The income-tax department plans to conduct compulsory assessment of returns filed by all real estate developers and corporate and non-corporate assesses who infused fresh capital in their ventures in 2005-06. Scrutiny assessment refers to rigorous examination of income-tax returns filed by these entities.
In its new guidelines for 2006-07, the Central Board of Direct Taxes (CBDT) has directed chief commissioners of income-tax to compulsorily put the returns filed by developers of commercial and residential properties under scrutiny.
Real estate developers finalise their accounts under the project completion method. The assessment of corporate and non-corporate assesses having infused fresh capital in their projects in 2005-06 is linked to floors.
Fresh capital infusion of Rs 1 crore and above in ventures in the four metros and cities of Hyderabad, Pune, Bangalore and Ahmedabad will qualify for assessment. For other cities, the floor is Rs 10 lakh for non-corporate assesses and Rs 50 lakh for corporates.
In a meeting of chief commissioners held last week, CBDT has decided to put additional thrust on the annual information from registrar of properties, mutual funds, banks and post offices to track high-value transactions.
According to official sources, it has been found that a total of 84,000 individuals entered high-value transactions in 2004-05 in Mumbai, out of which only 35,000 have replied to query letters sent by the income-tax department.
The department officials have been directed to pursue the remaining cases as it feels that the entities involved may not be having even the permanent account numbers.
Another new addition for the current years scrutiny are local authorities such as municipal bodies and agricultural products marketing companies.
All returns filed under the securities transaction tax will be also brought under compulsory scrutiny. The other criteria to decide on scrutiny assessment are the same as last year.