700 companies may come under I-T dept scanner

The Income Tax department is likely to scrutinise tax returns of over 700 top companies, which include A-group category companies listed on the Bombay Stock Exchange and NSE-500, to detect possible tax evasion.

As part of the finance ministry's efforts to meet the target of corporate and income tax collections for the current fiscal, all NSE-500 companies and BSE A-group companies listed as on March 31, 2007 will be "compulsorily scrutinised", official sources told PTI.

At present, 217 companies are listed at BSE under the A-group. Under the scrutiny process, the Income Tax department can send notices to the firms to explain any discrepancy in the information provided through tax returns filed, advance tax deposits, tax deduction at source (TDS), and their income and expenditure for up to three years.

For the returns filed till July 31, the sources said, the income tax officers can serve the scrutiny notice any time on or before July 31, 2008.

Under the annual action plan, recently approved by the finance ministry, the Central Board of Direct Taxes (CBDT) is understood to have directed the chief commissioners, income tax, to scrutinise the returns of these companies to ensure that they deposited all due taxes, and in time.

The sources said all stock brokers and commodity brokers as well as their sub-brokers earning Rs 1 crore or more in brokerage will also be brought under the scrutiny net.

For the current fiscal, the government has set a target of Rs 26,740 crore direct tax collections, expecting a growth of 16.25 per cent over Rs 230,091 crore collected previous fiscal.

In April-July period, corporate taxes contributed Rs 38,757.4 crore, which is 23.3 per cent more than April-July, 2006.

However, the government is hopeful that after the scrutiny of top companies more revenue could be realised. Official sources said the CBDT has also directed the field officials to scrutinise the returns of all those companies having book-profits of over Rs 50 lakh in Delhi, Mumbai, Chennai, Kolkata, Pune, Hyderabad, Bangalore and Ahmedabad.

In other places, the companies with a book-profit exceeding Rs 25 lakh would be brought under the scrutiny net, the sources said.

In addition, the income tax department is expected to look into the returns filed by the firms, whose total value of international transactions exceeds Rs 15 crore.

Notably, after the scrutiny of the returns filed by the companies and high-networth individuals, the income tax department had raised demand for additional Rs 54,000 crore tax collections in 2006-07.

The department is also likely to scrutinise all those cases, where refunds are more than Rs 25 lakh in a year, the sources added.