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Tax dept to close in on local bodies
June, 30th 2006
 

The tax department will focus on advance tax collections made by the local authorities barring those which are exempt such as panchayats, municipal corporations and cantonment boards.

The department has identified local authorities as a new category in its action plan for boosting advance tax collections in the current fiscal.

The first tranch of advance tax collections due on June 15 showed healthy growth of over 70 per cent, with collections of Rs 7,700 crore during June 1-15, compared with Rs 4,500 crore in the same period last year.

Officials said the department had asked its field formations to personally monitor advance tax payments of the top 100 taxpayers and the quarterly financial statements of large and medium corporations, which will be examined and correlated with advance tax paid by them for the quarter.

Officials said the department has been considering lowering the threshold limit for picking up refund and deduction claims for scrutiny. The limit last year was Rs 10 lakh for deductions and refunds. This is proposed to be lowered to Rs 5 lakh this year.

Similarly, the threshold for contractors has been lowered from Rs 5 crore last year to Rs 2 crore, if the total income declared is less than 5 per cent of the gross contractual receipts.

All cases in which deductions have been sought by corporate and non-corporate tax payers for the first time under Section 80IA and 80IB, and deductions under Section 10A and 10B pertaining to SEZs are also likely to be picked up for scrutiny.

Officials said the department had asked its field formation that if a case had been assessed under scrutiny for at least two assessment years, or in appeals with amounts of less than Rs 5 lakh in Delhi, Mumbai, Chennai, Kolkata, Pune, Hyderabad, Bangalore and Ahmedabad, and less than Rs 1 lakh in other places, then such cases should be excluded from compulsory scrutiny.

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