This is not good news for tax evaders on New Year Day. The heat will be on tax-dodgers in the next three months, up to the end of the current financial year.
The income-tax (I-T) department says it wouldnt leave any stone unturned to maximise tax collections in the remaining part of the financial year, and as such, it would take up a campaign of surveys to unearth hidden incomes.
A survey essentially involves an inspection of the books of a business establishment to look for inconsistencies between declared income and actual income.
Under tax laws, a survey, as opposed to search, can be conducted by the field formations of the tax department without being in possession of specific evidence or information of tax evasion. The tax department has better logistical backing this year to take up more surveys.
The field formations dont require to be told by the Central Board of Direct Taxes (CBDT) to take up surveys, CBDT joint secretary A K Sinha said.
The assessing officers are competent to conduct surveys in their jurisdictions in cases where the advance tax payments or the returns filed for the previous period dont appear to be consistent with the growth in business and incomes, he added.
We dont want to create a panic, Sinha said, but urged the media to help send out a gentle reminder to tax evaders that the tax department can be expected to carry out many more surveys in the next three months.
We are better prepared to conduct more surveys this year. The field formations, for instance, have been given 427 more vehicles extending their reach for conducting surveys, Sinha said.
The tax department is obviously encouraged by the rich dividend yielded by surveys conducted this year. In the last six months since July alone, surveys conducted by the department have resulted in the surrender of a total hidden income of over Rs 1,000 crore.
A surrender refers to the assessee conceding higher income when confronted with the result of a survey. In the whole of the last financial year, surveys were instrumental in the surrender of only Rs 212 crore.
The tax department, encouraged by the 42.5% growth in direct tax collections up to December 18, now estimates that actual collections would surpass the budgetary target for the current financial year by at least Rs 10,000 crore to reach Rs 2,20,000 crore.
This is a conservative estimate we have made keeping in view the many imponderables that may affect collections in the next three months, Sinha said.
On the expiry of the December 15 deadline for the third installment of advance tax payments by corporates, direct tax collections had swelled by 42.5% against the budgetary target of a 27.5% growth for the current financial year.
The tax buoyancy, riding on soaring corporate profitability and rising individual incomes, has been so good that revenue officials are excited over the prospects of direct tax collections actually fetching even Rs 25,000 crore over and above the target of Rs 2,10,419 crore.
The tax buoyancy is attributed to a moderate and stable tax regime that has encouraged voluntary tax compliance.