Income Around 10 Lakh? The Taxman Cometh

The TAXMAN has reason to believe that a significant percentage of those who show a Rs 10 lakh annual income are often hiding far more than they have revealed. Therefore, as part of the action plan to deepen tax collections, those who have filed returns claiming an income within the range of Rs 8 lakh to Rs 10 lakh during the last two to three years may be selected more often for conducting a survey this year. This is basically aimed at bringing into the net those taxpayers who have deliberately been trying to show their income as just below the psychological mark of Rs 10 lakh in their last three assessment years. In India, less than one lakh file return in the Rs 10 lakh and above income bracket, which has been a major headache for the income tax department.

For this purpose, returns of directors and senior officials of big companies, which have recorded an impressive growth in their bottom lines, may be crosschecked against the company performances. This would mean matching their income returns against the financial growth and other business details of the company they are employed in. For salaried executives, special emphasis would be given on estimating whether the fringe benefit tax has been deducted properly. For this, the TDS (tax deducted at source) wing may also conduct limited surveys.

For fiscal 2006-07, taxmen have been given the target of increasing the number of assesses in the Rs 10 lakh bracket by 50%. This kind of target was introduced for the first time last year and the income tax department has decided to continue with it this year also. This was discussed at the annual meeting of the chief commissioners and director generals of income tax.

For Those having an annual income above Rs 5 lakh but less than Rs10 lakh for three consecutive years, the department has decided to satisfy itself with increased scrutiny, department sources told ET.

Since AIR (annual information return) has thrown up a huge information base from which the department is corroborating and creating a PAN profile of assesses in high income bracket, the cross checking is expected to come in handy.

Some of the surveys or scrutiny may be taken up based on such available information.


Source: Economic Times 17th July 2006