CBDT’s action plan for FY20: Increase tax base, reduce appeals & eliminate PAN fraud

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This fiscal, the tax department is targeting the number to be at 1.30 crore, an increase of 18 percent

The Central Board of Direct Tax (CBDT) has rolled out a plan of action for FY20, with key on its priority being focusing on adding new filers, speedy disposal of litigation and taking action on reducing pan card errors.

Moneycontrol has seen a copy of the CBDT’s ‘Central Action Plan’.

During the last fiscal, the Income Tax Department added 1.10 crore new filers. This fiscal, the tax department is targeting the number to be at 1.30 crore, an increase of 18 percent.

The CBDT says in its report that “considering the increased economic activities both in organised as well as unorganised sectors, there is scope for further widening of the direct tax base of the country.”

The tax body has identified ways to identify potential taxpayers through “data mining and data analytics conducted by the Systems Directorate, Directorate of I&CI, Investigation Wing and TDS/TCS charges.”

“The effective utilisation of these data by the field officers would result in identification of a large number of potential tax payers. In addition, information from disseminated data, local intelligence, inputs from market associations, trade bodies and professional bodies should be gathered to identify non-filers,” the CBDT report says.

The CBDT has also found many instances when high value transaction deductors are making transactions that result in ‘PAN errors’, or throw up ‘invalid PAN’ or ‘PAN not available’ errors.

The CBDT takes a strict view on such cases and says that these should be highlighted immediately.

A source in capital market told Moneycontrol, “Earlier such tactics were used by several high net worth investors who knowingly put wrong PAN number. There were penalty on non-mentioning PAN number but there is no provision putting penalty of mentioning wrong PAN number. Later on, Securities and Exchange Board of India came out with a proper framework that put responsibility on brokers to check whether the client has proper PAN card.”

CBDT says, “A large number of instances have been noticed where the deductors are making PAN errors in the deductee rows in the TDS statements by way of either mentioning ‘invalid PANs’ or ‘PAN not available’ in the corresponding column.

Accordingly, CsIT (TDS) may advise the deductors to insist upon furnishing of valid PAN by the taxpayers in case of high value transactions. Pursuance of these cases could result in minimising TDS mismatch cases on the one hand while helping in identification of new assessees on the other, thus augmenting revenue”.

The CBDT also wants to act on those paying less TDS on immovable property.

“Action on defaults in immovable property transactions based on (Actionable Intelligence Report) AIR Information Data on sale of immovable properties over threshold limit available in AIR Returns may be obtained and matched with transactions on which TDS has been deducted u/s 195 to generate list of defaulters, on which action can be taken by assessing officers (AOs). It has been observed in several cases that the buyer of the property deducts only at the rate of one percent TDS on purchase of immovable property from NRIs, which actually requires TDS at 20 percent. These are high-risk cases which need to be taken up on priority basis.”

Further, the tax body is not happy with slow pace of disposable of appeals. “While the number of new appeals instituted before the CsIT(A) during the year has increased substantially, the disposal of such appeals is marginally lower as compared to preceding year,” it says.

As per data of compiled by CBDT, “The total number of appeals pending where demand is less than Rs 10 Lakh is 192,435 as on April 1, as against 194,502 which shows a slight decline from the corresponding figure as on April 1, 2018. However, the pendency is still very large, where demand is less than Rs. 2 lakh. The special focus for disposal of such cases is required to be maintained as efforts during the earlier year could only reduce the number of old appeals less than Rs 2 lakh to about half, whereas the target for the same was 90 percent.”

The Board is concerned with significant number of pending appeals. There are 22,156 cases pending for more than five years and 66,400 cases pending for more than three years.
CBDT has not changed any tax collection target and fix target of Rs 13.8 lakh crore for FY20.

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