Get on the spending trail: FM to taxmen

Foreign travel, luxury goods to be tracked.

Finance Minister P Chidambaram on Monday said the income-tax department would target high net worth individuals by tracking their spending patterns in order to beef up the tax revenue in the current fiscal.

Addressing a closed-door meeting of chief commissioners and directors-general of income tax, the minister indicated that the one-by-six formula for widening the tax base could be modified, with more attention being paid to categories like foreign travel, buying of imported watches and luxury cars.

The finance minister also said the tax arrears recovery plan announced in the Budget could match the success of the voluntary disclosure of income scheme of 1996-97, and set a target of recovering Rs 8,000 crore for the income- tax department.

Chidambaram's strategy included talking to the chief justice of India and chief justices of various high courts to set early dates for quick disposal of tax disputes involving substantial sums.

Sources quoting the minister said "out of the 5.5 million annual outbound travelers from India, nearly 2 million are tourists".

He told tax officials there was no reason why their spending pattern should not be reflected in income tax data.

The minister said 700,000 cars were sold annually, with 25,000 in the luxury segment alone. Yet the number of people declaring annual incomes of above Rs 10 lakh was only 75,000. "Do we have data on those who buy cars like Maybach?" he said.

He said the tax information network along with the newly introduced regime of annual information returns for expenditure of above Rs 50,000, should give a real-time database to tax officials to help them track spending behaviour.

Urging officials to use the data and come up with innovative and practical ways of collecting revenue, the minister said such moves would expand the tax base.

On arrears, the minister said the department would adopt a multi-pronged approach, including a media campaign on undisputed arrears. This would involve going public with the names of defaulters.