High income earners under taxman's lens

Armed with information regarding high-value transactions it has gleaned from annual information returns, the tax department now intends to closely watch returns of individuals whose income exceeds Rs 10 lakh per annum.

The income tax department is focusing on high-income earners to deepen the tax base. The number of tax payers declaring an income of above Rs 10 lakh is expected to increase by over 50 per cent.

The department is considering several suggestions, received from field formations, including examining the returns of directors and senior officers in big companies to check if the taxes paid by them match the financial growth and business of the company.

Similarly, in the case of salaried executives, there is a proposal to give special emphasis on the proper taxation of perquisites.

Another proposal is to use the "sauda registers" of the stockbrokers to identify potential taxpayers in this bracket.

A suggestion has also been made to collect information regarding the income of professionals like doctors, lawyers, chartered accountants, tax consultants, auditors, architects and technical experts, in order to ascertain their correct income.

The investigation wing of the income tax department is tracking new areas to create a data bank since the methodologies of tax evasion and avoidance and camouflaging of payments have undergone a sea change.

In addition to the information flowing from the Central Intelligence Bureau, the annual information returns and the banking cash transaction tax, information from newspapers, magazines and the Internet, the department has asked field investigation wings to individually develop databases on educational institutions including, coaching centres, hospitals, nursing homes and diagnostic centres, charitable trusts and religious institutions, cooperative societies, cooperative banks, non-banking financial companies including chit funds.

The investigation wing had, in 2005-06, issued over 3,300 warrants as a result of their searches and seized value of assets worth Rs 351.69 crore.

It also conducted over 7,600 surveys with the amount of additional income disclosed at Rs 2,300 crore.