If you are planning to buy a large quantity of shares in a blue-chip company, better get your account books right. The government may soon use the security transaction tax (STT) data to track cases of income tax evasion.
The Central Board of Direct Taxes (CBDT) has already set up a committee to find out how best the STT data, linked to PAN numbers of individual investors, can be used for IT purposes, sources in North Block told said. The Board may soon set up a similar committee to analyse VAT (Value Added Tax) data as well.
Significantly, the committee is examining as high as 66 gigabytes (GB) of STT data, accumulated during FY 06 and FY 07. It is expected to submit its report within a month.
Securities Transaction Tax or turnover tax, as is generally known, is levied on purchase or sale of an equity share or an unit of an equity-oriented fund. In addition, the investors need to pay short term capital gain tax at the rate of 10% if he sells his share within one year.
A senior CBDT official said that the idea behind analysing the STT or VAT data would be to find out how these information can be loaded into individuals PAN Ledger Account, which like a bank account, would reflect his or her financial transactions.
Finally, we will have a PAN Ledger Account of each tax payer. We are sitting on a huge STT and VAT data. We are in the process of analysing them so as to link them to ones earnings, he said.
Amarjeet Singh, a tax expert and partner, KPMG, said that such a move might help in improving the nations tax to GDP ratio.
Indias tax collection vis--vis GDP is mere 12 to 13% which is much below 22 to 23% recorded in the developed countries. By analysing existing data from STT or VAT, the government will be able to widen the tax base and restrain tax evasion, he said.