Income Tax department will consider information received from third party sources like banks, law enforcement agencies and foreign tax authorities for determining non-filers of income tax.
The Central Board of Direct Taxes (CBDT) had set up a committee to recommend standard definitions of certain commonly used terms relating to direct taxes.
Defining “non-filer” of I-T for a given Assessment Year, the committee said it is “any person who is liable to pay any tax or file an I-T Return … as per information available on record, but no such ITR for the relevant assessment year has been entered on the system”.
The words ‘information available on record’ in the above definition would include information received from “departmental sources, third parties e.g. banks, financial intermediaries, law enforcement agencies, foreign tax authorities etc and information available in public domain”.
The definition would help remove subjectivity and discretion at the level of tax officers in interpreting the same and would bring parity in categorisation of data for the purpose of reporting.
“The term ‘information available on record’ has been defined widely. Accordingly, it shall include information coming from foreign tax authorities, which is expected to start flowing under the terms of the MCAA on Automatic Exchange of Information signed amongst various countries worldwide, including India,” Nangia & Co Managing Partner Rakesh Nangia said.
Further, the CBDT has definited the words “tax paid” as Advance Tax, self-assessment tax, taxes deducted/collected at source (TDS/TCS), tax paid against regular assessment, Dividend Distribution Tax (DDT) etc.
“Including DDT in the definition of tax paid, could be only to include DDT in the amount of tax collected by the Government from corporate taxpayers, so that a true picture of tax collection is drawn,” Nangia said.
The definition would be adopted for the purpose of generating relevant statics as also for reporting to Parliamentary Committees and outside agencies, the committee said in the report.
“The recommendations of the Committee have been accepted by the CBDT with the directions that these standard definitions should henceforth be adopted for data generation and reporting purpose,” the CBDT said.
It defined an assessee as any person who is liable to pay any tax, or in respect of whom any proceedings is pending under the Income Tax act, for an assessment year.