Skip to main content

Income tax scrutiny to remain limited despite ITR filings surge

Income tax scrutiny to remain limited despite ITR filings surge
Enforcement action by the income tax department will be reserved for cases where specific tip-offs regarding large-scale tax evasions have been received
The income tax department will maintain the number of income tax returns (ITRs) chosen for scrutiny at the current level of less than 1% of all returns, in spite of a surge in individual tax filings to keep the process non-intrusive and taxpayer-friendly.
Gentle persuasion through text messages, emails and advertisements will remain the department’s main ways of interacting with taxpayers, while enforcement action will be reserved for cases where specific tip-offs regarding large-scale evasions have been received.
Out of the 52.8 million income-tax returns filed for the 2015-16 fiscal year, only about 300,000 cases, or around 0.6%, were scrutinized, a person privy to the deliberations within the tax department said on condition of anonymity.
“Even when the number of our assessees grow, scrutiny will be limited to this level—250,000-400,000 cases. It will always be less than 1% of returns received. We are absolutely non-intrusive to almost everyone. Even in most of the cases scrutinized, we do not hold searches or surveys,” the person cited above said, adding that the income-tax department vests its faith in taxpayers.
Searches conducted by the tax authorities—about 600 such cases happen in a year—will also stay at this level in future. “Only when we get very, very specific information of tax evasion of a substantial amount, we take enforcement action,” said the person.
The department recently sent 17 million text messages to individuals urging them to file returns for fiscal 2017 before the due date of 5 August, said the official.
This has led to a 25% jump in personal income-tax return filings for fiscal year 2016-17 to 27.9 million before the due date compared to the same period in the previous year.
Going by past trends, this figure could rise to about 66 million returns by the end of March 2018. Returns for a particular fiscal year can be filed by the end of the next year, called the assessment year, with interest on tax dues if any.
Close to three-fifths of the 52.8 million returns the department received for 2015-16 had come in after the due date in August 2016.
“Engaging with people through electronic means is easy and is a better strategy to ensure compliance than scrutinizing more tax returns. It is important for taxpayers to meticulously keep a record of their financial matters to remain compliant,” said Rahul Garg, a partner at consulting firm PwC India.
The income-tax department is also processing refunds faster. It has started issuing refunds within 10 days to taxpayers who have met the 5 August deadline for filing returns.
Individuals who make large purchases, such as houses, or cars priced above Rs10 lakh, but do not file income-tax returns figure among those who receive gentle reminders to file their returns as the authority secures information about such transactions from other sources.
Linking the permanent account number (PAN) used in filing tax returns with Aadhaar, the 12-digit number issued by Unique Identification Authority of India that identifies individuals using biometrics, is also enabling officials to check if the investments and spending of income-tax assessees are in line with their known sources of income.
So far, 94 million PANs have been linked with Aadhaar numbers after the central government made quoting the unique identification number compulsory for the filing of income-tax returns from July onwards.
The Hindustan Times, New Delhi, 21st August 2017


Popular posts from this blog

Shrinking footprints of foreign banks in India

Shrinking footprints of foreign banks in India Foreign banks are increasingly shrinking their presence in India and are also becoming more conservative than private and public sector counterparts. While many of them have sold some of their businesses in India as part of their global strategy, some are trying to keep their core expertise intact. Others are branching out to newer areas to continue business momentum.For example, HSBC and Barclays Bank in India have got out of the retail business, whereas corporate-focused Standard Chartered Bank is now trying to increase its focus on retail “Building a retail franchise is a huge exercise and takes a long time. You cannot afford to lose it,” said Shashank Joshi, Bank of Tokyo-Mitsubishi UFJ’s India head.According to the Reserve Bank of India (RBI) data, foreign banks’ combined loan book shrunk nearly 10 per cent from Rs 3.78 trillion in fiscal 2015-16 to Rs 3.42 trillion last financial year. The banking industry, which includes foreign banks…

New money laundering norms stump jewellery sector

New money laundering norms stump jewellery sector Dealers with turnover of Rs 2 crore and above covered; industry says threshold too low The central government has notified the money laundering rules for the gems and jewellery sector with immediate effect. Now, any entity deals in precious metals, precious stones, or other high-value goods and has a turnover of Rs 2 crore or more in a financial year will be covered under the Prevention of Money Laundering Act, 2002 (PMLA, 2002). The limit of Rs 2 crore would be calculated on the basis of the previous year’s turnover, said the notification. The directorate general of goods and service tax intelligence has been appointed under the Act. Sources said the government’s move to apply the PMLA to the jewellery sector was a fallout of income-tax raids on jewellers soon after demonetisation last November, when it was found that they sold gold and jewellery at a huge premium and accepted old currency notes as payment. The notification, issued on Augus…

Confusion over branded food GST

Confusion over branded food GST The GST Council's statement over the weekend on applying tax on branded food items has left most of the trade confused.

Even though the Council has not changed the rates on food -0 per cent on unbranded stuff and 5 per cent on brands -many small traders who didn't levy GST earlier said they could come under the 5 per cent slab after the clarification.

While they predicted some increase in consumer prices, large players said they can absorb GST in many ways and keep prices steady.

"Trade is confused and hence on behalf of our chamber, we have asked our members to go ahead and charge 5 per cent GST," said Sushil Sureka, general secretary of the Ahilya Chamber of Commerce and Industry in Indore.

The statement clarifying the application of GST came after some businesses were found deregistering their brands and selling under corporate brand name without paying tax, after the Council exempted unbranded food from the new all-encompassing indirec…