Those earning Rs 400,000 lakh per annum, besides people in tier-II and tier-III cities with taxable income but not paying taxes are on the radar of the Income-Tax Department which has launched an ambitious drive to net one crore new assessees this financial year.
The Central Board of Direct Taxes (CBDT), the top policy making body of the IT department, feels if more and more people pay their due taxes, the income tax burden of those already compliant could be gradually eased.
“We want that at least people who are earning taxable income, let them start filing returns. Because, even small payment of tax by a large number of people is a favourable thing and this currently constitutes our tax gap. As far as our understanding goes, after the studies which we got conducted, people who are not filing returns are people who are earning income of about Rs 4 lakh (per year). They are the ones who are missing from over records as filers.
“Then we have people who are filing returns but they are understating their income. Our approach for them was different but now what we are talking about those small taxpayers in the tier-II and tier-III cities who have small income but they have taxable income. There are about 18-20 per cent people in this bracket who are missing,” CBDT Chairperson Anita Kapur told PTI in an interview.
She said the taxman has begun approaching markets and resident welfare associations in large cities to convey the message that they should be paying proper taxes.
“We got a feedback that people living in posh areas, where the property prices are certainly for a category which should be on the tax net, they are not filing returns. We are asking RWAs that please tell your residents that you have a liability (to pay income tax), so you should pay taxes and that it is so easy to pay taxes,” Kapur said.
The CBDT chief said if these small taxpayers also come into the system, it would give the government “leeway” to reduce overall taxes and also lessen individual income tax.
“So, if these assessees, who are in large numbers, start paying, may be their taxes are small but even that small amount bolsters the revenue. So, once you get better tax compliance from a larger population you have the leeway to reduce the taxes. The Finance Minister has also said that,” she said.
“Someone who is not paying tax is actually increasing the burden for someone who is paying the tax and people don’t realise that. That is why we have begun the new project of bringing more and more eligible people into the tax net,” Kapur said.
The CBDT boss said the tax department will not “hunt down” people to pay taxes under the new exercise of adding more assesses and that it would be conducted through the use of technology.
“We will not hunt down (potential taxpayers)…we are not doing door-to-door survey. We are not sending our inspectors to houses etc. We are trying to do in a non-intrusive way to let the taxpayer know that the department knows you have income. We have information about you and you please file your taxes,” she said.
As part of government’s initiative to broaden the tax base, the CBDT recently activated all its field offices to achieve the goal of netting one crore assesses this fiscal with the Pune region being given the maximum target of bringing in over 10 lakh new taxpayers.
The Board has also communicated to the taxman that it should adopt a multi-pronged strategy to achieve this ‘not-so-easy’ target by holding meetings with trade associations and professional bodies and obtaining data on under-reporting assesses through technical and human intelligence.