A study to calculate the size of the black economy commissioned by the UPA Government has reported that a very large number of professionals earning taxable income from profession are not filing their returns of income. It found that barely 6.7 per cent of the registered chartered accountants – the professionals whose services tax payers hire to file their returns – admitted to having taxable professional incomes in 2009-10. This raises obvious questions for the Income Tax Department, the report says.
The report finds that just 1.8 per cent of the registered legal professionals filed tax returns in 2009-10. However, 42.8 per cent of the registered medical professionals and 35.2 percent of nursing homes did so in the same year.
There is enough statistical evidence to suggest that there is considerable under-reporting of professional receipts and inflation of expenses, even by those professionals who are filing their income returns, the study notes.
The study has also concluded that the increase in the number of taxpayers filing returns has been very low, and that too during a period when all economic indicators were pointing to a huge growth in the size of the famed Indian middle class. In the five years between 2005-06 and 2009-10 there were 5.4 crore new pan card holders but only 43 lakh new taxpayers filed returns.
The authors of the report also studied some flagship social programmes to assess the generation of black money through leakages in expenditures on them. The report estimates that 24 per cent of the MNREGS allocations by the Centre were misappropriated in 2009-10, down from 41.5 per cent in 2006-07.
In the same year, the report estimates that bribes worth about Rs. 37 crore paid by NREGS beneficiaries across the country to get jobs. The average bribe paid was Rs. 65.
The Hindu had >earlier reported that among the findings of a confidential report commissioned by the government is that driven substantially by the higher education sector, real estate deals and mining income, India’s black economy could now be nearly three-quarters the size of its reported Gross Domestic Product (GDP). The report was accessed exclusively by The Hindu.
Since there were no “reliable” estimates of black money generated in India and held within and outside the country, the UPA Government had commissioned the National Institute of Public Finance and Policy (NIPFP), linked to the Finance Ministry in March 2011, to estimate the black money in India and held overseas by Indians.
The Special Investigation Team (SIT) on black money constituted by the Modi Government had on May 27 in compliance with a Supreme Court direction is studying the report. Though the report was submitted to the Finance Ministry in December 2013, neither the UPA Finance Minister P Chidambaram placed it in Parliament nor has his successor Arun Jaitley.