Even while taxpayers with undisclosed income are once again given the facility of a new limited compliance window to come clean, the revenue department will, in parallel, intensify the effort to track down evaders, official sources told FE.
Even while taxpayers with undisclosed income are once again given the facility of a new limited compliance window to come clean, the revenue department will, in parallel, intensify the effort to track down evaders, official sources told FE. While the Foreign Account Tax Compliance Act signed with the US in July last year will stand the taxman in good stead in hunting down offshore tax evasion, the sources said an equal focus would be on using the advanced IT-enabled tracking systems to nail domestic unaccounted wealth.
Stating that the government is fully committed to reduce the incidence of black money, the Central Board of Direct Taxes (CBDT) chairman Atulesh Jindal told FE: “The idea is to catch big (habitual) tax evaders. Individuals may evade (tax) once or twice but not always. If someone, for instance, is investing in any real estate project or buying jewellery, by way of PAN disclosure, the IT department would come to know about the transactions. The IT tools have come very handy in keeping a track of (high value transactions).”
According to Jindal, thanks to FATCA, India will get access to information from nearly 95 countries including the US and Switzerland on the dealings and transactions of taxpayers/potential taxpayers in foreign jurisdictions. At the same time, he said, the Income Tax Department is regularly processing information on taxpayers, as the requirements of submission of PAN have been made more elaborate and mandatory. (The government has made it mandatory to disclose PAN in new clutch of additional transactions starting January 1, 2016).
The CBDT chairman, however, said the government has so far not set any target for the unaccounted funds it wants to bring under the tax net via the new compliance window. Finance minister Arun Jaitley told Parliament last week: “Having given (citizens) one opportunity for evaded income to be declared once, we would like to focus all our resources for bringing people with black money to the book.”
FATCA will also shield Indian banks, insurers, custodians and broking houses from facing US tax penalties for failure to disclose the transactions of the US citizens and firms in India. The agreement provides for an unprecedentedly robust system of information-sharing.
The latest compliance window — to be open between June-September 2016 — has been opened despite the lukewarm response to the (foreign) black money disclosure scheme, 2015. Last year’s scheme had led to disclosure of just `4,150 crore and tax collection of Rs 2,400 crore. The latest scheme indicated the government’s view that bulk of black money lies within the country.
“The income declaration scheme announced in the this Budget is expected to get more domestic taxpayers coming forward unlike previous schemes. This is because this time it offers a comfort and immunity under the IT Act, Wealth Tax and Benami Act. An individual can opt to pay 45% of the disclosed amount that would include tax, penalty and interest and settle any past untaxed assets or capital gains and get free from legal hassles. The Prime Minister is tech-savvy and we could expect the IT department making good use of technology to track down tax evaders. IT-enabled intelligence would certainly make tax evasion tough,” said Sonu Iyer, national leader for people advisory services, EY.