The Central Board of Direct Taxes (CBDT) has tasked its exclusive technical snoop unit– the Directorate of Intelligence and Criminal Investigation – to initiate a pilot project in 8 metro and tier-II cities of Bangalore, Chennai, Kolkata, Pune, Kochi, Lucknow, Bhopal and Guwahati for “widening and deepening the tax base”.
So, while the taxman will analyse high value personal expenses and payments made in shopping malls and other market avenues by an individual or an entity, fees paid in coaching centers and educational institutions and purchase of residential properties in Guwahati, their counterparts in Chennai will track the money flowing into the lucrative sand mining and timber import businesses in Tamil Nadu.
Similarly, in Bangalore the tax sleuths will track interest earned by a person from investments made in Urban Cooperative Banks (UCBs), corporate bonds and Cooperative Credit Societies.
The decision to undertake these projects was recently formulated by the top brass of the CBDT and the I-T department during the recently concluded two-day conference of Chief Commissioners and Directors General of the department in the national capital.
“Revenue collection under the direct taxes regime is a challenging task. Keeping in mind the government’s intention of providing a non-adversarial tax regime the department has decided to run this pilot project to ensure that no source of revenue is left untapped,” sources privy to the development told PTI.
“This is just a pilot project and many more economic expenditure indicators in various other cities would also be taken up in a confidential manner,” he said. The department, under this latest exercise, will also electronically track capital gains made from the transaction of sale of transfer of development rights in Maharashtra’s economic powerhouse Pune, while the said unit will track capital gains made from the sale of immovable assets in Madhya Pradesh’s capital Bhopal as it will closely monitor purchase of luxury cars and Sports Utility Vehicles (SUVs) in Lucknow.
The I-T will also analyse and monitor the house boats business in the port city of Kochi in Kerala while it will also keep a track of capital gains made from the land sold to an ambitious seaport project of the state government.
In the West Bengal capital city of Kolkata, the taxman has been tasked to keep a track of expenditure made in the production of film and television serials including similar content being made and sold across various media platforms.
Sources said the the selection of the cities was made on a random basis and learning from experiences of similar technical data gathering exercises done by the said directorate during the 2013-14 fiscal.
The Directorate of I and CI in the I-T department acts as the in-house intelligence gathering, analysis and dissemination wing as it receives confidential business and financial data from various sources like banks, financial intermediaries and investigation intelligence of the central department.
The same unit, during the last fiscal, undertook various special projects with an aim to widen the tax base and in one such operation it was found and reported that an “interest income of Rs 6,181 crore spread over 3,84,112 persons” had initially escaped assessment due to non filling of I-T returns or non declaration of interest income in ITRs or showing less income in ITRs.
The department, however, later tapped this leakage by making use of its legal enforcement measures as provided under the Income Tax Act.
Undertaking a similar project in the last fiscal, the tax department also detected an undeclared income of Rs 75.61 crore after 739 people filed their revised ITRs in response to query letters sent by the assessing officers to these individuals, which was based on data gathered through technical and electronic means.