past, including the recent one for foreign assets which got disclosures of just Rs 4,147 crore, it is natural to feel the new Income Disclosure Scheme (IDS) will meet the same fate. Going by a report in Business Standard, the taxman plans to use all the data with it to ensure tax-evaders declare their incomes honestly and pay a 45% tax—the alternative is to pay a penalty of 200% once the 4-month window is closed and also the possibility of a jail term. To start with, the taxman plans to send letters to those who spent over R1 crore last year—the taxman, it appears, has already got data on the spending by around 900,000 persons. If a person gets a letter saying he spent R1.5 crore last year but his returns show an annual income of just R50 lakh, chances are he will go scurrying to the nearest IDS window to quickly file an amended return. While the taxman has been collecting such data through what is called an Annual Information Return (AIR), there has not been much use of this AIR data so far—various categories of establishments such as jewellers, automobile dealerships and credit card firms are supposed to disclose information to the taxman on who have shopped with them for transactions above a certain value.

Similar letters had been sent in 2013 to those who had not filed income tax returns, and this yielded Rs 577 crore in self-assessment tax and Rs 408 crore in advance tax till mid-September, 2013. Encouraged by the outcome, the Central Board of Direct Taxes has turned this exercise into a full-fledged online non-filers monitoring system with the number of non-filers with potential tax liabilities in the list jumping from 12.19 lakh in the first cycle (2013) to 58.95 lakh in the fourth (2015). This is expected to gain considerable pace and momentum with the implementation of Project Insight by 2018 which is being done at the cost of about R800 crore to put in place a 360 degree data warehousing and business intelligence platform for effective utilisation of the information available with the department. As a key role of the system will be integrated collection of information, data-mining and tracking of tax evaders, embedding this work with the IDS is certainly a smart move.



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