Govt goes after tax cheats in new SMS drive

The government has launched a fresh drive to catch tax cheats, identifying thousands of people who made big investments over the past two years but neither paid income tax nor filed I-T returns.

The government has launched a fresh drive to catch tax cheats, identifying thousands of people who made big investments over the past two years but neither paid income tax nor filed I-T returns.

To begin with, the focus will be on suspected tax cheats in the four metros and some big cities. The SMS drive was launched mid-June. No deadline has been fixed for the filing to tax returns by those identified.(Representative Photo)

The income tax (I-T) department has already sent mobile text messages to about 10,000 people who bought properties worth more than Rs 50 lakh or invested Rs 10 lakh and more in mutual funds or to buy cars. They have been asked to file I-T returns.

“If they don’t then we will take appropriate action,” Sushil Chandra, chairman of the Central Board of Direct Taxes, told Hindustan Times.

“With the government going after black money hoarders, many people have voluntarily come under the tax net in the recent past and through data mining we are getting real-time information about all citizens who have made big investments but are outside the tax net.”

To begin with, the focus will be on suspected tax cheats in the four metros and some big cities. The SMS drive was launched mid-June. No deadline has been fixed for the filing to tax returns by those identified.

The central government has intensified its drive against tax cheats since its November 8 decision to scrap old 500-and 1000-rupee notes, a move Prime Minister Narender Modi said was aimed at breaking the back of India’s black economy.

Since then, the government has enacted a new law to unearth unaccounted for cash stashed abroad. It also gave tax cheats a chance to come clean under a new scheme, hoping to expand state revenues in a country where just 3% of the working population pays tax.

Now, the I-T department is mining data gathered by the Financial Intelligence Unit (FIU) to identify big-spenders who do not pay tax. Government officials said SMS messages to suspected tax evaders will be followed up with raids, if needed.

The FIU, set up by the government in 2004, collects information about suspect cash and wire transactions and the sale or purchase of immovable properties, among other things.

Successive governments have struggled with under-reporting of taxes, seen as a major hurdle in expanding state revenues, as well as with growing undisclosed incomes to avoid taxation. Of the 3.7-crore people who filed tax returns in 2015-16, 99-lakh showed an annual income below the tax exemption limit of Rs 2.5 lakh. Only 1.72-lakh people said they had earned more than Rs 50 lakh annually that year.

In comparison, more than 1.25 crore-cars were sold over the last five years and two crore people flew abroad in 2015 alone, indicating rampant under-reporting of taxes that led finance minister Arun Jaitley to say in this year’s budget speech that “tax evasion for many has become a way of life”.

A second CBDT official told HT that the I-T department is also trying to scrutinise more closely ‘cluster’ bank deposits made during the demonetisation period.

“Many cases have come to our notice where several members of the same family have deposited various amounts of cash between November 9 and December 30 (the window given to people to deposit demonetised notes in banks),” the official said.

“We will investigate those cases.”