Central Government likely to boost operation against IT evaders

According to authorities with knowledge of the situation, the government may step up its efforts to identify persons who engage in high-value financial transactions but fail to file tax returns. The move comes despite the government’s expectations for strong income-tax collection this fiscal year, as it seeks to expand the tax base, which currently stands at 81.3 million people.

To uncover incidents of tax evasion, the Central Board of Direct Taxes (CBDT) use artificial intelligence and data analytics. It may also use the non-filers monitoring system (NMS) to urge people to file their income tax returns, according to officials who requested anonymity.

“It is remarkable that just 81.3 million persons paid income tax in AY (assessment year) 2020-21 in a country of approximately 1.3 billion people. The number of taxpayers in the higher tax brackets is much smaller. “Detecting tax evasion is not difficult in this digital age,” one of the officials said, adding that some of the instruments include a financial transaction statement, tax deduction at source, tax collected at source, details of overseas remittances, trade data, and NMS.

Since 2013, the government has employed 10 cycles of NMS, which detects and monitors individuals who engage in high-value transactions and have potential tax liabilities but have not submitted tax returns. “The move is also in accordance with the political leadership’s order,” the official added, alluding to Prime Minister Narendra Modi’s speech on February 12, 2020.

“In our country, outstanding doctors, lawyers, chartered accountants, and a variety of professionals who are experts in their disciplines serve the nation.” However, it is also true that just 2,200 professionals in the country register an annual salary of more than one crore,” Modi stated.

CBDT did not respond to an email inquiry about this issue.

“In the last two cycles… NMS-9 and NMS-10 pertaining to flagging of non-filers for the assessment years 2019-20 and 2020-21, a total of 4,017,235 cases have been flagged, 1,069,186 taxpayers have filed returns, and a total of 7,318.65 crore has been collected as self-assessment tax,” junior finance minister Pankaj Chaudhary told Parliament on February 7.

“The income-tax department facilitates e-verification of all such NMS situations for simplicity of compliance by collecting taxpayers’ responses online as physical presence is not required,” a second source explained.

People who do not file tax returns are required to examine their tax liabilities for the current fiscal year and either file returns or submit an online answer within a specified time frame, which is usually three weeks. In the absence of a response, the department may commence legal action.

According to the most recent official data, over 6.63 crore tax returns have been filed for the fiscal year 2021-22 as of mid-March, representing a less than 3% increase over the same period the previous year.

The figure is projected to climb as the March 31 deadline for filing taxes, revising forms, integrating Aadhaar and PAN, and complying with e-proceedings for assessment approaches.

The net direct tax collection up to mid-March for fiscal year 2021-22, on the other hand, increased by more than 48 percent to 13.63 lakh crore, compared to 9.18 lakh crore in the same period the previous fiscal year.

According to the CBDT, the net direct tax collection on March 16 was 13,63,038.3 crore, which included company income tax at 7,19,035 crore and personal income tax, including security transaction tax, at 6,40,588.3 crore. So far, the net collection in 2021-22 is more than 9% higher than the revised forecast of 12.50 lakh crore.

The gross direct tax collection for 2021-22, before adjusting refunds, was 15,50,364.20 crore on March 16, compared to 11,20,638.60 crore in the previous fiscal year’s similar period.