Tax department to set up new division to widen base

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Bengaluru | Published: March 25, 2015 12:54:02 AM

The income tax department will set up a separate division in 2016 to scale up its trawling of unreported high-value transactions...

income tax, income tax department, income tax evaders, black money, income tax high spenders, income tax latest news, itoQuoting the Permanent Account Number (PAN) is compulsory for financial transactions above R50,000 which help the department to track the transactions of individuals. (PTI)

The income tax department will set up a separate division in 2016 to scale up its trawling of unreported high-value transactions aimed at bringing more individuals into the tax net, officials said.

The proposed non-compliance monitoring wing to be set up in New Delhi will help step up the number of letters sent to individuals about  their unreported high-value deals, the details of which the department has procured directly from financial institutions such as credit card providers and mutual funds.

Quoting the Permanent Account Number (PAN) is compulsory for financial transactions above R50,000 which help the department to track the transactions of individuals.

The new wing will be called Data Warehousing and Business Intelligence unit and will work with the recently created Directorate General of Risk Management led by chief commissioner Arbind Modi in identifying transactions and classes of assesses where potential tax evasion is high.

At present, only 3.5 crore assessees file returns and pay taxes, which account for only 2.5% of the population, which is way below the world average of 15%, said an Income Tax official. Having a dedicated unit for pursuing unreported high value transactions is likely to help in raising the tax base. “The sky is the limit,” said the official.

In 2014-15, the department issued letters to 20 lakh individuals, trusts and partnerships about their undisclosed transactions, which led to 8.5 lakh assessees filing or revising their income tax returns. This has led to recovery of R2,032 crore of tax by way of self assessment and R1,536 crore by way of advance tax up to December 2014, said another official.

The department will also make filing of tax returns easier for individuals by discontinuing the requirement of tax payers having to send signed hard copies of their returns to its centralised processing unit in Bangalore in addition to online filing. At present, the only way the department can accept the information filed in the return as true is on the basis of the signature on the hard copy.

To do away with the requirement of sending hard copies, the department will introduce the use of ‘one-time password’ sent to the mobile number of tax payers at the time of online filing.  Another option being examined is to providing a column in the tax return to disclose the Aadhar number, which could be used to verify the authenticity of the return filed.

Use of the one-time password or Aadhar number to be quoted in the return will “provide for the additional level of security and verification of the tax payer,” currently done through a signed hard copy.

Those paying corporate tax do not have to send signed hard copies because they are verified by way of a digital signature they use at the time of filing returns. Obtaining digital signature is not popular among individual tax payers as obtaining it costs about R600-700 for a year.

“Adhar number is now taken as an additional layer of security. We will build all these into the return so that we have an authentic profile of the tax payer.

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