Soon, the taxman will be able to access all the financial information of taxpayers in a single window.
The income-tax (I-T) department is embarking on a project called Income Tax Business Application to collate all information on a taxpayer from various sources based on the permanent account number (PAN).
Of the total 30 million tax returns filed annually, the I-T department selects 300,000- 400,000 cases annually for scrutiny, based on risk profiling by the tax department. For this purpose, currently, the tax department collects all such information—but at a macro level.
“We are trying to improve internal data mining. We get information from various sources like tax deducted at source, annual information return (AIR), CEIB (Central Economic Intelligence Bureau), excise, service tax and value-added tax. But they are all in silos,” said Anita Kapur, chairperson of Central Board of Direct Taxes (CBDT) on Tuesday.
“We have started a pilot project wherein an assessing officer will get the entire information about a taxpayer whose tax return has been selected for scrutiny. It will include all financial transactions data of an individual or entity, including human intelligence collected. We hope to make it operational by the next calendar year,” she said.
The project is being rolled out in phases. The department has already started seeding Aadhaar numbers with the PAN database to weed out duplicate ones.
To incentivize taxpayers to voluntarily disclose Aadhaar numbers, the department has proposed a plan wherein the Aadhaar number of taxpayers will be used to validate online tax returns filed by taxpayers. So taxpayers will not need to send signed acknowledgement copies of the I-T returns to the Central Processing Centre in Bengaluru.
“If a taxpayer gives his Aadhaar and mobile numbers, we will send a one-time password to the taxpayer once he uploads his I-T return on the website. The taxpayer can then validate their return using the one-time password,” Kapur said.
Taking a strong stand against tax evaders, Kapur said the tax department has no option but to take a tough action against evaders to encourage compliance. “We try to ensure that our tax regime remains non-intrusive….but there are certain people or cases against whom intrusive action is required. Because not everybody is willingly compliant,” she said.
Sunil Jain Partner at J Sagar Associates, a law firm, said the department gets a lot of information from various sources. “Many institutions are obligated to report a transaction above a certain threshold level. So the tax department has a lot of information. But once it accumulates and collates all this information, it will have to talk to the assessee and ask for an explanation,” he said.
“This is going to increase the workload of the tax department and you will need a corresponding increase in manpower. And staffing and training continues to remain a major challenge for the tax department,” he said