Taxmen to keep watch on big spenders
Income tax men will snoop on big spending of doctors, lawyers and other self-employed as part of a drive to check evasion.india Updated: Apr 14, 2006 18:02 IST
Income tax men will snoop on big spending of doctors, lawyers, chartered accountants and other self-employed as part of a drive to check evasion.
World over, the self-employed do not report at least two-third of their income and India is no exception and the taxmen will now keep a watch on their spending to improve tax compliance, official sources said.
Purchases of high value pens and watches, plasma TV and home theatre, modular kitchen will come under scrutiny of taxmen, particularly if payments are made in cash, the sources said.
The survey of such high value purchases began in November last in 14 cities in the country and this has yielded "very good results" so far, the sources said declining to quantify the number of tax evaders tracked.
Sometimes, tracking of purchases of high value pens and watches become difficult as the buyers leave no trail but in case of modular kitchen and home theatre was somewhat easy as the buyers give the home address for the delivery.
Asked if genuine buyers of home theatre would be harassed in the process, the sources said the tax department only writes polite letters and asks them to quote permanent account number.
Genuine buyers therefore need not fear as only evaders will have to explain the source of income.
Finance Ministry has obtained details of more than 18 lakh high-value transactions during 2005-06 and these should be probed now, the sources said.
The amount involved in seven categories of high profile transactions equals 53 per cent of GDP. The Finance Ministry in its annual information returns has obtained details of six lakh transactions of over Rs two lakh each.
The combined worth of these transactions was put at over Rs 7,50,000 crore. At the same time, 90,000 transactions of over Rs 5 lakh were worth Rs 3,16,000 crore.
Earlier, heavy expenditure meant purchase of expensive cars, a watch or vacation abroad. Now, big spending was being associated with investments in the stock market, mutual funds, or real estates.
As many as 29,000 transactions, involving purchase and sale of bonds and debentures worth Rs 5,00,000, the networth was more than Rs 95,000 crore.
More than Rs 77,000 crore changed hands in 1,44,000 transactions, involving shares worth Rs 1,00,000.
To check whether there were no tax evasion in these transactions, the Government was now insisting on quoting of PAN.
Consequent upon the insistence, there were now as many as 4.3 crore PAN card holders as against just a little over 2 crore persons filing income tax returns.
The sources said there were large number of credit card holders who were spending more than Rs 2 lakh a year and all such cases were being scrutinised and many of those card holders who do not have PAN have now been asked to get PAN.
The sources said one area where AIR has not been effective is in tracking of real estate deals. Property registration beyond Rs 30 lakh is among the seven transactions on which annual information returns have to be filed by all sub-registrar offices.
The record keeping in several states was not up to the mark, partly because all sub-registrar offices have not been computerised fully as yet.
This was one area in which AIR filing need to considerably improved, the sources said.
With the mandatory filing of PAN for such high-value purchases, the tax department would be able to determine whether the returns filed by the tax payers were proportionate to high spending.
The sources said it has been found that several self-employed persons who file tax returns for income of Rs 3-4 lakh annually spend hardly Rs 30,000-40,000 from their bank accounts.
The sources wondered how they manage to indulge in high spending when they show frugal spending from their bank accounts.
First Published: Apr 14, 2006 17:47 IST