New Delhi, February 7, 2017

The income tax department could relax laws dealing with search and survey if tax compliance improved in future, the chairman of Central Board of Direct Taxes (CBDT) Sushil Chandra, said on Monday. While not specifying the compliance threshold that could trigger the easing of Section 132 (search) and Section 133 A (survey) of the Income Tax Act, Chandra said that time had come for citizens to be aware of their tax liabilities.

Speaking at a post-Budget event, Chandra said that no question would be asked from those who have deposited cash of up to Rs 2.5 lakh during the demonetisation period. However, the department has pulled out data related to large cash deposits of over Rs 1 crore that do not match the income tax returns filed by these individuals in the past. These cases would be scrutinised further if no satisfactory explanation is provided to the initial query.

“We have found the data for deposits between Rs 2 lakh and Rs 80 lakh and Rs 80 lakh and above. As the Prime Minister has clearly said that for deposits up to Rs 2.5 lakh, we will not ask questions, so we have put that data aside at the moment,” he said. Moreover, he said, deposits of Rs 3 lakh are “justified” if a person has an annual taxable income of Rs 10 lakh and the tax department will “not touch” him. Importantly, if companies show a cash-in-hand in balance sheet of R10 lakh and have deposited Rs 5 lakh, the tax department will not scrutinise those.

“But if you have deposited Rs 5 lakh and you have not filed return of last three years, that I should touch for scrutiny,” he said. He added that if an individual files income tax returns of Rs 2.5 lakh but deposits Rs 10 lakh in different bank accounts, he should be asked about it.

Chandra said that individuals with unaccounted deposits have an option of availing of the new tax amnesty scheme, the Prime Minister Garib Kalyan Yojana (PMGKY) and deposit 50 per cent tax. “We have found that one trustee, who was running an educational institution, put Rs 2 lakh in each employees account and one of them complained, and we searched him. That led to the individual surrendering around Rs10 crore,” he said.

The CBDT has already sent SMSes and emails to 18 lakh individuals who have made suspicious deposits over Rs 5 lakh during the 50-day demonetisation period.

Also, speaking at the same event, Ram Tirath, member – Budget and GST, Central Board of Excise and Customs, said since the government was committed on bringing GST with effect from July1, there weren’t many changes in the area of indirect taxes. “The changes that have been incorporated in the Budget are largely in the areas of digitisation, ease of doing business, export promotion and anti-avoidance,” he added.

[The Indian Express]