AIR likely to cover 5 more transactions

Payment of insurance premium of over Rs 1 lakh, purchase of a car valued at Rs 5 lakh or more, and payment in cash for purchasing a bank draft of above Rs 1 lakh are some of the transactions which could be brought under the ambit of the annual information returns (AIR) from the next financial year.

AIR is a system for collecting information regarding high-value transactions from "third party" sources. The income-tax department, at present, tracks seven transactions under AIR.

These include cash deposits exceeding Rs 10 lakh, credit card payment exceeding Rs 2 lakh, purchase and sale of property worth more than Rs 30 lakh and purchase of RBI bonds worth more than Rs 5 lakh.

Finance ministry officials said the Central Board of Direct Taxes was considering a proposal to expand the present list of transactions under AIR by including five more transactions.

"There is a view to either expand the existing list of AIR or empower the Central Information Branch (CIB) to collect third-party information on five new transactions. Information collected by the CIB would be like a parallel AIR," an official said.

A final decision on the matter will be taken by Finance Minister P Chidambaram.

There is also a proposal to get the CIB to collect third-party information on the sale of property above Rs 20 lakh, where the sale price is lower than the prevailing price as per the circle rate. The tax to be paid on sale of property is calculated by the tax department by comparing it with the circle rate where the property is located.

"The AIR at present collects information on all sale and purchase of property above Rs 30 lakh, but the department wants to collect information on sale of property at prices below the circle rate separately for purposes of scrutiny," the official said.

The CIB may also be asked to collect information on transactions of more than Rs 2 lakh undertaken by individuals who do not have a permanent account number.

"Such information has to be filed through Form 60 which is proposed to be digitised," officials said.

The CBDT will soon take a view on restructuring the role of the CIB. Though the CIB has been collecting information for the income-tax department, this is not done on a systematic basis.

"There is a proposal to rename the CIB as the Directorate of Intelligence (Income-Tax). The directorate will collect information in a digitised format so that the data can be processed on the same lines as AIR," an official said.

The income-tax department had in August issued detailed instructions to all its field formations regarding the utilisation of data collected through the AIR for transactions in 2004-05.

For each AIR, the department will prepare an individual transaction statement (ITS). The ITS will then be segregated into ITS accompanied with PAN and those without it.