The next time you buy a piece of jewellery, car or any expensive thing, just keep this fact in mind that someone is watching you! Not just how much money you spend, but also how much money your keep in your bank account or as an FD – everything is being watched. Yes, the money is yours and only you will decide how will you spend it or where you will keep it, but whatever you do will now be under scrutiny. Not because someone is interested in your personal matters or wants to infringe on your privacy, but because they want to rest assured whether you have paid tax on every penny you have earned or not.
Yes, this may seem to be a bit of an exaggeration, but this is the role our Income Tax Department appears to be playing at the moment or will most likely play in the future. In fact, apart from your income, including interest income, and high-value transactions – like cash transactions of Rs 2 lakh or more, bank FD interest of Rs 5 lakh or more, purchase of a piece of property – your investments also are under the I-T lens. For instance, people who have invested more than Rs 10 lakh in stock markets in a year are said to be on the radar of the I-T Department now. Also, no one can receive or repay Rs 20,000 or more in cash for transfer of an immovable property. Not only this, paying more than Rs 10,000 in cash relating to expenditure of a business or profession is also prohibited! Keeping these developments in mind, anything can be expected to come under the I-T lens in the future – even dining in a 5-star hotel!
Tax experts say that the government has been quite vocal about ushering in an era of tax transparency and encouraging citizens towards tax compliance. “The available data suggests that India is largely a tax non-compliant society. This could for various reasons, like higher tax rates in the past, increased burden of tax compliance, fear of dealing with authorities etc. Over time, a number of impediments have been removed and steps are taken to remove fear and hurdles for the common tax payer,” says Vikas Vasal, Partner & National Leader-Tax, Grant Thornton India LLP.
What to do now?
It is important to note that the government has access and receives data from different sources like banks and financial institutions, returns filed by employer/others for tax deducted at source etc. Also, with the linking of Aadhaar with PAN, it’s much easier for authorities to track income, expenses and wealth accumulation. Add to it, “the data analytic tools available today makes it much easier to track any deviations/variations, including tax non-compliance. Thus, tax payers need to be more conscious and file their tax returns with complete information and remain tax-compliant,” suggests Vasal.
Apart from remaining tax-compliant and filing your income tax return with due care, you also need to keep the relevant documents related to your income or expenditure at a safe and secure place so that they could be produced to the tax authorities whenever demanded.