Finance ministry sources told India Today TV there is no such proposal to modify income tax returns forms. The taxpayer would not need to mention high value transactions in their return.
he finance ministry has cleared the air on a report that said the Statement of Financial Transactions (SFT) expansion would result in filing of high value financial transactions in ITR by the taxpayers themselves
Finance ministry sources told India Today TV there is no such proposal to modify income tax returns forms. The taxpayer would not need to mention high value transactions in their return.
The reporting of high value transactions to the income tax department is to be done by the third parties under Income Tax Act.
Third party reporting applies to those who spend big money on business class air travel, foreign travel, expensive hotels, sending children to posh schools, but do not disclose it in their income tax return.
In most of the cases, those who spend on the above mentioned items claim their income is less than Rs 2.5 lakh per annum.
Income Tax Act already provides for quoting of PAN/Aadhaar for certain high value transactions and their reporting by the third parties, mainly for the purpose of the widening of tax base.
Sources said that reporting of such high value transactions is essentially used to identify persons who avoid filing of income tax returns and paying income tax besides high spending in their day-to-day life.
An officer in the income tax department told India Today TV that the department is relying more and more on voluntary compliance and, therefore, it has become essential to identify the tax evaders. For that purpose expenditure data collected from third parties through SFT is the best and most effective non-intrusive method.
The information will be used to identify those who are either not filing the returns or the income disclosed in the returns are not proportionate to the pattern of expenditure reported in the SFTs.
Such exercise will be done through data analytics and artificial intelligence. There will be no manual intervention in such exercise.
Sources said that with the changing facets of taxation in India towards a faceless approach, it has become now even more imperative for the I-T Department to have broader SFT reports by third party about people who undertake high value transactions but do not pay income-tax.
For example, a person who is paying school fee/donation of Rs 5 lakh p.a. and still does not file income tax return by claiming that his income is not taxable is actually trying to dodge the system.
Similarly, a person who has made purchases of luxury items or spent sizeable amount for hotel bills are potential taxpayers and should file his/her income-tax return.
Another officer said if the department does not collect such information, it would not be able to identify the persons who evade paying taxes. This would be a great injustice to the honest taxpayers who are paying their taxes diligently.
Also, widening of tax base would provide more fiscal space to the government to lower of the tax burden of the honest taxpayers.
|