New Delhi, Aug 17 (IANS) In a reprieve for taxpayers, the Centre has decided against further modification on income tax return (ITR) form, making it mandatory for tax filers to give details of all high value transactions undertaken by them during the year.
Sources in the Finance Ministry said that the expansion of the Statement of Financial Transactions (SFT) would not result in filing of high value financial transactions in ITR by the taxpayers themselves.
Instead, the reporting of high value transactions to the Income Tax Department will be done by the third parties under the Income-tax Act.
“This is the most non-intrusive way to identify those who spend big money on various items such as business class air travel, foreign travel, spend big money in expensive hotels, send their children to expensive schools and yet they do not file income tax return claiming that their income is less than Rs 2.5 lakh per annum,” Finance Ministry sources said.
There was speculation that the SFT expansion would mean taxpayers being asked to provide details of all high value transactions themselves in the ITR. This, many feel would result in unnecessary harassment of taxpayers at the hands of I-T officials with questions being raised about every expense and taxpayers being asked to provide details of every transaction.
The fear about the changes came about after the launch of the platform for ‘Transparent Taxation – Honouring the Honest’ by Prime Minister Narendra Modi on Friday. The IT department, on series of tweets about the new scheme, also mentioned various steps proposed by it to expand the country’s tax base by reporting various high value transactions of taxpayers.
According to Fin Min Sources, the Income-tax Act already provides for quoting of PAN/Aadhaar for certain high value transactions and their reporting by the third parties mainly for the purpose of the widening of tax base. Currently, for example, the information regarding high cash deposit/withdrawal in bank accounts, purchase of shares, mutual funds, purchase of immovable property, etc., are reported to the I-T Department by the third party.
Sources said that such reporting of high value transactions is essentially used to identifying persons who avoid filing of income tax returns and paying income tax besides high spending in their day-to-day life. It is an open fact that in India only a tiny segment of people pays taxes and all those who should be paying their taxes are actually not paying their taxes.
Fin Min Sources said that the Income Tax Department is relying more and more on voluntary compliance and therefore it become essential to identify the tax evaders and for that purpose expenditure data collected from third parties through SFT is the best and most effective non-intrusive method.
The information will be used to identify those who are either not filing the returns or the income disclosed in the returns are not proportionate to the pattern of expenditure reported in the SFTs. Such exercise will be done through data analytics and artificial intelligence. There will be no manual intervention in such exercise.
Sources said that with the changing facets of taxation in India towards a faceless approach, it has become now even more imperative for the I-T Department to have broader SFT reports by third party about those persons who undertake high value transactions but still do not pay income tax. For example, a person who is paying school fee/donation of say Rs five lakh per annum, and still does not file income tax return by claiming that his income is not taxable is actually trying to dodge the income tax system. Similarly, a person who has made purchases of luxury items or spent sizeable amount for hotel bills are potential taxpayers and should file his/her income-tax return.
“No doubt, the third party reporting of high value transactions made by such non-filers would allow the department to nudge such persons to file their returns and pay their due tax,” said the sources.
India Tribune, as an English weekly newspaper, was launched in 1977 in Chicago by its publisher Prashant Shah with a lofty ideal to serve the Asian Indian community in the USA. Over the years, it has grown with all vigor, and now it is being published in three editions – Chicago, New York and Atlanta. India Tribune, a journal of its kind for the family in the USA, has been a household name for many Indians for over three decades with each issue commanding a readership of over 125,000.
