In a concerted drive against tax evasion in the wake of a shortfall in revenue and a burgeoning fiscal deficit, the Centre has directed the Income Tax Department to launch a two-month special initiative, starting January 20, to trail and verify high value transactions by persons not assessed to tax or those who have not furnished their Permanent Account Number (PAN) cards during such deals.
“The Central Board of Direct Taxes [CBDT] has directed the Income Tax Department to launch a special drive, from 20th January to 20th March 2012, for verifying high value transactions [investments / deposits / expenditure] from persons who are not assessed to income tax or who have not furnished their PAN while entering into such transactions,” the Finance Ministry said in a statement here on Wednesday.
According to the statement, high-value transactions under the tax scanner will include purchase of property, vehicles, shares and bonds, fixed deposits in banks and post offices. For this purpose, “the CBDT has issued pro forma for query letters and responses to be issued to the high-value investors/depositors/spenders,” it said.
As part of the drive to nab tax evaders, while addressees will be required to furnish their PAN if they already have one — or apply immediately for it if they do not — they will also be required to explain the source of the high-value investments/deposits/expenditure, and whether these are properly accounted for and explained in the income tax return filed by them. For furnishing the information required by the Department, a visit to the tax office is not essential as it can be sent by speed/registered post.
“Persons who have not properly accounted for the high-value transactions, are required to pay due taxes and file the income tax return within this financial year, i.e. by 31st March, 2012,” the statement said. It also noted that while there are penal consequences for not obtaining a PAN or not reporting such high-value transactions, a penalty of up to 300 per cent of the unpaid tax can be imposed for not paying proper taxes along with prosecution in some cases.
In some cases, the statement said, the tax officials may also visit the premises of high-value investors/depositors/ spenders. “In such cases, the taxpayer should verify the identity of the tax official before furnishing information in the prescribed pro forma,” it said.
Since July 1 last year, it has been made mandatory for individuals to reveal their PAN for purchase of any jewellery worth Rs. 5 lakh or more. For one, as high-value jewellery purchase is said to be one of the simpler routes for black money circulation, PAN identification is aimed at helping taxmen in tracking such transactions.
Likewise, transactions such as payment of Rs. 50,000 or more as life insurance premium annually, high-value deals such as sale or purchase of any immoveable property worth Rs. 5 lakh or more, sale or purchase of motor vehicles (other than two-wheelers) and bank deposits in excess of Rs. 50,000 require PAN identification.
Ostensibly, apart from the crusade against black money, the special two-month drive this fiscal is aimed at mopping up additional revenue to help the government in bridging the yawning gap in fiscal deficit. As per current calculations, Finance Minister Pranab Mukherjee has already admitted that adhering to the budgeted fiscal deficit target of 4.6 per cent of the gross domestic product remains a big challenge as it is unlikely to be met.