Concerned over huge tax evasion in the realty sector, the income-tax department is likely to scrutinise tax returns of all real estate players be it a property dealer or a builder with annual turnover of Rs 5 crore in the current fiscal.
The Central Board of Direct Taxes (CBDT) has asked the field income-tax officials to sent scrutiny notices to all builders having an annual turnover of Rs 5 crore or more, a finance ministry source said.
An official comment from the ministry on the issue could not be obtained.
The official said through these notices assessing officials could ask builders to appear before them to explain the sources of income, net profit and the tax deducted at source. The builders could also be asked to disclose details of income and expenditure during the past three years.
A decision in this regard was recently taken as part of the annual action plan of the department to take measures for meeting direct tax collections' target of Rs 2,67,490 crore and unearth black money in the realty sector.
It has also come to our notice that many builders are selling flats by taking money partly in cash, and not disclosing it in the annual returns, the source said. He said though many builders were taking money from home buyers in advance, they showed income in tax returns only after the completion of projects. Information collected from banks was collated in this regard, he added.
The source said stiff scrutiny norms for property deals was the result of the high-level of activity in the real estate market, and the government wanted to ensure that people were paying taxes and there was no black money in circulation.
For the returns filed till July 31, they said, income-tax officers could serve the scrutiny notice by July 31, 2008.
The source said, The CBDT has also asked I-T officials to review the statements of builders bank accounts, match withdrawals with expenses, including those on credit cards.