Income Tax Scanner on 89 High Value Foreign Remittance Cases

The Income Tax Department has found 89 “high-risk foreign remittance” instances, each of which involves alleged tax evasion of more than Rs 100 crore.

According to individuals familiar with the specifics, these cases were filtered through data analytics and relate to high-value remittances in FY20 and FY21.

In these instances, the department has already begun procedures. In an internal order issued on March 28, the Central Board of Direct Taxes (CBDT), the top direct taxes authority, directed pertinent assessing officials to start verification and send notifications to these red-flagged transactions.

“According to the data analytics, there are 89 cases where suspected evasion exceeds 100 crore and another 31 cases where suspected evasion exceeds 50 crore,” said one officer.

The official went on to say that in these instances, the assessee’s stated revenue was not proportional to the money sent overseas. Furthermore, the high-value foreign transactions were not reflected in the tax returns.

According to the official, the real number could be higher because the agency has found a significant number of inconsistencies in form 15CC for FY20 and FY21. Following a second round of review, more instances may be considered. These instances have been made available to local TDS (tax deducted at source) officials (international tax) on the department’s Insight Portal’s verification section under the Foreign Remittance Verification (Form 15CC) category.

Currently, a 5% tax collected at source (TCS) is levied on certain international outbound transfers surpassing Rs. 7 lakh, as a measure to ensure that these transactions are recorded in the system and analysed to detect tax evasion.

Subsection (6) of Section 195 of the Income-Tax Act requires a person responsible for paying to a non-resident, who is not a company, or to a foreign company, any sum, whether or not chargeable under the provisions of this Act, to furnish the information relating to the payment in Form 15CC.

This document must be returned quarterly.

“Technology and data analytics are assisting us in detecting evasions, closing any gaps, and improving tax compliance,” the source added.

The budget suggested this year that any outward remittances for reasons other than medical care and schooling would be subject to a 20% TCS on the total value beginning July 1.