Tax dept gets busy on 15% hike in mop-up target

The proposed target comes sans any amnesty scheme

Ahead of an uphill collection target for the current financial year (FY18), the income tax department has prepared a multi-pronged strategy to achieve 15.7 per cent growth, without any amnesty schemes that provided a buffer last year. There’s also been a reduction in the rate for the lowest income slab. 

The strategy includes litigation management, disposal of high-value cases, scaling up of searches and seizures, strengthening of systems and investigation teams, and tying with global data mining companies for information gathering.

The department has a collection target of Rs 9.8 lakh crore for 2017-18, up 15.7 per cent, compared with growth of 14.3 per cent in 2016-17. The rate on annual income between Rs 2.5 lakh and Rs 5 lakh has been cut to five per cent from the earlier 10 per cent.

“The compliance rate has shown an improvement after demonetisation, which will also facilitate higher collection. Litigation management, arrears recovery, information gathering and enforcement action will be the top areas of focus,” said a senior official.

The commissioner (appeals) has been asked to expedite clearance of high value cases of Rs 50 crore and above. “We want such cases to be decided early. If the sum is to be freed, take a decision early. If it needs to be recovered, that too we should know early, to devise a strategy,” said the official.

The number of surveys and searches has been scaled up from the beginning of the year. “People know that black (undisclosed) money will not be tolerated any more. So, we expect an improvement in the compliance rate,” added the official.

Advance tax paid by individuals was 40 per cent higher in the financial year’s first, June, quarter. This could be an after-impact of the demonetisation of high value currency, with more non-corporates recording higher incomes in their books of account. E-filing of returns up to June for 2016-17 grew by 18 per cent, suggesting that more people regularised their unaccounted income. 

In an unusual move, the Central Board of Direct Taxes (CBDT) Chairman Sushil Chandra got a one-year extension this May. This is expected to help work on a longer term strategy for increasing the tax base, currently 55 million. 

Systems and investigation teams were strengthened in a major reshuffle last week involving 315 officers. More people in systems are aimed at help in generating information for investigation teams.
 

The department says it has already identified cases where individuals and entities had attempted to regularise their unaccounted money by revising their returns for the previous financial years. “We have selected cases for partial scrutiny and full scrutiny of entities and individuals who tried to regularise their unaccounted income during demonetisation,” said the official quoted earlier.  

A committee has been constituted to recommend measures for expeditious recovery of tax arrears, currently over Rs 10 lakh crore. The seven-member panel will study the broad categories and recommend class-specific measures. It will classify cases on how old these are and recommend policy changes. And, check if some CBDT regions are more prone to raising tax demands that remain uncollected for long. The department says it will discourage the creating of infructuous demands.

The government had offered two income declaration schemes last year, an opportunity to those with hidden money to disclose this by paying a tax and a penalty. The Income Declaration Scheme fetched the government close to Rs 12,000 crore in 2016-17 and another Rs 10,000 crore from it is expected this year, due to a staggered payment option.